Bank of Montreal acquires BNP Paribas’ US unit

Bank of the West operates commercial and consumer banking segments, as well as specialized financing and other services. The San Francisco-based bank has about $ 89 billion in deposits, assets of about $ 105 billion and about 500 branches in the Midwest and West. It has been owned by France’s GDP since 1979.

GDP said that they are still committed to their corporate and institutional banking business in the US Bank of the West has accounted for about 5% of the bank’s pre-tax income in recent years, it says.

The French bank said it plans to repurchase shares to compensate shareholders for a dilution of earnings per share. It will also use the revenues to grow in Europe, for technology investments and acquisitions. The bank’s shares rose 1.1%, yielding better results than the Euro Stoxx Banks index, which was down around 1%.

The Wall Street Journal reported Sunday that GDP and BMO, as the Bank of Montreal is known, were in advanced talks and that a deal could be finalized as soon as this week.

The Bank of Montreal is the fourth largest bank in Canada. Its US division delivers around 38% of the bank’s revenue today, up from around 28% three years ago, said CEO Darryl White at an investor meeting earlier this month. Earnings for the bank’s US division increased by 58% in the fourth quarter, compared with an increase of 42% for the Canadian division.

In the United States, BMO conducts commercial, retail, asset management and capital market activities. The bank has said that it sees a great opportunity for growth in its US asset management business.

The BMO opened its first state branch in 1818, about a year after its founding. In the 1990s, it became the first Canadian bank to trade on the New York Stock Exchange. The company has a market value of around $ 69 billion.

For larger Canadian lenders wishing to expand, limited domestic growth opportunities have led them to look beyond the southern border.

Royal Bank of Canada,

the country’s second largest lender, bought Los Angeles-based City National Corp. for $ 5.4 billion in 2015. Canada’s largest bank, Toronto-Dominion,

now operates more branches in the United States than in Canada.

European lenders who planted flags in the United States in the late 1980s have not been able to gain much ground. Royal Bank of Scotland Group PLC sold out of Citizens Financial Group Inc.

in 2015. HSBC Holdings PLC said last year that it would close a third of its US branches.

BBVA in Spain agreed to sell its US arm about a year ago to PNC Financial Services Group Inc.

for about $ 11.6 billion in a deal that created the fifth largest retail bank in the United States

While major bank mergers have been rare since the 2008 crisis, there have been more so far this year than ever since.

But federal financial regulators have expressed interest in curbing the wave of mergers. Democratic members of the Federal Deposit Insurance Corporation’s board have been pushing in recent weeks to revise the regulations regarding major bank mergers. Officials in the banking industry fear that such a review by the FDIC or other regulators, namely the Federal Reserve and the Office of the Comptroller of the Currency, could lead to stricter controls on major agreements.

The continued consolidation of financial institutions gives consumers fewer banking options and reduces competition, progressive decision-makers have argued. Regional banks are joining forces as the best way to combat meager lending profits and the ever-increasing costs required to keep pace with the technological improvements of the largest banks.

Bloomberg reported on Thursday that BMO had had initial talks about buying the GDP unit.

Write to Cara Lombardo at cara.lombardo@wsj.com and Orla McCaffrey at orla.mccaffrey@wsj.com