Bank boss Ed Clark’s ‘repeatable successes’
Hold onto your hats, it’s time to shower some praise on a banker.
Ed Clark, 65, who announced his retirement as CEO of Toronto Dominion Bank on Wednesday, has come as close to the ideal of leader as we’ve seen in modern banking. The Clark formula has been customer service; high-risk aversion (he ordered that TD’s “toxic waste” assets be dumped ahead of the global credit crash); and a rare gumption to launch a major foray into a U.S. market where so many Canadian interlopers have failed.
His goal, as Clark put it in an interview Wednesday with the Wall Street Journal, has been to build into the TD culture “repeatable successes” — to be consistently well-run rather than sporadically so, against the crisis-prone U.S. banking tradition.
Clark’s introduction to financial services was a trial by fire in making the best of a hopeless situation at one of the many closely held Canadian trust companies that had hit the wall in the 1980s. Clark’s resilience in that test made him the surprise choice to head Canada Trust.
His sure-footedness there marked him as Charles Baillie’s successor at the larger Toronto Dominion Bank when TD bought the consistently well-run Canada Trust in 2000.
Clark took over from Baillie as TD’s CEO just two years after that transaction. Clark proceeded to implant the Canada Trust customer-first culture on a TD he renamed TD Canada Trust. You’d have to be a Canadian banker, long taught to regard trusts as the idiot cousins in the financial services trade, to appreciate the impact of that decision.
Clark then set about succeeding where so many Canadian commercial adventurers had met with disappointment in his bid to crack the U.S. market, and compensate for a maturing, slow-growth market at home.
A tall order, that. Bank of Montreal had for decades flirted with dormancy at its Harris Bank in Chicago. And last year, Royal Bank of Canada abandoned a decadelong effort to build a durable presence in the U.S. Southeast, selling its assets to an incumbent U.S. bank.
Clark’s own testing of the U.S. waters initially looked to be similarly fated, starting as it did with his 2004 purchase of the small, Maine-based BankNorth. But any thoughts of Clark misunderstanding the imperative of heft in the U.S. market were erased with his $8.6-billion purchase of New Jersey-based Commerce Bancorp in 2008 — one of the biggest bets in Canadian banking history. In 2011, Clark made a similarly big-ticket purchase of Chrysler Financial for $6.3 billion — an opportunistic buy from a distressed seller. Yet, last month Clark passed on the chance to fill out TD’s New England presence by relieving crippled Royal Bank of Scotland PLC of its Citizens Bank unit in the U.S. Clark did kick the tires of RBS’s American business. But the likely $12.2-billion asking price was beyond the pale for a CEO who is not an ego-driven dealmaker. Besides, TD is already among America’s 10 largest banks. Commerce Bank bore a striking resemblance to Clark’s homey Canada Trust. Wholly devoted to retail banking, Commerce had quickly become a force throughout the Tri-State area, siphoning business in Manhattan from under the noses of locals Citigroup Inc., JP Morgan Chase & Co. and the like with its free refreshments and easy chairs, competitive rates and above-average friendly staff. The TD that Clark took charge of in 2002 was in rough shape, posting a rare loss that year, of $76 million. Last year, TD reported a profit of $7.1 billion. TD’s assets have almost tripled during Clark’s 12-year tenure, to $811.1 billion. Clark’s get-big-or-go home regard for the U.S. is such that TD now has more American branches — some 1,300 — than it does at home (1,200). TD’s U.S. profits don’t yet come up to Canadian levels. But Clark has been playing the long game. They decided that “we can afford to carry initially a lower return on investment in the U.S. to establish a base,” Clark told the Journal this week. “We’re not here to make ourselves look good in the short run. We’re here to build a great franchise in the long run.”
Indeed, Clark’s chosen successor, Bharat Masrani, 56, won his spurs building TD’s U.S. operations. Masrani, a 26-year TD veteran, is of South Asian descent and the first member of a visible minority to ascend to the CEO position at a Big Six bank.
Clark will likely never shed his “Red Ed” sobriquet, as one of the Trudeau-era bureaucrats charged with imposing the National Energy Program on an enraged oilpatch. But Clark’s outstanding performance at TD proves that a corporate board could do worse than hiring a well-rounded mandarin to craft a more winning business model, and in seeking to expand its growth horizons. That, certainly, will loom large in Clark’s legacy, long after he hands over the reins at TD in November 2014. dolive@thestar.ca