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European banks shun bids for US assets

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Published Feb. 17, 2012, 1:43 p.m. ET

European banks are keeping “for sale” signs off the lawns of their US branches.

Despite deep financial problems that are forcing them to unload assets around the world, most big European banks consider their US retail divisions to be among their most stable operations.

That means — at least for now — big banks such as Banco Santander, Royal Bank of Scotland Group and Banco Bilbao Vizcaya Argentaria want to hang onto these businesses.

This reflects a big change from just a couple of years ago, when European banks were widely expected to unload their US assets. But only a couple of small deals have taken place. Allied Irish Banks sold its 22 percent stake in M&T Bank Corp. in late 2010 and HSBC Holdings dumped its US credit-card portfolio and some branches.

The resolve to keep the businesses in European hands is disappointing to potential buyers from Canada and Japan seeking to bulk up their US presence.

In recent months, France’s BNP Paribas has fielded informal offers for its US subsidiary, San Francisco-based Bank of the West, from at least two North American banks, according to people familiar with the matter. BNP rejected the offers as too low.

Bank of the West has roughly 650 branches in 19 Western and Midwestern states, and about $62 billion in assets. A spokeswoman said the French bank considers the subsidiary to be “a core asset.” BNP also owns First Hawaiian Bank, which has $15.4 billion in assets and 64 branches.

One of the reasons that the US assets are staying put is because they now look to be safer bets than businesses closer to home. Fewer loans are souring and the industry’s capital crunch appears to be mostly under control for many large US banks.

Further reducing the appeal of a sale is that US regulators would likely frown on big domestic banks bulking up through acquisitions. Still, there remains intense interest from Wall Street deal makers.

“The whole investment-banking community has been circling these names,” one banker who focuses on financial institutions said.

To read more, go to The Wall Street Journal