BMO is expecting the deal to bring it 1.8 million new customers when it closes at the end of the year
Bank of Montreal executives in the U.S. touted the benefits of their acquisition of BancWest Holding Inc. and Bank of the West at a public input hearing on Thursday, arguing the merger will “increase competition and benefit consumers in every market we serve.”
The board of governors of the Federal Reserve System and the Office of the Comptroller of the Currency heard from executives from both banks, as well as community groups such as the California Reinvestment Coalition, as part of the review process under the Bank Holding Company Act and the Bank Merger Act.
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BMO Financial Group’s U.S. CEO, David Casper, told the panel that Bank of the West’s merger with BMO Harris Bank National Association will promote competition, especially in California, where he said more than half of the market is dominated by just three large banks.
“We believe the merger of BMO Harris Bank and Bank of West is an opportunity to create a stronger bank that will greatly benefit the customers and communities of both institutions,” Casper said.
BMO’s deal to buy the U.S. operations of BNP Paribas SA for US$16.3 billion is one of the biggest in Canadian banking history and will mark the bank’s most significant move in the U.S. since it bought Harris Bancorp in the 1980s and Marshall & Ilsley in 2010.
Casper said when combined, the banks will have less than three per cent of the deposit share in California and, with almost no overlap in their footprints, “no negative impact on competition.” He said BMO has committed to obtain all Bank of the West frontline branch employees and no branch closures.
The bank has said that it expects the deal to bring it 1.8 million new customers when it closes at the end of the year.
The executives also touted BMO Harris Bank’s announcement this week to raise its minimum hourly wage from $18 to $20 for all its frontline workers in the United States starting Aug. 7, which will extend to workers from Bank of the West. They also mentioned the bank’s announcement earlier this month to eliminate non-sufficient funds (NSF) and overdraft transfer fees, and cut overdraft fees to $15 for U.S. customers.
“We at Bank of the West are continually struck by how complementary our two businesses are, not just in terms of footprint but more importantly, in terms of values,” said Bank of the West president and CEO Nandita Bakshi.
But a number of groups who spoke expressed concern about the merger, if not direct opposition.
“The largest banks in the country were built one acquisition at a time through combinations just like this one,” said Jesse Van Tol, head of National Community Reinvestment Coalition, warning the merger may contribute to concentration in the banking sector.
Ken Thomas, who authored the Community Reinvestment Act Handbook and taught finance at the University of Pennsylvania’s Wharton School, suggested it was highly unlikely that BMO would not close any Bank of the West branches if it plans to keep the same business model.
“To be at the same average office size and business model, (Bank of the West) will have to close many offices,” he said, adding that community groups should “do the math and make sure this is part of their community benefit agreement.”
Other groups spoke in favour of the merger, including Illinois Hispanic Chamber of Commerce, which has partnered with BMO Harris Bank in Chicago for years.
“We’re excited of the prospect of BMO bringing the same level of support, expertise and positive impact to individuals like us in other areas around the country.”
• Email: dpaglinawan@postmedia.com | Twitter: denisepglnwn
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