BNPP’s Bank of the West sale does not signal European bank consolidation
BNP Paribas has in effect ruled out using the proceeds of its US retail bank sale on big bank M&A in Europe.
BMO’s acquisition of Bank of the West from BNP Paribas marks the latest chapter in bank M&A across North America. In Europe, however, even domestic bank deals have slowed after a flurry of mid-tier deals in 2020.
And BNPP has made it clear that the $16.3 billion in cash it will receive from selling Bank of the West won’t go towards buying traditional peers in its home continent – despite the fact that the lack of a strategic rationale for owning a retail bank in the US rather than Europe is behind the move in the first place.
BNPP is the European Union’s biggest bank by assets and market capitalization, so it should be a natural leader of the sort of big cross-border EU bank mergers that could give rise to more of a continental banking sector in Europe. Market participants have often wondered whether it could buy Germany’s long-troubled Commerzbank, for example.
Buying an incumbent would now just be a distraction
Clearly, a Commerzbank deal is not on the cards. Neither does the Bank of the West sale translate into European bank consolidation in general – whether domestic or cross-border.