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Wells Fargo buys BNP Paribas energy group

by Andrew Bulkeley and Claire Poole | Published February 22, 2012 at 12:27 PM

Wells Fargo & Co. late Tuesday, Feb. 21, agreed to buy the North American energy lending business of BNP Paribas SA as the French seller reshuffles its activities abroad.

Wells Fargo Bank NA, the unit buying the business, will pick up a portfolio with $9.5 billion in loan commitments and $3.9 billion in outstanding loans. The business primarily covers U.S. energy activities -- about 90% of the loans -- with the remainder in Canada, Wells Fargo said.

Paris-based BNP Paribas is attempting to lower its risk profile and raise cash as both European Banking Authority and forthcoming Basel III regulations force European lenders to increase Tier 1 capital. The lender aims to trim its dollar-denominated specialty lending activities by $20 billion by year's end. It has also asked bankers in its corporate and investment unit, home to the energy business, to focus on the most profitable customers after funding was slashed.

"Though it was a difficult decision, we are pleased to have secured a premium on the sale of the business," BNP North America CEO Everett Schenk said in a statement.

Wells Fargo, headquartered in San Francisco, said it would take over the 36 employees from BNP's Houston and Calgary, Alberta, offices and that the purchase would boost its energy lending portfolio to $30 billion. The deal is expected to close in the second quarter.

The U.S. bank has been a keen buyer of assets from restructuring European lenders. It has aggressively sought out commercial property loan portfolios on the block and, in December, bought Bank of Ireland Group's London and Stamford, Conn.-headquartered asset-based lender Burdale Financial Ltd. for €690 million ($913.2 million).

"The BNP Paribas Energy team is a good cultural fit with the Wells Fargo Energy Group. Both businesses focus on the creation of long-term client relationships and have similar philosophies on lending to the energy space," said Kyle Hranicky, head of Wells Fargo's energy activities, in a statement.

Sullivan & Cromwell LLP attorneys Stephen Kotran and Dennis Sullivan acted as counsel to Wells Fargo.

BNP Paribas took financial advice from James Spencer and Marc Winniford at Lazard and legal counsel from Skadden, Arps, Slate, Meagher & Flom LLP's David Ingles, David Armstrong, John Osborn, Steven Matays and Neil Leff.

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Tags: BNP Paribas SA | Everett Schenk | Kyle Hranicky | Wells Fargo & Co. | Wells Fargo Bank NA

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