TORONTO – TD Bank Group has sold its entire stake in Charles Schwab Corp. – it had owned 10.1% of Schwab’s shares – raising about $14.6 billion in the Feb. 12 transaction just a few months after receiving a $3.1 billion fine from U.S. regulators because of problems with the bank’s anti-money laundering controls.
The bank had already sold Schwab shares in August ahead of the record fine, reducing its stake from 12.3% to 10.1%.
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Toronto-based TD, which is the eighth-largest bank in Rhode Island in terms of deposits, said it sold 184.7 million shares of Schwab’s common stock. About 165.4 million shares were sold in an offering of $79.25 a share. Also, Schwab repurchased 19.2 million shares from TD at a total price of $1.5 billion.
“As part of our strategic review, we have been evaluating capital allocation and have made the decision to exit our Schwab investment,” TD CEO and President Raymond Chun, who took over on Feb. 1, said in a statement. “We are very pleased with the strong return we are generating on the Schwab shares we acquired in 2020.
“We are confident in TD’s growth opportunities and long-term potential, and we plan to use $8 billion [in Canadian dollars] of the proceeds to repurchase our stock,” Chun said. “We will invest the balance of the proceeds in our businesses to further support our customers and clients, drive performance and accelerate organic growth.”
TD Bank was fined $3 billion in October in a historic money laundering settlement. The bank, one of Canada’s largest, agreed to pay the fine and pleaded guilty to criminal charges in the U.S. after allowing drug cartels and other criminals to transfer hundreds of millions of dollars in illicit funds. U.S. regulators accused the bank of allowing Chinese drug traffickers to launder more than $650 million through the bank, beginning in 2016.
