BNP Paribas SA’s sale of its US operations to Bank of Montreal won’t just reshape North American finance. It could also shake up Europe’s banking landscape.
The $16.3bn deal - if approved - will provide BNP Paribas with a war chest to pursue an acquisition in Europe. The French lender has said it will use the proceeds for buybacks and bolt-on acquisitions, prompting speculation about who it might target.
BNP Paribas, itself the result of a merger, has a proven appetite for expansion, including deals. It expanded its loan book during the pandemic while US banks retreated from the continent, and took on Deutsche Bank AG’s business serving hedge funds. 
Banco Bilbao Vizcaya Argentaria SA’s exit from the US earlier this year may provide a playbook for what BNP Paribas might do with the cash, including buying cheap assets or diversifying within other business areas. BBVA also explored a tie-up with rival Banco de Sabadell SA, although those talks proved short-lived.
Here are some options BNP Paribas - whose shares have risen about a third so far this year - might pursue, based on conversations with investment bankers and experts who follow Europe’s lenders.
Insurance expansion: The French lender’s vast distribution network may mean it looks to beef up its insurance operations. Such a move would further diversify the bank from investment banking and provide a source of recurring income and help bolster its asset-management business. It could also, in theory, join the pursuit of Belgian insurer Ageas.
Adding to the attraction: Banks can hold less regulatory capital against insurance assets.
Custody business: Another move could be buying a custody business, perhaps in the US. 
BNP Paribas, which has a large custodian business in Europe, was reportedly interested in buying Brown Brothers Harriman’s investors-services business but decided against it because of a lack of funds, according to people familiar with the matter. That’s not an issue anymore, although the deal itself is no longer on the table. State Street bought the business for $3.5bn in September.
Mega deals: On the more ambitious end of the scale, BNP Paribas’ German operations mean it has long been linked to Commerzbank AG deal chatter. Although cross-border transactions are notoriously difficult to execute in finance, rising German backing for a banking union in the continent suggest it may be increasingly feasible.
A domestic combination with Societe Generale SA is equally ambitious. It would create an equities-trading powerhouse and an undisputed European champion.