TD CEO Bharat Masrani to retire, bank names successor

Article content

Bharat Masrani will retire as the chief executive of the Toronto-Dominion Bank in April next year after spending more than a decade in the post, the bank said on Thursday.

The announcement comes as Canada’s second-largest bank faces a number of regulatory issues. The bank posted a rare loss in its latest quarterly results because it had to keep aside US$2.6 billion to tackle expected fines due to anti-money laundering (AML) issues it is facing in the United States.

Article content

Last week, TD was also ordered to pay about US$28 million by U.S. authorities for repeatedly sharing inaccurate information about its customers with consumer reporting companies.

TD’s board of directors has chosen Raymond Chun, group head of the bank’s Canadian personal banking unit, as his successor. As part of the succession plan, Chun will be appointed as chief operating officer effective Nov. 1 and will report to Masrani until April. At that point, Masrani will take on an advisory role until November.

“Bharat helped to build TD over almost four decades, and as CEO, he led the bank through a period of profound change in our industry,” Alan MacGibbon, TD’s chair, said in a statement on Thursday. “The board extends its deep appreciation for Bharat’s significant contributions to TD.”

Succession talk

Talks about succession planning at TD have intensified on Bay Street after the bank set aside US$2.6 billion to cover any expected fines from the AML probe, which is on top of the US$450 million it set aside in April.

“Succession questions have become even more intense because of the bank’s U.S. regulatory issues,” National Bank Financial analyst Gabriel Dechaine said in a note last month, suggesting that under normal circumstances, succession would already be in motion with Masrani, 67, having spent 10 years at the helm.

Article content

Article content

But finding a replacement wasn’t going to be easy, since top candidates had left the bank before and after the money laundering probes were revealed more than a year ago.

“Chun is a seasoned executive, and not directly tied to any of TD’s issues in the U.S., but he does have a relatively low profile on the Street, and is certainly not the ‘outsider’ candidate that most investors had expected,” Meny Grauman, an analyst at the Bank of Nova Scotia, said in a note on Thursday.

“We have speculated that this news would be coming (although probably not this soon) and would be a key (positive) catalyst for the shares, along with another coming key catalyst, which we identified as a full global resolution of the bank’s U.S. AML issues.”

Masrani said he was delighted that Chun was selected as his successor.

“We are navigating a difficult moment, and I am confident that Ray’s leadership will successfully guide this great institution into the future,” he said in a statement on Thursday.

More TD changes at the top

TD also announced several other changes.

Riaz Ahmed, group head of TD’s wholesale banking unit and chief executive of TD Securities, will retire by the end of January 2025. He has spent close to three decades at TD. He will be replaced by Tim Wiggan, who currently heads wealth management and insurance.

Article content

Paul Clark, currently executive vice-president of private wealth management and financial planning, will become senior executive vice-president, wealth management. Sona Mehta, currently executive vice-president of real estate secured lending, everyday banking, saving and investing, will become group head of Canadian Personal Banking.

Masrani, who worked at TD for nearly four decades, said he expects the bank to execute a “smooth and seamless” CEO transition. He added that he takes full responsibility for the anti-money laundering challenges that TD faces.

“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,” he said.

Chun, Masrani’s successor, joined TD’s management training program in 1992 and rose through the ranks. He has served as president of TD Direct Investing, chief executive of TD Insurance, group head, wealth management and insurance, and, most recently, group head of Canadian personal banking.

Article content

“I am honoured by the trust our board has placed in me,” he said. “TD is a critical part of our financial system and economy … I am committed to the work ahead and energized by the opportunity to lead this outstanding bank into the future.”

On a conference call after the announcement, Masrani described Chun as the “right leader at the right time” and said that he can “capture every opportunity” available to build winning teams across the bank’s business segments.

He said other candidates, including those from outside the company, were considered for the role, and that the board selected Chun after a “lengthy and competitive” process.

• Email: [email protected]

Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters here.

Article content