TD Bank is reportedly selling its 10.1% stake in Charles Schwab, according to a report from The Wall Street Journal (WSJ) on February 10. This marks the first significant action under the leadership of new CEO Raymond Chun, who is working to address the bank’s losses following a major money-laundering scandal.
Chun, who took over as CEO earlier this month, shared with WSJ that the decision to sell its Schwab investment followed an extensive review of TD Bank that began last year.
Analysts had predicted that divesting from Schwab would be one of Chun’s initial moves as he seeks to restore investor confidence. The bank’s reputation took a hit last year when it pleaded guilty to several charges related to deficiencies in its anti-money-laundering (AML) measures at its U.S. operations, leading to a $3.09 billion settlement.
Bharat Masrani, who had served as TD’s CEO for a decade, retired shortly after the scandal, and Chun, who was then the bank’s chief operating officer, was appointed as his successor.
TD plans to use the 8 billion Canadian dollars (approximately $5.6 billion) raised from selling its Schwab stake to repurchase its shares. The remaining proceeds will be reinvested into the bank’s business to support performance and fuel organic growth, according to Chun.
During the bank’s quarterly earnings announcement in December, TD stated that achieving earnings growth would be “challenging” in the current fiscal year due to ongoing AML remediation efforts and investments in business expansion.
Chun expressed confidence in the growth potential of TD’s Canadian personal and commercial banking, wealth management, insurance, and wholesale banking segments. However, he acknowledged that the restructuring of the U.S. balance sheet and AML remediation efforts would likely affect the U.S. retail segment. Despite these challenges, Chun reiterated the bank’s commitment to the U.S. market and its confidence in the strength of its operations there.
In January, TD appointed two executives to new roles focused on financial crime prevention. Jacqueline Sanjuas, previously TD’s U.S. Bank Secrecy Act officer, was named the bank’s global head of financial crime risk management. Additionally, Stephen Joyce, vice president of financial crime risk management, has been appointed interim head of financial crime risk management for TD’s Canadian and international businesses.
