Bank of Montreal (BMO) chief executive Darryl White headed into January’s annual Royal Bank of Canada (RBC) bank chiefs conference on Monday with arguably the most interesting tale to tell, after his bank announced the acquisition of Bank of the West (BOTW) from BNP Paribas on December 20 for $16.3 billion.
The deal follows a string of recent transactions in the regional US banking arena, including PNC’s $11.6 billion purchase of BBVA’s US banking network in November 2020, US Bancorp’s $8 billion acquisition of most of MUFG Union Bank, which was announced in September, and deals from Citizens, which last year bought HSBC’s US branches and online deposits and Investors Bancorp.
In analyst calls and public statements since announcing the deal, White has been forthright on not only the logic of the BOTW deal but its affordability. Two thirds of it will be funded by excess capital at BMO, recently given a further boost by the sale of BMO’s EMEA asset management business to Columbia Threadneedle in November for £615 million. There is also a further C$3.8 billion of excess capital at BOTW itself, and the remainder will be funded through a primary equity raise.
