TD to build U.S. business brick by brick, after First Horizon setback

TORONTO (Reuters) – Canada’s no.2 lender TD Bank Group (TD.TO) will push ahead with its U.S. expansion by focusing on organic growth, after its M&A-led strategy in the world’s biggest banking market suffered a setback this month, a top official told Reuters on Thursday.

TD has made U.S. growth a key priority as it deals with a saturated market at home and had pinned its hopes on $13.4 billion bid for regional lender First Horizon (FHN.N), but that was scrapped after hitting regulatory hurdles.

With about $18 billion in excess capital, it now plans to focus on opening branches and building its wealth business in the U.S., Chief Financial Officer Kelvin Tran said in the first comments since the First Horizon deal was pulled.

“In the U.S., we are still a relatively young bank. We have a lot of white spaces there,” Tran said.

“We continue to make referrals to our wealth business. That’s still a new business in the U.S. … So lots of opportunities still there in the U.S.,” he added.

The bank has not ruled out other acquisitions.

“When we look at deployment of capital, it’s about what we can invest to drive organic growth, we look at whether there are opportunities for M&A … and then also opportunities to return capital to shareholders,” Tran told Reuters.

TD announced plans to buy back 30 million shares along with its quarterly earnings that missed expectations.

The uncertainty of the First Horizon deal has weighed on TD shares, which are down more than 7% so far this year, compared with a 3.6% drop in TSX’s banks sub-index (.GSPTXBA).

Some shareholders are willing to be patient as TD seeks to grow its U.S. business.

Anthony Visano, a portfolio manager at Kingwest, a long-term TD investor, said the U.S. expansion strategy makes sense, but TD needs to shift towards wealth management.

“So, do they build or do they buy? I think they can do both in parallel. They can build locations and they can acquire the other pieces that are missing from the platform,” Visano said.

OPENING NEW BRANCHES

Masrani told investors on Thursday the bank plans to open 150 new stores by 2027 and double wealth adviser hiring. That includes opening 18 stores in the U.S. this year, on top of the 1,100 it operates in 16 U.S. states and its 12% stake in Charles Schwab.

It has already opened five new branches, including in south Florida, Atlanta and North Carolina – areas considered to be First Horizon’s turf – while also looking at the U.S. northeast.

“Think Boston, Philly, New York, where we think there are expanding communities, growing communities where we’ll lean into … But the Southeast is going to be a very important part of the overall equation,” Leo Salom, the head of TD’s U.S. Retail business said.

The bank earned about 40% of its second-quarter adjusted net income from its retail business in the United States, where TD is the eighth-biggest lender, as did its Canadian rival Bank of Montreal (BMO.TO), which acquired San Francisco-based Bank of the West.

Some analysts said TD should rethink its U.S. M&A strategy.

“TD should revisit the idea of whether or not they should be pursuing aggressive growth in United States banking through acquisitions,” Veritas analyst Nigel D’Souza said.

“My argument is that they should deploy excess capital to grow their wealth management and capital markets franchises.”

Image by: REUTERS/Chris Helgren

Shopping Cart

Media Kit

    Data Protection

    The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

    The Digital Banker Summit

    Moving on from FTX: is 2023 the year of CBDCs?

    Indonesia, Jakarta

    Thailand, Bangkok

    Philippines, Manila

    Contact Us

      Data Protection

      The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

      Request Nomination Pack

        Data Protection

        The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

        Registration Form

          Data Protection

          The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

          Registration Form

            Data Protection

            The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

            Registration Form

              Data Protection

              The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

              Registration Form

                Data Protection

                The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

                Registration Form

                  Data Protection

                  The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

                  The world’s preeminent Private Banks and Wealth Managers are demonstrating a committed drive in innovation, advisory, new products and services to meet the sophisticated needs of their clients.

                  COVID-19
                  Amid economic activity revival on the back of the Covid-19 vaccine program, organisations moving from business continuity plans to stable working environments, together with the slightest improvement in unemployment numbers, forced the world to adjust to new realities. Coming to terms with the “new normal”, global investors are now on the look-out for attractive and stable investment opportunities.

                  Needs of Private Wealth customers and families worldwide have drastically changed due to the pandemic and banks have had to accelerate efforts to deploy a multi-channel service strategy and safeguard clients’ businesses and wealth against negative impacts of economic uncertainly.

                  The Global Private Banking Innovation Awards will recognise the world’s best private banks, wealth managers and asset managers that are championing innovation across advisory, service, products, customer experience and more.

                  Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. 

                  Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.

                  Request Nomination Pack

                  Error: Contact form not found.