TD Bank Reportedly Will Need Years to Address Regulators’ Concerns

Although TD Bank has capital on hand to make acquisitions, it reportedly won’t be able to make them in the United States.

Barclays analyst said the regulatory challenges the bank faced when trying to buy First Horizon Bank will keep it from making acquisitions of other retail banks for three to five years, Bloomberg reported Monday (May 15).

“If what we’re hearing, the rumors coming out that the regulator didn’t allow them on First Horizon because of issues with regulator concerns, it’s not going to dissipate,” Barclays Head of Research (Canada) and Senior Analyst John Aiken said Monday in an interview with BNN Bloomberg Television. “It will take TD several years to not only change their systems but also show the regulator that they have changed. So, from our standpoint, that’s a multiple-year process.”

Because the First Horizon deal collapsed, TD Bank has billions of dollars of surplus capital, making it “probably the safest bank right now” but also leaving it with no way to spend it, Aiken said.

TD Bank did not immediately reply to PYMNTS’ request for comment.

This news comes a week after it was reported that regulators’ concerns about TD Bank’s anti-money laundering (AML) practices ended its plans to acquire First Horizon.

The concerns of the Office of the Comptroller of the Currency (OCC) and the Federal Reserve centered on TD Bank’s handling of unusual transactions and its timeliness in reporting suspicious activity to them, The Wall Street Journal (WSJ) reported May 8.

A TD Bank spokesperson told the WSJ: “TD works diligently to prevent criminals from using the bank for illegal activity, to strengthen its risk management programs on an ongoing basis, and to protect the interests of our customers, the bank and the financial system.”

TD Bank and First Horizon called off their planned $13.4 billion merger on May 4, saying in a joint statement that the decision came after TD told First Horizon that TD didn’t have a timetable for regulatory approvals.

The planned merger was announced in February 2022 and would have created America’s sixth-largest bank.