TD Hunting Deal For BancWest Offer As Canadian Lenders Bring US Growth


  • BancWest triggered a bidding war between TD and BMO sources
  • TD looking for targets for tight sources of loss
  • BMO is now the 16th bank by wealth in the United States
  • Excess cash and high share prices fuel Canadian banks

LONDON / TORONTO, Dec 23 (Reuters) – Toronto-Dominion Bank (TD.TO) has responsibility for high-cash Canadian banks that are making a push in the United States and growing outside of their home region, where the Big Six already control banks almost 90% of the market.

Billions of dollars of excess cash accumulated during a nearly two-year moratorium on capital redistribution that was lifted just last month and stock prices near record highs have given Canadian banks an acquisition currency to bet on the exit and downsizing of several European and international banks. Continue reading

The sale of the US unit Bank of the West (BancWest) by BNP Paribas (BNPP.PA) is the latest example of a backlog of the matter, said Familiar. Continue reading

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The Bank of Montreal announced Monday that it would buy BNP Paribas’ unit, Bank of the West, for $ 16.3 billion in its biggest deal ever. Continue reading

TD, Canada’s second largest bank by market value, had looked at all of its major asset portfolios up for sale, including the U.S. stores sold in September by Mitsubishi UFJ (MUFG) (8306.T) and BBVA (BBVA.MC) in September November 2020, said the sources. Continue reading

It remains looking for acquisitions in the United States after the narrow loss to BMO. Continue reading

TD and BMO spokespeople commented neither on the bidding process nor on future growth plans in the USA. The MUFG declined to comment on the Canadian banks’ interest in their assets and the BBVA did not immediately respond to a request for comment.

“Banking is a game of scope, technology and sophistication,” said Brian Madden, portfolio manager at Goodreid Investment Counsel.

He added that Canadian banks, already in the United States, are well placed to expand their US operations as they “happen to be right next to the largest banking market in the world”.

TD executives said earlier this year that the bank “will not be afraid” to do any banking in the southeastern US or any other area it currently operates, particularly the east coast.

After TD missed out on some big acquisitions, TD is now likely to turn to smaller banks, one of the sources said.

Together with TD and BMO, Royal Bank of Canada (RY.TO), Canadian Imperial Bank of Commerce (CIBC) (CM.TO), Bank of Nova Scotia (BNS.TO) and National Bank of Canada (NA.TO) round Canada’s Big Six banks.

TD is one of the top 10 banks in the United States, and Royal Bank owns City National, California’s ninth largest bank by deposits.

Royal Bank has also expanded in the US, although Canada’s largest lender is more focused on its wealth management business in the United States.

And CIBC, which entered the US in 2017 with the acquisition of PrivateBancorp, has announced that it will generate higher revenues from the country in the coming years.

The Royal Bank did not respond to a request for comment. CIBC declined to comment.

BMO’S CHASE

BMO tracked BancWest after losing the U.S. retail business of MUFG, Japan’s largest lender, one of the sources said. MUFG eventually sold its US retail business to US Bancorp for $ 8 billion.

BMO has made a competitive bid on MUFG’s assets, and disappointment with the loss led Canada’s fourth-largest bank to move quickly on the BancWest sale, the source said.

BNP Paribas, advised by Goldman Sachs (GS.N) and JPMorgan (JPM.N), had parallel discussions with TD and BMO, which increased pressure on both bidders to close their bids, fearing regulatory headwinds to hinder sales could sources said.

BNP Paribas did not respond to a request for comment.

While TD initially placed a low bid and then increased it, BMO was more aggressive with its initial proposal and quickly declared its offer “best and final” in December after offering one final sweetener, one of the sources said.

The transaction will make BMO the 16th largest bank in the United States by assets from today ranked 19th, bringing its assets to nearly $ 300 billion. Continue reading

By merging with US competitors, Canadian banks with an existing US presence are expected to generate better returns than smaller companies from these companies, even if they appear to pay a premium, as BMO did for BancWest, said Anthony Visano, portfolio manager at Kingwest & Co.

“Sometimes strategic value outweighs financial consideration,” said Madden of Goodreid Investment.

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Reporting by Pamela Barbaglia in London and Nichola Saminather in Toronto; Editing by Megan Davies and Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.


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