BNP buys The company that controls First Hawaiian Bank is buying Los Angeles-based United California Bank, in a $2.4 billion deal that will make it California's fourth-largest lender.
United Calif. bank
The acquirer of First Hawaiian's
parent is paying $2.4 billion for
the mainland branchesBy Rick Daysog
rdaysog@starbulletin.comBNP Paribas SA said yesterday that it has signed a definitive agreement with Tokyo- based UFJ Holdings to acquire its United California Bank, which is the largest Los Angeles-based bank with $11 billion in assets and 117 branches.
BNP Paribas, which will complete its $2.5 billion buyout of First Hawaiian and parent BancWest Corp. this month, said its expects to close the California deal by the end of the third quarter 2002, pending regulatory approval. The boards of BNP and UFJ have already approved the deal.
"Our business lines fit together well," said Walter Dods Jr., BancWest's chairman and chief executive officer. "And because the companies have strong positions in the two largest markets in California, the logic of this combination is compelling."
Upon completion of the transaction, BancWest will have $31 billion in assets and serve more than 1.5 million customers in 350 branches throughout the Western United States. From the standpoint of deposits, BancWest's market share will be the fourth largest in the Golden State.
United California lists approximately the same amount of assets as First Hawaiian competitor Bank of Hawaii.
BNP said the United California branches will operate under the Bank of the West brand once the merger its completed next year. The bank also said it expects to consolidate duplicative administrative functions and overlapping branches.
BancWest and United California, which have initiated a hiring freeze in their non-Hawaii operations, said job reductions will largely come about through attrition. United California has about 2,800 employees, BancWest employs about 4,900.
Shares of BancWest Corp. were up a penny today at $34.98 on the New York Stock Exchange. Last week, BNP announced that it will complete its $35-a-share takeover of BancWest on Dec. 20.
The deal is part of BancWest's aggressive expansion plan, which includes more than a dozen mergers and acquisitions since1990.
The United California deal will add retail customers in southern California to BancWest's commercial lending in the north and center of the state.
"California is a growing market," Michel Pebereau, BNP Paribas' chairman, said at a press conference. "And it's attractive because we're already there."
BNP will have about 3.3 percent of California's banking market. In France, it has a market share of about 10 percent.
BNP said there were only "a limited number of bidders" for United California, which earned $129 million in the last fiscal year, according to Bloomberg News. UFJ has been seeking a buyer for United California since August, Shougo Kimura, a bank spokesman, told Bloomberg News.
The deal comes as Japanese financial institutions are under pressure to sell their American units.
In July, GE Capital Corp., the largest non-bank financing company, bought Fuji Bank Ltd.'s Heller Financial Inc. for $5.3 billion. A month earlier, Tyco International Ltd. paid $10 billion for CIT Group Inc., in which Dai-Ichi Kangyo Bank Ltd. held a 27 percent stake. Zions Bancorporation agreed to buy Sumitomo Bank of California for $546 million in March 1998.
"It's a reasonable decision for Japanese banks to withdraw their equity holdings in international operations where there are no synergies with their domestic operations," said Takamasa Yamaoka, a banking analyst at Standard & Poor's Corp. in Tokyo.
Bloomberg News contributed to this report