BNP to buy another bank
Advertiser Staff and News Services
Paris-based BNP Paribas SA, which last week received federal approval to acquire Hawai'i's biggest bank, said yesterday it will acquire United California Bank in a $2.4 billion cash deal that will make the French lender one of the region's biggest banks.
BNP said it will acquire all the outstanding shares of Los Angeles-based United California from Japan's UFJ Holdings Inc. and merge United California branches into Bank of the West, a subsidiary of Honolulu-based BancWest Corp.
United California has 117 branches, more than 2,800 employees, and about $11 billion in assets. The consolidated company will operate as Bank of the West.
BNP's acquisition of BancWest, which also is the parent company of First Hawaiian Bank, is expected to close Dec. 20.
BNP's acquisition of United California will give BancWest $31 billion in assets, 1.5 million customers and more than 350 branches in California, Hawai'i, five other Western states, Guam and Saipan. Bank of the West will have $15 billion in deposits within California, ranking fourth in bank deposit market share.
"(United California Bank's) philosophy of community banking and locally based decision making is a perfect match for us," BancWest Chairman and Chief Executive Officer Walter A. Dods Jr. said yesterday in a statement. "Our business lines fit together well. And because the companies have strong positions in the two largest markets in California, the logic of this combination is compelling."
The transaction needs regulatory approval but is expected to close by March.
UFJ is the world's sixth-largest bank, formed by a merger between Sanwa Bank Ltd., Tokai Bank Ltd. and Toyo Trust & Banking Corp. Sanwa owns 81 percent of United California and Tokai holds 19 percent. Japanese banks have been selling overseas assets in the past two years to bolster finances as they write off record bad loans and try to weather a deepening recession at home.
United California Bank, founded in 1868 as the San Francisco Bank and operating mainly in Southern California and the Bay Area, was sold to Sanwa in 1972.
Bank of the West plans to create a regional administrative and support headquarters in the Los Angeles area as part of the acquisition. Officials said duplicate administrative functions will be consolidated and a small number of overlapping branches could be affected. It was not known yesterday how many employees could be affected.
Both banks said that they would institute a hiring freeze and that they expect most reductions in positions to be made by attrition.
BNP Paribas, the 10th-biggest bank by assets, has been trying to expand in the U.S. market. Managing Director Baudouin Prot last month said the French bank is looking at retail bank acquisitions and medium-sized investment banks.
BNP was in talks to buy Keefe, Bruyette & Woods Inc. of the U.S. before the New York-based firm lost a quarter of its staff in the Sept. 11 terrorist attacks. Those talks have been postponed while the U.S. firm rebuilds, BNP said last month.
"BNP, being largely a European house, is in search of distribution points and access to an important part of the U.S.," said Raymond Lee, managing director of investment banking at Salomon Smith Barney in Hong Kong. "It's part and parcel of BNP's long-term strategy to expand."
Last week, in a 5-0 vote, the Federal Reserve Board approved BNP's bid to acquire the 55 percent of BancWest it did not already own.
A Bloomberg News report was included in this story.