* JPMorgan and Goldman Sachs working with BNP - sources
* Discussions still at early stage - sources
* PNC, Canada's TD and BMO seen as potential suitors
* Any deal would face U.S. regulatory challenges
LONDON, Nov 15 (Reuters) - BNP Paribas is working
with advisers to assess a sale of its U.S. arm Bank of the West
as it seeks to retreat from the American retail banking market
after struggling to compete with larger and better capitalized
rivals, sources told Reuters.
The French lender, which overtook Britain's HSBC
last year to become Europe's largest bank by assets, is looking
to part ways with its San Francisco-based retail banking
subsidiary in a deal that could value it at about $15 billion,
three sources with knowledge of the matter said.
JPMorgan and Goldman Sachs are preparing the
business for a sale and have been working closely with BNP to
gauge interest from prospective bidders, the sources said.
Discussions are still at an early stage and no deal is
certain, they said.
Shares in BNP rose as much as 5.5% to 62.55 euros after the
Reuters story and were 3.4% higher in early afternoon trading.
JPMorgan was first to secure a mandate from BNP during the
summer, one of the sources said, having recently represented
Spain's BBVA in the $11.6 billion sale of its U.S.
operations to PNC Financial Services Group Inc - a deal
BNP hopes to replicate.
BNP was not immediately available for comment. JPMorgan and
Goldman Sachs declined to comment.
Bank of the West, with $99.2 billion of assets as of June
30, ranks as BNP's biggest business outside Europe.
A sale would give Chief Executive Jean-Laurent Bonnafé cash
to invest on the continent where the European Central Bank is
urging the region's lenders to merge as they have lagged their
U.S. and Chinese rivals in profitability and size since the 2008
financial crisis, the sources said.
While centered on California, the 147-year old Bank of the
West has retail operations in 19 U.S. West and Midwest states.
It was bought by BNP in 1979 and subsequently merged with its
local subsidiary, the French Bank of California (FBC).
Bank of the West sells a range of retail banking products
and services to individuals, small businesses and corporate
clients with a strong presence in specialized financing areas,
such as agribusiness and farming.
To secure a successful sale of the business, BNP would have
to overcome a number of challenges, the sources noted.
U.S. President Joe Biden has called for more scrutiny of
bank mergers, while the departure nL1N2RZ1IC of Randal Quarles
as the Federal Reserve's vice chair for supervision and
uncertainty over Jerome Powell's future as chair has cast doubt
on banking consolidation.
Dealmakers, who spoke with Reuters on condition of
anonymity, said this leadership void has created an effective
hold on the approval of large bank acquisitions by the Fed,
making it difficult for bank boards to sanction new
"BNP needs to find a partner who's willing to fight hard to
win regulatory approval," the first source said.
The French lender has long seen PNC as an ideal suitor for
Bank of the West, and its sale efforts were emboldened by the
purchase price PNC paid for BBVA's U.S. business, valuing it at
20 times its 2019 earnings, the source said.
But with PNC now busy integrating its latest acquisition,
BNP is left with a small pool of potential buyers, which include
Canadian banks and some regional U.S. players.
Toronto-Dominion Bank and Bank of Montreal
are seen as possible suitors alongside Ohio-based KeyCorp
, two of the sources said.
TD Bank, with retail operations along the U.S. East Coast,
has proceeds available from the $26 billion sale of
broker-dealer TD Ameriprise to Charles Schwab Corp.
Chief Executive Bharat Masrani said in May the bank was open for
M&A opportunities which made financial sense, with a focus on
its existing footprint.
BMO executives have expressed a desire to grow the bank's
U.S. presence and would be in a position to add cash to finance
a possible deal while KeyCorp would instead need to pursue an
Royal Bank of Canada - which owns City National
Bank, the ninth-largest bank in California by deposits - could
also express interest in Bank of the West, one of the sources
PNC and KeyCorp declined to comment while TD, BMO and RBC
were not immediately available.
(Reporting by Pamela Barbaglia in London and David French in
New York; Editing by Emelia Sithole-Matarise)