TD Bank Selling Charles Schwab Stake to Combat AML Fallout

TD Bank is reportedly selling its 10.1% stake in investment firm Charles Schwab.

That’s according to a report Monday (Feb. 10) by The Wall Street Journal (WSJ), which notes that this is the first major move under new CEO Raymond Chun to stem losses after a massive money-laundering-related scandal.

Chun, who became chief executive this month, told the WSJ that the bank chose to exit its Schwab investment following a major review of TD launched last year.

The report said analysts had forecast that a sale of the investment would be among Chun’s first moves as he tries to bolster investor confidence. That confidence was shaken last year when the Canadian bank pleaded guilty to multiple charges for failings in its anti-money-laundering (AML) measures at its U.S. operation, and agreed to pay $3.09 billion.

Bharat Masrani, who had been TD’s CEO for 10 years, announced his retirement soon after. Chun, the bank’s chief operating officer, was appointed to take his place.

TD says it plans to use 8 billion Canadian dollars (roughly $5.6 billion) from the sale of the Schwab investment to repurchase its shares. The balance of the proceeds will be put back into TD’s businesses to help fuel performance and boost organic growth, Chun said.

When announcing quarterly earnings in December, TD said it would be “challenging” for the bank to generate earnings growth during this fiscal year, as it continues to deal with its AML remediation and invest in its business.

“I remain confident in the earnings growth potential of our Canadian personal and commercial banking, wealth management, insurance and wholesale banking segments,” Chun said at the time. “And while we expect that the U.S. balance sheet restructuring and AML remediation will impact the U.S. retail segment, we remain committed to the U.S. market and confident in the strength of our franchise.”

Last month, the bank appointed two executives to new financial crime prevention roles. Jacqueline Sanjuas, TD’s U.S. Bank Secrecy Act officer, was appointed to serve as the lender’s global head of financial crime risk management.

Meanwhile, Stephen Joyce, vice president of financial crime risk management, transformation delivery and enablement, has been named interim head of financial crime risk management for TD’s Canadian and international (non-U.S.) businesses.