Canada’s TD Bank, Run By CEO Bharat Masrani, Fined $3 Billion

Bharat Masrani will retire in 2025 as CEO of TD Bank which agreed to several settlements with regulators

(Photo: Bharat Masrani, CEO, TD Bank)

October 10, 2024

Toronto-Dominion Bank announced today that it resolved investigations into its anti-money laundering and secrecy programs by the United States Department of Justice and other United States agencies. As part of this resolution, the Canadian bank will pay a fine of $3.1 billion to U.S. agencies, improve its anti-money laundering programs and agreed that its new products, services, markets, and stores in the U.S. will be subject to more stringent approval processes by U.S. agencies.   

“We have taken full responsibility for the failures…(which) took place on my watch as CEO and I apologize to all our stakeholders," Bharat Masrani, the bank’s Chief Executive Officer said in a statement.

The bank and its subsidiaries, collectively known as TD Bank Group, is headquartered in Toronto, Canada. With C$1.9 trillion in assets, it is the sixth largest bank in North America by assets. Its financial products and services include personal and commercial banking in Canada, retail banking in the U.S., wealth management, insurance, and investment banking, through TD Securities and TD Cowen.

TD, with 95,000 employees, serves nearly 28 million customers worldwide, including more than 16 million online. It was formed in 1955 through the merger of The Bank of Toronto, chartered in 1855, and The Dominion Bank, chartered in 1869.

In fiscal year ended October 2023, TD earned C$10.8 billion in net income on C$50.5 billion in revenues which included C$30 billion in net interest income on customer deposits. The bank, which is listed on both the Toronto and New York stock exchanges, has a market value of $104 billion

Last month, TD’s board of directors announced that Masrani, 68-years-old, will retire as CEO in April next year. He has served as the CEO since 2014, having worked at the bank for 38 years. During 2013-2014, he served as the chief operating officer; from 2006 to 2013, he served as the CEO of TD Bank America; from 2003 to 2006, he served in senior roles managing risk; and from 1999 to 2002, he was CEO TD Waterhouse Securities, Europe.

Masrani earned an MBA, 1979, and Bachelor of Administrative Studies, 1978, both from York University, Canada.

Masrani expanded TD’s operations in the U.S. through acquisitions. It is the 10th largest bank in the United States, with about $400 billion in assets and a network of 1,150 branches on the East Coast.

But TD’s expansion in the U.S. came with regulatory problems. In 2020, the bank reached a $122 million settlement with the U.S. Consumer Financial Protection Bureau for charging customers overdraft fees without their consent. Last year, the bank agreed to pay $1.2 billion to settle claims related to the bank’s involvement in a two-decade-long Ponzi scheme.

Then, U.S. investigators alleged that Chinese drug traffickers used TD to launder at least $650 million from 2016 through 2021 and that an employee took a bribe to facilitate laundering of drug money, The Wall Street Journal reported.

Last year, the anti-money laundering issues led U.S. agencies to block TD’s $13.4 billion acquisition of First Horizon bank, which has a network of retail branches in the Southwestern U.S.

In fiscal year 2023, Masrani took a 11% cut in his compensation earning a total C$13.4 million. This pay cut, TD’s board said in a statement, was due to “acknowledgement of the termination of the First Horizon transaction and certain U.S. regulatory issues…”