TD shareholders kept waiting for news on U.S. anti-money laundering probe

Confidentiality requirements muzzle bank

SHAREHOLDERS HAVE SOME ANXIETY, AS DO WE, REGARDING OUR ISSUE IN THE U.S.

— BHARAT MASRANI, TD CEO

Toronto-dominion Bank chief executive Bharat Masrani says he hopes to be able to say more soon on the investigation into the bank’s anti-money laundering measures.

Masrani made the remarks as he faced shareholders Thursday at the bank’s annual general meeting, the first since its Us$13.4-billion takeover of First Horizon bank fell apart and the bank disclosed that it expects to face penalties from an investigation from U.S. regulators related to its anti-money-laundering program.

“Regretfully, our program was not where it needed to be,” said Masrani. “We know where our issues are, we are working to fix them.”

He said that he understands shareholders want to know more about the investigation, which includes the U.S. Department of Justice, but that given confidentiality requirements he can’t provide more detail or speculate on the timing of updates.

“I’m hoping that in the near term, I will be able to, and I’d be really thrilled that at that time, you know, I could provide more detail,” said Masrani.

“But in the meantime, I would ask you to be patient.”

TD called off the First Horizon deal in May last year, citing timing uncertainty, while in August it disclosed that it expects U.S. regulators to impose penalties.

Masrani was also pressed Thursday on the share price performance of the bank, which has sunk over 27 per cent from the high reached in February 2022.

The bank’s fundamental performance is strong, he said, but he acknowledged that the investigation has weighed on the stock.

“Without a doubt shareholders have some anxiety, as do we, regarding our issue in the U.S., and until there is better clarity, I’m sure there is pressure.”

Masrani emphasized that TD still has a significant presence and potential in the U.S., even without the acquisition, including more retail locations than in Canada, and that nearly 80 per cent of its retail deposits in the U.S. are in markets where it ranks as a top-three bank.

The bank also faced questions on its climate efforts, ranging from its lobbying affiliations to its direct efforts on emission reductions.

A shareholder resolution put forward by Investors for Paris Compliance calling on the bank to disclose more details on how it plans to achieve its net zero targets received 28.6 per cent support, up from 23.5 per cent for a similar resolution last year.

Kyra Bell-pasht, director of research and policy with Investors for Paris Compliance, said in a statement that the growing support shows shareholders remain concerned about how the bank will manage its growing climate transition risk.

“Investor pressure will only grow for accountability at the bank as the climate crisis accelerates,” she said.

A proposal for an advisory vote on environmental policies, proposed by Le Mouvement d’education et de defense des actionnaires, received 17.9 per cent support.

Climate issues saw the most support among shareholder resolutions, including almost 29 per cent support for a proposal to have TD provide more details on its transitions plans, and 18 per cent support for an advisory vote on environmental policies.