PARIS (Reuters) - BNP Paribas said on Wednesday it is considering “strategic alternatives” for its U.S. unit First Hawaiian Bank which could help France’s biggest listed bank reach regulatory capital requirements by mid-2017.
BNP said its fourth-quarter results would be impacted by 0.9 billion euros due to the impairment of goodwill for its Italian unit BNL, but confirmed its 45 percent dividend payout target.
BNP Paribas said following Supervisory Review and Evaluation Process (SREP) the European Central Bank recommendation is to follow “a linear path towards reaching 11.5 percent in fully loaded CET 1 ratio in 2019.”
The bank intends to reach this level well in advance, thanks to its strong organic capital generation and active capital management, it said in a statement.
However, BNP Paribas added it is contemplating “strategic alternatives” regarding its subsidiary, First Hawaiian Bank, which if successfully completed could strengthen BNP’s CET 1 ratio by up to approximately 40 basis points.
“This would lead BNP Paribas to reach the fully loaded CET 1 anticipated level by mid-2017,” the bank said.
BNP Paribas owns BancWest Corporation in the United States, which is the holding company for two retail banks: Bank of the West and First Hawaiian Bank.
BancWest, with $71.7 billion of assets is the third-largest commercial bank based in California and operates a network of more than 600 retail, wealth and corporate banking offices in 22 states.
First Hawaiian Bank, with $18.9 billion of assets, has 62 branches throughout Hawaii, Guam and Saipan.
A source familiar with the matter said BNP is considering a sale or an initial public offering for the unit which has a strong market share, but lacks cross-selling opportunities.
The First Hawaiian Bank’s net income stood at $172.5 million over the first nine months of the year, up 4.6 percent over the comparable period of 2014. Its total assets were up 4 percent to $18.9 billion since the start of the year.
BNP had a 10.7 percent fully-loaded common equity tier 1 ratio as of end-September. Societe Generale (SOGN.PA), France’s second-biggest listed bank, is targeting a 11 percent CET 1 ratio by end-2016.
Editing by David Evans