Toronto-Dominion Bank is setting aside $2.6 billion to cover fines it expects to pay for failures in its money-laundering controls, and the company sold part of its stake in Charles Schwab Corp. to fund it.
Including a $450 million provision announced in April, the lender now estimates it will pay $3 billion related to its U.S. compliance lapses.
"The bank expects that a global resolution will be finalized by calendar year-end," Toronto-Dominion said in a statement after markets closed Wednesday.
Canada's second-biggest bank said its ownership interest in Schwab will fall to 10.1% from 12.3% after selling 40.5 million shares of the discount broker.
Toronto-Dominion acquired that stake in 2020 as part of a transaction to sell its interest in online brokerage TD Ameritrade Holding Corp. to Schwab.
The shares were being marketed at $61.35 to $62.65 each, according to terms of the deal seen by Bloomberg News. The range represents a potential discount of as much as 5% to Wednesday's closing price of $64.57 apiece, Bloomberg calculations show.
Analysts and investors had speculated that Toronto-Dominion could sell some or all of its interest in Schwab to help cover the financial penalties it's facing in the criminal and regulatory money-laundering matters.
"We recognize the seriousness of our US AML program deficiencies," Chief Executive Officer Bharat Masrani said in the statement, adding, "The work required to meet our obligations and responsibilities is of paramount importance to me, our senior leaders, and our boards."
Bribe Allegations
Last year, Toronto-Dominion's landmark $13.4 billion deal to acquire First Horizon Corp. collapsed, with the Canadian lender saying it was unclear regulators would ever approve the deal. Soon after, TD acknowledged that it was receiving inquiries from the U.S. Department of Justice, in addition to financial regulators and the Treasury Department.
