European Banks Continue Withdrawing from US Retail Banking... BNP Paribas Sells Business

[Photo by AFP Yonhap News]

[Asia Economy Reporter Park Byung-hee] European banks are increasingly withdrawing from the U.S. retail banking market.

Major foreign media reported on the 20th (local time) that France's largest bank BNP Paribas and Bank of Montreal (BMO) have agreed on the sale of Bank of the West, a San Francisco-based bank in the U.S. BNP Paribas decided to sell Bank of the West after owning it for over 40 years since acquiring it in 1979. The sale price is $16.3 billion. The sale is expected to be completed by the end of next year.

BMO is the 8th largest bank in North America by asset size. With the acquisition of Bank of the West, BMO's number of branches and wealth management offices will increase to over 500, and its customer base will expand to 1.8 million.

Recently, European banks have been withdrawing from the U.S. retail banking market one after another. This is due to difficulties competing with large U.S. banks operating nationwide such as JPMorgan Chase, Bank of America (BOA), and Wells Fargo.

Spain's BBVA sold its U.S. business unit to PNC Financial, headquartered in Pittsburgh, last November. HSBC Bank also sold its North American business unit to Citizens Bank.

BNP Paribas has decided to exit the U.S. retail banking business but plans to continue its corporate banking and investment banking operations.

By selling Bank of the West, BNP Paribas can improve its soundness by increasing its capital ratio. It is also expected to expand share buybacks to enhance shareholder value and increase investments in the mobile banking sector. BNP Paribas plans to announce a new investment strategy plan in February next year.