* Business has $9.5 billion in loan commitments
* Purchase is latest by Wells as European banks shed assets
* Wells eyes new client relationships in deal
By Rick Rothacker
Feb 21 - Wells Fargo & Co said it is buying an energy lending business from BNP Paribas in the U.S. bank’s latest acquisition from a European bank seeking to shrink its balance sheet.
The San Francisco-based bank is buying $9.5 billion of total loan commitments, including $3.9 billion in funded balances. BNP said the premium paid by Wells and other terms of the all-cash transaction were not being disclosed.
BNP said the sale of the Houston-based business was part of its plan to reduce its U.S. dollar funding requirements and would provide a slight benefit to its Tier 1 Common Equity ratio. The company said it remains committed to maintaining a strong North American energy and commodities business.
About 90 percent of the portfolio is U.S.-based, with the rest mostly in Canada, Wells said. Once the deal closes, the combined energy group will have about $30 billion in total commitments, said Kyle Hranicky, who leads the Wells Fargo group, which is also based in Houston.
Reuters reported in January that France’s largest listed bank was shopping a portfolio of loans to oil and gas companies and had received interest from Wells Fargo and Canadian buyers. European banks have been retreating from the United States as they look to offload assets and build capital amid the Euro zone debt crisis.
The deal, subject to regulatory and other approvals, is expected to close in the second quarter. The group’s 36 employees in Houston and Calgary will be offered jobs with Wells, BNP said.
The acquisition brings loans as well as bankers who have relationships with 175 oil and gas companies, Hranicky said. Wells is hopeful these bankers will join the company and has already reached agreements with some of them, he said.
Since the middle of last year, Wells Fargo, the fourth largest U.S. bank by assets, has bought commercial real estate loans from Irish banks and acquired Bank of Ireland’s Burdale Financial Holdings Ltd unit, an asset-based lender. CEO John Stumpf has said the bank is actively exploring possible acquisitions as European banks look to shed loans and businesses.
The $9.5 billion in loan commitments in the BNP Paribas deal equals about 1 percent of Wells Fargo’s total loans.
BNP was advised by Lazard; Skadden, Arps, Slate, Meagher & Flom LLP served as legal counsel.