TD Bank shakes up leadership amid scandal around anti-money-laundering
TD Bank Group, which is mired in a money-laundering scandal in the U.S., said Raymond Chun will replace chief executive Bharat Masrani, who is retiring next year.
Chun, who stepped into the role of head of Canadian personal banking last December, will become chief operating officer on Nov. 1 before taking over the top job when Masrani officially steps down on April 10.
The leadership shakeup was announced Thursday, and also includes several other executive changes. It comes as the bank works to resolve investigations into deficiencies in its anti-money-laundering program in the U.S., which allegedly allowed hundreds of millions of dollars of illicit drug profits to flow through the bank.
Masrani, in announcing his retirement after 38 years at the bank and a decade in charge, said the shortcomings in the program were his to bear.
“This took place on my watch as CEO, and I take full responsibility,” he said on a conference call.
“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.”
The investigations have been a major overhang for the bank and helped scuttle its proposed $13.4-billion US acquisition of U.S. bank First Horizon in May last year.
Chun said on the call that remediation is the top priority as the bank looks to write its next chapter.
“TD is a critical part of our financial system and economy.… We also have a significant challenge in front of us.”
After a major U.S. investigation, TD admitted it failed to stop criminals from using its branches to launder money. The Canadian-owned bank is one of several under investigation by the U.S. government and financial regulators.
Timing of leadership change a surprise to some
Some analysts said both the timing and the naming of Chun, who has mostly Canadian experience, was a surprise.
“We believe some investors were open to the possibility of TD selecting an external CEO candidate, one with deep U.S. banking sector experience (and experience with U.S. regulators) given the bank’s (anti-money laundering) issues,” said National Bank analyst Gabriel Dechaine in a note.
The bank has taken more than $3 billion US in charges related to the investigations, and has said it expects a global resolution of those probes by the end of the year. But Dechaine said there are worries that regulators will impose financial restrictions on the bank that could stretch well beyond then.
“We note that, aside from regulatory fines, these issues could have long-term operational impacts on TD’s U.S. bank,” he said.
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