Canada’s TD Bank sells Charles Schwab shares for $14.6 billion. Toronto-Dominion Bank (TD.TO) (opens a new tab) announced that it will sell its entire 10,1% stake in U.S. Financial Services firm Charles Schwab (SCHW.N) (opens a new tab) for approximately $14.6 billion as part of a review conducted following a landmark U.S. penalty.
Canada’s TD Bank sells Charles Schwab shares for $14.6 billion
TD owns 184.7 million Charles Schwab shares, of which 165.4 million will be sold at $79.25 each for approximately $13.1 billion. This represents a discount of almost 5% on Schwab’s Friday closing price.
Schwab will buy the remaining shares of TD from TD for $1.5 billion.
As part of a guilty verdict for money laundering, U.S. regulators imposed a $434 billion asset cap on TD, which limits its growth in the U.S.
Raymond Chun, TD’s new CEO, stated that the bank will use C$8 Billion ($5.58 Billion) for share buybacks and the remainder for organic growth and performance.
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Chun was appointed CEO this month. During the strategic review, he said that “everything was on the table,” and TD would look to exit some loan portfolios.
TD was the largest bank to ever plead guilty in U.S. History to violating a federal law against money laundering. They agreed to pay over $3 billion in fines.
John Aiken, Jefferies analyst, said: “We think this will simplify TD’s U.S. operation.”
When the TD strategic review is completed and released, we will know if this means a new strategy for U.S. Wealth Management.
Analysts estimate that TD will release capital worth C$10-12 Billion.
Like other Canadian banks, TD has a strong capital base, which enabled it to expand into the U.S.
The investigation was conducted shortly after the plan to purchase First Horizon, a regional lender based in Tennessee, was announced.
(1 Canadian dollar = $0.6976)
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