TD Bank trying to collect $ 14 billion in Schwab Stake Exit

On By Littum

(Bloomberg) -Toronto-Dominion Bank (TD.TO, TD) expects to raise around $ 14 billion through the sale of all its efforts in Charles Schwab Corp. (Schw) As part of a business overhaul in the wake of its historic American money -laightening Settlement.

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Toronto-Dominion will sell 184.7 million shares of Schwab’s joint share representing 10.1% financial ownership, said in a statement Monday. Schwab has agreed to buy $ 1.5 billion of its shares from TD.

Canada’s second largest bank reached a solution in October with the US Ministry of Justice and bank regulators over its failure to catch money laundering on several US branches. Toronto Dominion agreed to pay nearly $ 3.1 billion in fines and other sanctions, and last month said it accelerated its CEO-Transition Process and Tapped Raymond Chun to step into the role two months earlier than originally planned.

“As part of our strategic review, we have evaluated capital allocation and have made the decision to leave our Schwab investments,” Chun said in the statement.

Toronto-Dominion expects to generate about $ 14 billion in the proceeds through stock sales, Chun Bank employees told an internal memo on Monday morning seen by Bloomberg. “In almost five years, this investment has generated a very strong return, and we believe this is the right time to redistribute the capital,” he said in the note.

The Canadian lender acquired its ownership interest in 2020 as part of a transaction to sell his interest in online broker TD Ameritrade Holding Corp. to Schwab. It sold 40.5 million Schwab shares in August and pruned its previous 12.3% share to raise approx. $ 2.5 billion to help cover the cost of fines in the money-sensible probes.

Toronto Dominion said it is planning to spend C $ 8 billion of the proceeds to repurchase its share and will invest the balance of the proceedings in the company’s businesses.

A representative of Schwab refused to comment and referred for regulatory reasons.

Chun has previously said that Toronto Dominion’s ownership of Schwab shares is separate from its agreement with the company to make Sweep-DePOSit accounts available to Schwab clients. With sweeping programs, non-invested cash in brokerage accounts is automatically transferred to higher interest rate accounts.