BMO Harris Bank is buying San Francisco-based Bank of the West for $16.3 billion, doubling its retail footprint and expanding to 32 states.
The deal, announced Monday, will add more than 500 Bank of the West branches and $105 billion in assets, giving Chicago-based BMO Harris national heft and a significant entry into California, where most of the newly acquired branches are located.
“This is a very, very big deal for the bank,” said David Casper, U.S. CEO of BMO Financial Group, the Canadian-based parent company of BMO Harris. “This gives us an opportunity to be on the West Coast in a way that we’ve never been before.”
Bank of the West has 1.8 million customers and branches in 19 states from California to Wisconsin. Under the terms of the agreement, the cash purchase will be funded primarily through excess capital, including nearly $2.9 billion on the Bank of the West balance sheet. The deal is expected to close by the end of 2022, pending regulatory approval.
BMO Harris has $162 billion in assets, 2 million customers and more than 500 branches in Illinois, Indiana, Arizona, Missouri, Minnesota, Kansas, Florida and Wisconsin. Current BMO Harris customers will be able to bank at any of the more than 1,000 locations of the combined entity, once the merger is completed, Casper said
“It really connects the dots for our retail customers that now have basically close to a national footprint,” Casper said.
While there would be some geographic overlap, Casper said there are no plans to close branches from either bank upon completion of the merger.
The merger is expected to create $669 million in annual operational cost savings, with some consolidation at the corporate level, Casper said. There are no layoffs expected at the branches.
“The branch operations, there really are not going to be any loss of jobs,” Casper said. “We need everybody that’s customer-facing.”
Founded in 1874, Bank of the West operates branches and offices in 24 states and has more than 9,000 employees. The bank is owned by Paris-based BNP Paribas, a leading European bank which is exiting the U.S. retail banking market with the sale of Bank of the West. The French banking giant bought Bank of the West in 1979.
“This is a value accretive transaction for all sides, which emphasizes the quality of Bank of the West franchise,” BNP Paribas CEO Jean-Laurent Bonnafé said in a news release.
Bank of the West will become part of BMO Harris, and Chicago will remain the U.S. headquarters for the combined entity, Casper said. It has not been decided if Bank of the West will operate under the BMO Harris banner, he said.
“They have a very good brand, we have a very good brand,” Casper said. “The BMO brand is the overall brand. But how it actually will work, we just haven’t figured out.”
Bank of Montreal, now known as BMO Financial Group, acquired Chicago-based Harris Bank in 1984. Chicago is the largest U.S. market for the Canadian banking giant, with more than a third of its U.S. branches in Chicago and the suburbs.
In September, BMO Harris announced it was planning to close nine of its 182 Chicago-area branches, reducing the bank’s footprint by 5% in its largest U.S. market.
