One Shareholder says Toronto-Dominion Bank’s recently announced CEO change will give the bank a fresh slate.
TD announced on Thursday that its CEO, Bharat Masrani, will be retiring in April 2025 and succeeded by Raymond Chun. The announcement follows an ongoing investigation into the bank by the Department of Justice and financial regulators since learning of TD’s ties to money laundering in its U.S. branches.
“I think the issue for Bharat is that something had to be done on the management team, because somebody had to take responsibility for this issue on the money laundering side, so I think the way they’ve done it is the right thing,” Harris Douglass Asset Management Portfolio Manager and TD shareholder Paul Harris told BNN Bloomberg Thursday.
Going forward, Harris says that this gives the bank an opportunity to show investors and clients how it can handle such an investigation, while allowing the new CEO to have a “fresh slate.”
“[Chun] can actually start with a fresh slate in April, (which) gives him the opportunity to set in place a strategy for the bank going forward, and I think that’s really important for someone who is taking over as CEO,” Harris said. “I think they’ve done this in the right way.”
In August, Bloomberg News reported the bank has faced allegations that it failed to catch money laundering and financial crimes in New York, New Jersey and Florida. TD said it anticipates having to pay a total of more than US$3 billion in penalties related to U.S. compliance lapses.
In a Thursday statement on the matter, Masrani said that the bank has a “strong branch of senior leaders,” that will execute a smooth transition.
“The anti-money laundering challenges we face took place on my watch as CEO and I take full responsibility,” he said in the statement. “In the coming months, I will continue to advance and direct the critical remediation program required to meet our obligations and responsibilities and strengthen our risk and control foundation.”
What challenges lay ahead for Chun?
Anti-money laundering investigation aside, Harris said he expects Chun to face some challenges in strengthening TD’s presence in the U.S.
“It’s far more complicated running a U.S. bank, it’s just not the same as a Canadian bank… You’re competing with many people there where you don’t have that kind of competition in Canada in those ways because there are a lot more local banks that you deal with etc.,” he said.
While the Canadian franchise typically does well, and has recently reached a one-year high, Harris says that the U.S. branches face a different outlook.
“[Masrani]’s legacy is tough because the latter part has not been very good,” he said about the money laundering investigation. “But for eight of those years, it was very good, so he did a great job.”
“…So I think they can get back to those levels, because they do have a very good strong franchise in this country, and they have a great opportunity to get it right, to take that U.S. franchise and develop it and make it better.”
With files from Bloomberg News