David French, Pamela Barbaglia

LONDON (Reuters] – BNP Paribas, OTC:), is currently working with consultants to determine if it should sell its U.S. subsidiary Bank of the West. The bank seeks to withdraw from the American retail market for banking after having failed to match larger, better capitalized rivals.

Three sources familiar with the matter stated that the French lender has decided to end its relationship with California’s retail banking division. The deal could be worth around $15 billion.

Sources said that JPMorgan (NYSE 🙂 and Goldman Sachs(NYSE 🙂 have begun preparations for the sale of the company and are working with BNP in order to assess interest from potential bidders.

The discussions remain in the early stages and no agreement is imminent, they stated.

One source said that JPMorgan secured a mandate from BNP in summer. JPMorgan represented Spain’s BBVA, (MC:), during its $11.6 billion sale to PNC Financial Services Group Inc. (NYSE:). This is a deal BNP wants to repeat.

BNP could not be reached for comment immediately. JPMorgan Goldman Sachs and JPMorgan declined to comment.

Bank of the West with assets of $99.2 Billion as of June 30 ranks among the top BNP businesses 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.

Although the Bank of the West is centered in California, the bank’s 147-year-old operation has 531 branches located primarily throughout the U.S. West, and Midwest. In 1979, it was purchased by BNP and later merged with the French Bank of California (FBC) local subsidiary.

According to sources, BNP will need to face a variety of obstacles to ensure a sale.

U.S. President Joe Biden calls for increased scrutiny of bank merges. The departure of Randal Qarles, Federal Reserve vice chair for supervision, and the uncertainty about Jerome Powell’s future as Chair have cast doubt over banking consolidation.

Dealmakers spoke to Reuters under anonymity because they claimed that this leadership void had created an effective block on approval for large bank acquisitions by Fed. This makes it hard for banks boards and regulators to approve new transactions.

BIDDING FIELD

BNP considered PNC a perfect suitor to Bank of the West for a long time. PNC’s purchase of BBVA’s U.S. operation at 20 times 2019 earnings was a boost for its sales efforts, according to BBVA.

PNC is busy with its recent acquisition and BNP has a limited pool of buyers. These include some U.S. regional players as well as Canadian banks.

Two sources claimed that Toronto-Dominion Bank, Bank of Montreal and Ohio-based KeyCorp are possible suitors.

TD Bank has retail operations on the U.S. East Coast and can use the proceeds from the $26 Billion sale of broker-dealer TD Ameriprise. Charles Schwab (NYSE:) 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 expressed their desire to expand the U.S. presence. The bank could offer BNP an alternative to KeyCorp, which would need to seek an all-stock deal.

One source said that Royal Bank of Canada, which is the owner of City National Bank in California, could express an interest in Bank of the West.

PNC, TD and BMO were unavailable for comment immediately.