BMO Financial Group says it has closed its US$16.3 billion acquisition of Bank of the West more than 13 months after initially announcing the deal.

The bank says the closing of the deal adds nearly 1.8 million customers and 500 branches to BMO that, along with its current presence in the U.S., gives it a footprint in 32 states.

North American personal and business banking group head Erminia (Ernie) Johannson says the deal gives the bank the needed scale to compete and grow.

She says that among other advantages, a bigger operation will help the bank better leverage its technology, while also offering more possibilities to test out products and offerings in different markets.

The deal comes amid heightened regulatory scrutiny in the U.S. on acquisitions, and the banking sector more generally, but Johannson says its important to have scale to respond to both competition and the changing regulatory environment.

The closing also arrives as worries grow about the near-term economic picture amid rising interest rates and high inflation, but Johannson says the bank is still confident the deal makes sense.

"Yes, the market's shifted, but this is a long-term strategy, as well as a near-term strategy play against all the economic environment changes that happen."

Heightened economic worries has pushed Canadian regulators to increase bank capital requirements, which has prompted BMO to raise money both through share issues and a dividend reinvestment program. 

While there are a lot of priorities to balance and manage, Johannson says the bank has had a year to prepare for the integration of Bank of the West.

"Do not get me wrong. These are complex pieces of work. But we've been planning for it, we're ready for it."

This report by The Canadian Press was first published Feb. 1, 2023.