TD CEO Bharat Masrani asked for patience Thursday during the bank’s annual general meeting, with regard to U.S. regulators’ investigation into the lender’s anti-money laundering practices. The probe has stretched into its second year.
Masrani acknowledged Thursday that the bank’s AML compliance was not up to par and that the bank is working diligently to address concerns raised by U.S. regulators and law enforcement agencies. TD is focused on resolving the issues and cooperating with the authorities to resolve the matter, Masrani said, without offering further details.
“We have onboarded globally recognized talent and leadership, and invested in technology, process design, training and other activities,” Masrani said Thursday, according to Bloomberg. “I understand that you want to know more. However, given the confidential nature of regulatory discussions, I cannot provide additional detail or speculate on timing or announcements.”
TD hired a new chief global AML officer and associate vice president and, in the U.S., it appointed McKinsey & Co. and other outside consultants to guide it on regulatory and other matters, The Globe and Mail reported in January.
The bank’s AML issues have been a focus since the bank last May terminated its proposed acquisition of Memphis, Tennessee-based First Horizon. The Capitol Forum in January reported that TD executives knew as early as November 2022 that multiple U.S. agencies had found AML deficiencies serious enough to put the deal at risk of rejection.
During TD’s first-quarter earnings call in March, Masrani said, “We know what the AML issue is, and we’re making progress in fixing it every day.”
TD could pay between $500 million and $1 billion in penalties over the issue, The Globe and Mail reported, citing analysts’ estimates.
CEO succession
Investors are also getting impatient over the lack of indication as to who will serve as TD’s CEO after Masrani, 67, retires.
“A bank of our size, scale and profile would have very robust succession plans — and we do. Our board is very engaged, as would be other departments of the bank,” Masrani said Thursday, according to The Globe and Mail. “When the time comes, you will see that TD, like it has for many years, will see a seamless and terrific executive takeover for my position.”
At least one leading candidate, Michael Rhodes, formerly TD’s Canadian personal banking chief, left the bank in December to join Discover as its CEO — only to leave for Ally within three months.
Ray Chun, the former head of wealth management who became the head of the Canadian personal-banking unit after Rhodes left, is also a potential candidate, according to Bloomberg.
Leo Salom, head of TD’s U.S. operations, is also seen as a contender, but it is unclear how the AML probe’s affect will affect his career trajectory.
“Bharat is focused on strengthening the bank, serving our customers and creating value for shareholders,” TD spokesperson Lisa Hodgins said in an email to Bloomberg on Thursday. “He leads a deep and highly experienced bench of leaders with proven track records driving growth across large complex businesses.”
“I’m healthy,” Masrani reassured Thursday. “I wake up every morning saying, ‘How can we serve customers even better, create more value for our shareholders?’ I feel great.”