TD Bank sells Charles Schwab stake in $14.6bn deal

February 11, 2025 (MLN): Canada's Toronto-Dominion Bank said it would offload its entire 10.1% stake in U.S. financial services firm Charles Schwab for about $14.6 billion, as part of a strategic review undertaken following a landmark U.S. fine.

TD holds 184.7 million shares in Charles Schwab, out of which it will sell 165.4mn shares at $79.25 apiece for about $13.1bn, at a discount of nearly 5% from Schwab's closing price on Friday.

Schwab will purchase the remaining shares from TD for $1.5bn.

U.S. regulators hit TD with an asset cap of $434bn that limits growth in the U.S., a core market it had focused on for over a decade, and several other restrictions as part of a guilty plea for money laundering failures.

TD's new CEO, Raymond Chun, said the bank would use C$8bn ($5.58bn) of the proceeds for share buybacks and invest the rest in performance and organic growth, as Reuters reported.

Chun took charge this month.

He has said "everything is on the table" in the strategic review and TD will look at some loan portfolios.

In October, TD became the largest bank in U.S. history to plead guilty to violating a federal anti-money laundering law and agreed to pay more than $3bn in penalties.

"We believe this will simplify TD's U.S. operations," said Jefferies analyst John Aiken.

"Whether this sets TD up for a different strategy in U.S. wealth management will be seen when its strategic review is complete and revealed."

Analysts have estimated TD will free up capital of C$10-12bn.

Like other Canadian banks, TD has generally held strong capital levels, which allowed it to expand in the U.S.

It had planned to buy Tennessee-based regional lender First Horizon until shortly before the probe was revealed.

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