The trip to California has ended for BNP Paribas.

France's largest commercial bank officially announced on Monday that it wanted to part with its American subsidiary Bank of the West.

At a price of 16.3 billion dollars (around 14.4 billion euros), the San Francisco-based bank is to go 100 percent to the Bank of Montreal (BMO) from Canada.

A corresponding agreement between BNP and BMO has therefore been signed.

Niklas Záboji

Business correspondent in Paris

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Those involved do not want to waste much time: If everything goes well and the competition authorities do not raise any objections, the transaction should be completed in the course of the coming year. The Bank of the West was part of BNP for almost 40 years. However, their sale is not to be equated with a general farewell to America. Rather, the branches of the parent institute remained a “strategic pillar” for the company, emphasized BNP boss Jean-Laurent Bonnafé.

At the same time, the French are reflecting on their core business to a certain extent.

They never really got a foothold in the United States, and BNP had already separated from its American subsidiary First Hawaiian Bank between 2016 and 2019.

As the bank further reports, the purchase price is just under a fifth of its market value and 1.72 times the book value of the Bank of the West.

The French estimate the after-tax sales gain at around 2.9 billion euros.

Details in early February

Last but not least, the shareholders should be pleased about this. BNP promises you an extraordinary distribution in the form of a share buyback. However, they weren't really in a celebratory mood on Monday: In the first hours of trading, the price of the BNP share fluctuated between a slight minus and a slight plus. That is still better than the French leading index CAC40 as a whole, which started the week with a minus of up to 2.5 percent on Monday, mainly due to concerns about the Omicron variant of the corona virus.

What happens to the remaining proceeds from the sale of the Bank of the West has not yet been specified: They want to use them in a “disciplined” manner in order to improve long-term value creation and, especially in Europe, to grow organically and to target technologies and innovative business models invest.

However, strategically appropriate acquisitions should also be considered, continues BNP.

That makes you sit up and take notice.

After all, the French have long been traded as possible buyers of the German Commerzbank.

So far, however, such rumors have been consistently denied.

"That always sounds very simple in theory, but in practice it is very difficult to bring banks together," BNP boss Bonnafé once said.

But the French have been investing a lot of money in Germany for years and have established themselves as an important competitor for the domestic institutes in this country.

The bank intends to present details of its strategic goals for the coming years at an investor conference in early February.

Europe's largest financial institution

BNP, created almost 20 years ago through the merger of Banque Nationale de Paris with Bank Paribas, is the largest commercial bank in France, ahead of Crédit Agricole and Société Générale. Last year their balance sheet total was 2.5 trillion euros. That is almost twice as much as Deutsche Bank, Germany's front runner. In terms of market capitalization, the difference is even greater: BNP is valued at around 70 billion euros on the stock exchange, and Deutsche Bank at around 20 billion euros.

With its total assets, BNP even narrowly overtook the British HSBC, Europe's largest financial institution to date.

Unlike this, however, it is much less active on the Asian market.

In Asia and the United States, the French earn only a tenth of their total income.

BMO, founded in 1874, is the fourth largest commercial bank in Canada.

Their balance sheet total was around 650 million euros last year.

The acquisition of Bank of the West is the largest acquisition in its history.

It wants to continue its expansion course in the United States.

However, the BMO is not new to the US market; it bought Harris Bank, based in Chicago, back in the 1980s, and Marshall & Ilsley Bank, based in Milwaukee, ten years ago.