Toronto-Dominion Bank (TD) is set to raise approximately $14 billion through the sale of its entire stake in Charles Schwab Corp., as part of a strategic corporate overhaul following a historic U.S. money-laundering settlement.
In a statement released Monday, TD revealed plans to sell 184.7 million shares of Schwab’s common stock, representing 10.1% of the company’s economic ownership. As part of the deal, Schwab has agreed to repurchase $1.5 billion of its own shares from TD. This move comes after the bank reached a settlement in October with the U.S. Department of Justice and other regulators, related to its failure to detect money laundering activities at several American branches. TD agreed to pay nearly $3.1 billion in fines and other penalties as part of the settlement.
TD’s CEO, Raymond Chun, emphasised that the decision to exit the Schwab investment was part of a broader review of the bank’s capital allocation strategy. “In just under five years, this investment has generated a very strong return, and we believe this is the right time to reallocate the capital,” he said in an internal memo shared with employees.
The Canadian bank originally acquired its stake in Schwab in 2020 as part of a transaction when it sold its interest in TD Ameritrade to Schwab. TD had already sold 40.5 million shares of Schwab in August, reducing its stake from 12.3% to approximately $2.5 billion to help cover fines linked to the money-laundering investigation.
TD plans to use C$8 billion of the proceeds from this sale to repurchase its own stock and reinvest the remainder in its businesses.
This move reflects TD’s ongoing efforts to recover from its regulatory setbacks and streamline its operations while optimising its capital structure.
