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Globe and Mail
23-05-2025
- Business
- Globe and Mail
Greener pastures
From the thunderous standing ovation that broke out at Toronto-Dominion Bank's internal leadership conference last September, you would be excused for thinking Lady Gaga had walked on stage. Instead, then TD chief executive officer Bharat Masrani – donning a green shirt that matched the giant TD logo on the wall behind him – had just announced to the crowd of more than 2,500 senior managers that he would step down and that TD had tapped long-time executive Raymond Chun as his successor. Much of the cheering was to celebrate Mr. Chun's ascension to the CEO chair, but the jubilance also came from a feeling of relief, according to four sources who attended the conference. Change was finally on the horizon, even if the person chosen to lead it – a 30-year TD veteran – had been omitted from most succession bingo cards. The Globe and Mail is not identifying the sources because they are not authorized to speak publicly about the matter. Mr. Masrani's impending departure was no secret and hadn't been for months. It had become clear TD needed a new leadership team to usher in the sweeping changes required to fix its anti-money-laundering failures, which in October resulted in U.S. regulators announcing more than US$3-billion in fines by the Department of Justice and a host of non-monetary penalties that will carve deep trenches in the bank for years to come. TD's succession list included other more high-profile executives, and Mr. Chun was relatively unknown to investors. While his career at TD spans more than three decades, he only joined the bank's most senior ranks a few years ago, when he was appointed to lead the bank's wealth management and insurance unit. As CEO, Mr. Chun now faces a mountainous task. He must turn around Canada's second-largest bank after the most significant crisis in its history. The money-laundering fracas means TD's growth is stunted in the United States, regulators are watching its every move, the board and senior executive team have been overhauled, and employees are feeling weighed down after more than a year of uncertainty. While the new CEO is known internally for tackling major initiatives, Mr. Chun has not previously taken on an assignment near the scope of TD's self-inflicted injuries – which has left some shareholders skeptical he's the right man for the job. Mr. Chun's big message to observers outside the bank: He's moving fast to make major changes. But he will have to draw from his deep business knowledge and ability to rally the people around him, according to one of his former managers at TD. 'The scale is new for him, and he will have to rely on the talent around him as he has in the past,' former TD executive vice-president Kerry Peacock said in an interview. 'He's had the capacity, even in huge roles, to go very deep, and he'll still be really deep here, but it's just too big.' TD's Canadian retail bank is one of the most boisterous and upbeat businesses on Bay Street. At employee town halls, executives strut on stage in glittery green accessories. Staff – also dressed in green – file into grand auditoriums with noisemakers. Senior leaders lay out the bank's strategic priorities and rally employees to take up the call to action. It is in this environment that Mr. Chun grew his career. He joined TD in 1992 and spent more than a decade zigzagging across various roles in retail banking and operations. He climbed into the executive ranks in 2005 under the leadership of then CEO Ed Clark, who was known for building TD's culture and instilling deep pride in the bank's work force. Within a few years, Mr. Chun took on a role leading the branch network in British Columbia at a time when the division needed to improve customer satisfaction scores in the region. 'When he would walk into a branch, if there were ATM slips on the floor by the machines, he'd be picking them up,' Ms. Peacock said. 'That sends such a strong message about pride and premises, what you do as a leader and how everybody needs to follow.' TD declined an interview request from The Globe to speak with Mr. Chun. Mr. Chun then spent five years overseeing the development and rollout of products and services offered in the retail bank as TD was building its online and mobile banking platforms and reassessing its branch operations. This is when TD's then head of insurance, Kenn Lalonde, noticed Mr. Chun's ability to learn quickly and implement strategic growth plans. 'I made a full-court press to management that it would be extremely beneficial for him to come and learn a completely different business from what had been his focus, which was retail banking and wealth management,' Mr. Lalonde said in an interview. 'If we think that this individual has this kind of potential and runway, we really need to test them in a completely foreign category, which was insurance.' Shortly after Mr. Chun became TD Insurance's chief claims officer, wildfires tore across Fort McMurray, Alta., decimating hundreds of thousands of hectares of land and more than 2,400 homes and businesses. Mr. Chun and his team determined that they could purchase satellite data to proactively identify homes and commercial properties that were affected by the fires. TD Insurance used the information to reach out to clients before they submitted claims to address concerns and issues more quickly. In 2019, Mr. Chun was promoted to president and CEO of TD Insurance. The division operates as a stand-alone business with its own board of directors. The unit works with Canada's banking regulator, the Office of the Superintendent of Financial Institutions, as well as the provincial regulators. The role gave Mr. Chun the experience of running a financial institution with its own governance structure, and direct exposure to managing relationships with Canadian financial regulators. In 2022, after a quick stint as president of the bank's direct investing business, Mr. Chun took his first seat at the table with TD's most senior executive team as the head of global wealth management and insurance. Inside TD, Mr. Chun's rise through the bank's most senior ranks in recent years is referred to as 'meteoric.' Even after his promotion to the executive ranks, Mr. Chun was not considered a leading candidate to become the next CEO. He was viewed as too new, and – more crucially – there were multiple seasoned executives on the list ahead of him. But a series of executive departures would help lay the groundwork for his torrid ascent. In late 2021, Greg Braca, then the head of TD's U.S. retail bank, was shuffled out of the role and the bank announced the retirement of Teri Currie, the head of Canadian personal banking. The following year, TD's general counsel, Norie Campbell – who had also overseen the bank's anti-money-laundering division for part of her tenure – left the bank. The shakeup made space for newcomers to the team, and Mr. Chun was installed as the head of the wealth management and insurance business. A year later, Michael Rhodes – who was considered a CEO candidate – left to lead a U.S. financial institution. In December, 2023, Mr. Chun was tapped as the head of Canadian personal banking. The role is considered a training ground for potential CEO successors. As TD's board was searching for the bank's next CEO last year, its list of internal candidates dwindled as senior leaders either left the bank or were embroiled in the anti-money-laundering failures in the U.S. In early 2024, the two most obvious contenders were U.S. retail head Leo Salom and TD Securities head Riaz Ahmed – both of whom were already well-known outside the bank. As the head of TD's behemoth U.S. retail business, Mr. Salom had spent time speaking with shareholders about the bank's largest growth engine. Mr. Ahmed had previously held the role of chief financial officer, liaising directly with investors about quarterly earnings and other aspects of the bank's performance. But Mr. Ahmed was expected to retire, and Mr. Salom was embroiled in remediation efforts in the U.S., overseeing dealings with U.S. authorities and the plan to fix the bank's failings. As pieces fell off the chessboard, the path was cleared for a newer player. Just nine months after Mr. Chun was installed as head of Canadian personal banking, he was catapulted into the CEO seat. Some investors had initially expected TD to hire an external candidate as CEO – a move that is virtually unheard of in Canadian banking. But they thought TD needed an outsider with previous CEO experience who could provide fresh perspective, and who was untarnished by the anti-money-laundering failings. 'He wasn't the first person who came to mind in terms of the most likely potential CEO candidate,' Bank of America analyst Ebrahim Poonawala said in an interview. 'It came as a bit of a surprise, and we approached it with some degree of caution around whether or not this will lead to the changes that TD needs, and how long it's going to take for him to ramp up and really put his stamp on what needs to be done.' Weeks after Mr. Chun was named CEO on Sept. 19, TD became the first bank in the U.S. to plead guilty to conspiracy to commit money laundering. Top U.S. banking regulators and the Department of Justice imposed more than US$3-billion in fines and punishing non-monetary penalties. The most damaging is an asset cap, which limits the bank's ability to expand its U.S. retail balance sheet, which is a key factor in how lenders make money. Mr. Chun has had to pivot quickly to sell U.S. assets to ensure the bank can stay within its new constrained growth limits. Among his early moves, he has carved up TD's balance sheet to meet the regulatory requirements while making room to bolster growth. In February, TD struck a deal to sell US$9-billion in U.S. residential mortgage loans as part of its plan to divest from portfolios it considers non-essential to its business. The bank also sold its stake in U.S. investment dealer Charles Schwab Corp. for about US$14-billion. TD has earmarked the proceeds for share buybacks, which will return capital to shareholders, and to invest in other businesses. With TD's growth capped in its U.S. retail unit, its Canadian business becomes core to its expansion plan. Mr. Chun lacks significant U.S. experience, so he will have to pull from his Canadian banking resume to generate bigger returns from the highly saturated domestic market. To enhance its customer base, TD has added branch specialists with expertise in home buying and retirement, and has made changes aimed at simplifying its mortgage application process. But convincing clients to switch banks in Canada's banking market is a difficult task. In December, TD said it wouldn't provide investors with its financial targets for 2025, as the lender faced challenges growing profit while it remediates its anti-money-laundering gaps. On Thursday, the bank said it launched a cost-cutting plan, which includes slashing its work force by 2 per cent, along with exiting certain businesses and real estate premises. While shareholders initially reacted with skepticism to Mr. Chun's appointment, sentiment has pivoted in recent months as he introduced himself and his plans by taking centre stage on TD's earnings calls and meeting with key stakeholders. 'Our confidence level in him being the right person at the right time for TD has increased dramatically,' Mr. Poonawala said. 'Despite being someone who's been with TD all his life, he is willing to take on the role of the internal activist – the change agent. For someone who is taking that approach, the fact that he has been with TD for all these years then turns into an advantage where you have someone who knows this bank extremely well.' In part, investors attribute the renewed confidence to Mr. Chun's approach to communicating TD's plans. He shares updates often and in greater detail than Mr. Masrani did – a departure from TD's previous approach to stakeholder conversations. 'The messaging to the Street – be it earnings calls or otherwise around management strategy, management financial targets, and how they plan to get there – has been lacking in some aspects. There was a frustration that I've heard for many, many years now from investors who wanted more from the management team,' Mr. Poonawala said. 'My sense today is I think you're going to have a very different CEO and management in charge that is willing to be front-footed in outlining their strategy, maybe providing a bit more colour than what we are used to.' Experience in the banking market south of the border was also considered a key credential to become TD's CEO, but Mr. Chun has not spent time steeped in the U.S. banking system. He will need to rely on the expertise of Mr. Salom and the team in the U.S. to manage remediation efforts and figure out a way to grow the business despite the asset cap. In March, TD said it awarded Mr. Salom a US$2-million retention bonus in recognition of his role overseeing the efforts to fix the bank's anti-money-laundering failings. TD has 'a capable leader who's been in place for a fair amount of time right now in terms of Leo Salom running the U.S. operations, so [Mr. Chun] can lean heavily on that as he gets more and more up to speed,' Jefferies analyst John Aiken said in an interview. 'I don't think it's an issue that is insurmountable, but then those of us on the Street are left to wonder – until we hear about his strategic review – what does his relative lack of experience in the U.S. mean for TD going forward? There are a lot of questions and discussions around that.' On Bay Street, people joke that TD staff bleed green. Employee pride ran deep at the bank when it was growing fast and catching up to Canada's largest lender, Royal Bank of Canada. In the winding PATH network of pedestrian tunnels beneath Toronto's Financial District, TD employees stand out from all the other banks – they always wear their TD pins. One of Mr. Chun's biggest challenges lies within the walls of the bank. He may want to act fast on his business strategy, but he will need to rebuild decimated employee morale and inspire burned-out staff to move at his pace. If Mr. Chun can get the bank's culture pointed in the right direction again, over time, TD could 'be back to the very successful and dominant bank that it had been,' according to Mr. Aiken 'Ray has to get TD's mojo back,' Mr. Aiken said in an interview. 'Operationally, it's got higher expenses and it has to focus on the AML remediation, but on a day-to-day basis, those working – those that are in the trenches – it doesn't necessarily impact them all that much outside of morale and management being distracted.' At an internal leadership meeting in February, Mr. Chun told TD executives that managers need to elevate their focus on respecting the time and effort of their colleagues, according to one of the four sources. In recent years, the complexity and decision-making structures at the bank have created barriers to employees getting work done and moving projects forward, but Mr. Chun has made it clear that he wants to remove those hurdles, the source said. Employees are eager for the bank to return to its glory days when talent development was prioritized, leaders could make decisive calls and teams could move quickly on projects. Staff who have worked with Mr. Chun say that his approach to people management and culture will renew confidence among TD's work force. 'He's not threatened by talent,' Ms. Peacock said. 'When he was a senior vice-president and running the product group, when he came in to pitch whatever was going on, he would bring the team that had done the work. He would let them present, and he was okay when they disagreed with him.' But employees and shareholders will have to wait until Mr. Chun unveils TD's new strategy in September for more clarity on the bank's future. 'It's a wait and see, because we still don't even know what his vision for the bank is,' Mr. Aiken said. 'Hopefully we'll get that in reasonably short order, and then we can reassess, both on his vision as well as his execution.'
National Post
23-05-2025
- Business
- National Post
TD Bank cutting 2% of workforce as part of restructuring effort
TD Bank Group said Thursday that it's cutting about two per cent of its workforce as the bank works to reduce costs and refocus spending under new leadership. Article content The job cuts amount to a little over 2,000 employees based on the roughly 101,800 employees it had last year. Article content TD made the announcement as it reported a second-quarter profit of $11.1 billion, though earnings included an $8.6 billion after-tax boost from the sale of its shares in the Charles Schwab Corp. Article content Article content The share sale, and the job cuts, come as TD continues to work to move past its massive anti-money laundering oversight scandal that saw it pay over US$3 billion in fines last year, led U.S. regulators to put limits on its assets there, and resulted in former CEO Bharat Masrani stepping down. Article content Article content Current chief executive Raymond Chun, who took on the role at the start of the second quarter, said the bank is working to turn the page. Article content 'We are structurally reducing costs across the bank by taking a disciplined look at our operations and processes,' said Chun on an earnings call Thursday. Article content 'I want to thank our colleagues across the bank for their tremendous dedication and efforts. Together, we are writing the next chapter of this great institution's story.' The job cuts come as part of a wider restructuring that will see the bank also cut back on some real estate, wind down some business and write off some assets as part of its strategic review, said chief financial officer Kelvin Tran. Article content Article content He said the bank will look to achieve the job cuts whenever possible through attrition and will also shift employees to areas where it's working to expand its capabilities. Article content Article content TD took a $163 million pre-tax charge in the quarter from the restructuring, mostly from real estate, while it expects around $650 million in pre-tax charges over the next several quarters from severance and other costs. Article content It said the restructuring should lead to around $600 million in annual pre-tax savings when complete, money the bank plans to plow back into the business such as artificial intelligence and technology, said Tran.
Vancouver Sun
23-05-2025
- Business
- Vancouver Sun
TD Bank cutting 2% of workforce as part of restructuring effort
TD Bank Group said Thursday that it's cutting about two per cent of its workforce as the bank works to reduce costs and refocus spending under new leadership. The job cuts amount to a little over 2,000 employees based on the roughly 101,800 employees it had last year. TD made the announcement as it reported a second-quarter profit of $11.1 billion, though earnings included an $8.6 billion after-tax boost from the sale of its shares in the Charles Schwab Corp. The share sale, and the job cuts, come as TD continues to work to move past its massive anti-money laundering oversight scandal that saw it pay over US$3 billion in fines last year, led U.S. regulators to put limits on its assets there, and resulted in former CEO Bharat Masrani stepping down. Start your day with a roundup of B.C.-focused news and opinion. By signing up you consent to receive the above newsletter from Postmedia Network Inc. A welcome email is on its way. If you don't see it, please check your junk folder. The next issue of Sunrise will soon be in your inbox. Please try again Interested in more newsletters? Browse here. Current chief executive Raymond Chun, who took on the role at the start of the second quarter, said the bank is working to turn the page. 'We are structurally reducing costs across the bank by taking a disciplined look at our operations and processes,' said Chun on an earnings call Thursday. 'I want to thank our colleagues across the bank for their tremendous dedication and efforts. Together, we are writing the next chapter of this great institution's story.' The job cuts come as part of a wider restructuring that will see the bank also cut back on some real estate, wind down some business and write off some assets as part of its strategic review, said chief financial officer Kelvin Tran. He said the bank will look to achieve the job cuts whenever possible through attrition and will also shift employees to areas where it's working to expand its capabilities. TD took a $163 million pre-tax charge in the quarter from the restructuring, mostly from real estate, while it expects around $650 million in pre-tax charges over the next several quarters from severance and other costs. It said the restructuring should lead to around $600 million in annual pre-tax savings when complete, money the bank plans to plow back into the business such as artificial intelligence and technology, said Tran. 'Through this restructuring program and the strategic review more broadly, we are innovating to drive efficiency and structurally reduce the bank's cost base,' he said. The moves also come as companies everywhere grapple with macroeconomic uncertainty and hesitant consumers and businesses. Chun noted housing activity was down in the quarter, while the bank has also seen moderated foreign currency spending as consumers are more cautious, especially with cross-border purchases. But the bank's provisions for potentially bad loans rose only modestly in the quarter, up $103 million from the previous quarter to $1.2 billion, or up $211 million from the same quarter last year. The provisions build was lower than analysts expected, helping TD's adjusted earnings of $1.97 per diluted share easily beat the $1.76 per share profit analysts had expected, according to LSEG Data & Analytics. The measure was still down from the $2.04 a share the bank made in the same quarter last year. Jefferies analyst John Aiken said in a note that TD came in ahead of expectations in most segments, though he wonders if the market will see the provisions as enough for the uncertainty ahead. TD said the provisions increase was related to policy and trade uncertainty, while it otherwise would have likely seen rates potentially coming down as consumers benefit from lower interest rates. Revenue for the quarter totalled $22.9 billion, up from $13.8 billion in the same quarter last year. TD said its Canadian personal and commercial banking business earned just under $1.7 billion in its latest quarter, down from just over $1.7 billion in the same quarter last year as it saw higher provisions for credit losses and non-interest expenses, partially offset by higher revenue. TD's U.S. retail operations earned $120 million in the second quarter, down from $507 million a year earlier. The bank's wealth management and insurance business earned $707 million in its latest quarter, up from $621 million a year ago. TD's wholesale banking division earned $419 million, up from $361 million in the same quarter last year. Our website is the place for the latest breaking news, exclusive scoops, longreads and provocative commentary. Please bookmark and sign up for our daily newsletter, Posted, here .
Finextra
23-05-2025
- Business
- Finextra
TD Bank to lay off 2% of staff in restructuring
TD Bank has announced that 2% of its workforce will be laid off amid digital and AI restructuring program under new CEO Ray Chun. 0 This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community. The restructuring is estimated to save the bank up to C$650 million per year. The layoff will axe around 2,000 employees to save costs in the restructuring, through the location of the cuts has not been specified. The move follows TD Bank's $3 billion anti-money laundering settlement in the US, that ended in chief executive Bharat Masrani stepping down and Chun taking charge in February. Chun commented: "We are structurally reducing costs across the bank by taking a disciplined look at our operations and processes to find opportunities to automate and to re-engineer them. "We are identifying opportunities to innovate, to drive efficiencies and operational excellence."
