TD Bank CEO Bharat Masrani to Retire, Be Succeeded by Raymond Chun — Update

By Robb M. Stewart

Toronto-Dominion Bank has picked a new leader from within its ranks to take over after the retirement next year of Chief Executive Bharat Masrani, a succession made smoother by the bank's efforts to resolve failings in its anti-money laundering controls and settle investigations by U.S. authorities.

Masrani will step down at the bank's next annual shareholders' meeting in April and TD's board intends to appoint Raymond Chun, a veteran of the lender and head of Canadian personal banking, to take over as president and CEO. Chun first will become chief operating officer from November, with responsibility for all of TD's lines of business, before stepping into the top job.

Masrani is stepping down after 38 years with the bank and more than 10 years as CEO, though TD said he will continue to serve as an adviser until the end of October next year.

A decade is typically how long leaders of Canada's big banks spend in the role, but speculation a succession was likely to be soon has grown as TD has been beset by probes into weakness in its anti-money laundering program and has set aside billions of dollars to cover anticipated fines in the U.S.

Masrani said the bank has a strong bench of senior leaders and plans a smooth CEO transition.

"The anti-money laundering challenges we face took place on my watch as CEO and I take full responsibility," he said. "In the coming months, I will continue to advance and direct the critical remediation program required to meet our obligations and responsibilities and strengthen our risk and control foundation."

TD has said it expects a global resolution of the anti-money laundering investigations to be finalized by the end of December.

The Toronto-based bank in August took a further $2.6 billion provision for the latest quarter to cover fines it expects to settle civil and criminal investigations into failings in the anti-money laundering program by the U.S. Justice Department, prudential regulators and the Financial Crimes Enforcement Network. That came on top of an initial $450 million provision taken a quarter earlier for the anticipated fines. TD also has spend hundreds of millions of dollars strengthening its anti-money laundering efforts.

The provisions have weighed heavily in TD earnings, and it swung to a loss in the last quarter. To strengthen its balance sheet the bank in August raised $2.5 billion with sale of a portion of its investment in brokerage and money-management firm Charles Schwab, cutting its stake to roughly 10% from about 12%.

The anti-money-laundering problems had other costs for TD. The Wall Street Journal previously reported the bank's handling of suspicious customer transactions in recent years was behind U.S. regulators' refusal last year to approve the lender's $13.4 billion bid to buy First Horizon.

The failings also added to regulatory and legal difficulties faced by TD in the U.S. In 2020, the bank reached a $122 million settlement with the Consumer Financial Protection Bureau, which found it had charged customers overdraft fees for ATM and one-time debit-card transactions without obtaining their consent. Early last year, TD agreed to pay $1.2 billion to settle claims related to the bank's involvement in R. Allen Stanford's two-decade-long Ponzi scheme, for which he was convicted in 2012.

Masrani took over as CEO in 2014 when TD had its eyes on the U.S. market to expand. Before moving into the top office he held roles including chief operating officer, president and CEO of TD's Cherry Hill, NJ, based banking arm in the U.S., and held executive posts in a number of countries including as country head for India. He began at TD as a commercial banking trainee in 1987.

Rather than turn to an external candidate, TD has picked a successor who has held increasingly senior roles at the bank over the past 32 years. Chun joined TD's management training program in 1992 and has held positions including president of TD Direct Investing, president and CEO of TD Insurance, and head of wealth management and insurance.

With the transition set, TD also is shuffling its executive ranks.

Riaz Ahmed, head of wholesale banking and president and CEO of TD Securities, will retire at the end of January after close to three decades at the bank.

From Nov. 1, Sona Mehta, vice president of real estate secured lending, everyday banking, saving and investing, will become head of Canadian personal banking. At that time, Paul Clark, now executive vice president of private wealth management and financial planning, will become senior executive vice president of wealth management, and Tim Wiggan, current head of wealth management and insurance, will become head of Wholesale banking and president and CEO of TD Securities.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

September 19, 2024 10:24 ET (14:24 GMT)

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