Sept 19 (Askume) – TD Bank (TD.TO) Chief Executive Officer Bharat Masrani will retire next year as Canada’s second-largest bank steps up anti-money laundering efforts, handing the reins to Canadian banking chief Ray Chun as it braces itself for possible penalties from the United States over its vulnerabilities.
Toronto-based TD said Thursday that Maslany, who became chief executive in 2014, will step down in April. TD Bank also said Riaz Ahmed, the head of its capital markets unit TD Securities, will retire in January.
Masrani has focused on the bank’s U.S. arm as he seeks growth opportunities outside Canada, growing the business to become the country’s 10th-largest bank with about $400 billion in assets and a network of 1,150 branches on the East Coast.
The bank, which faced trouble with the US government, including the Justice Department, last year over weak anti-money laundering protocols, has scrapped a $13.4 billion acquisition of Tennessee-based First Horizon, which would have expanded its network in the southwestern United States.
TD Bank reported its first loss in decades in August as the companySet aside $2.6 billion to cover expected fines from US regulators .
“This incident occurred during my tenure as CEO, and I take full responsibility for it,” Maslany told analysts on Thursday.
“In the months ahead, I will continue to lead and guide the important improvement program needed to meet our obligations and responsibilities and strengthen our risk and control base,” Masrani said.
The investigation by US regulators involves Chinese drug traffickers using TD to launder at least $650 million between 2016 and 2021, as well as allegations that an employee accepted bribes to facilitate money laundering.
Chun joined the TD management training program in 1992 and has held a number of senior positions over the past 32 years, including working across the brokerage, insurance and wealth management business areas, most recently as Head of Canadian Personal Banking.
Chun assured investors that his previous experience running “large corporate, complex businesses” and working with controls and risk teams was the reason for taking on the role.
Analysts said the choice of Chun was a surprise and that he had no direct connection to the US campaign led by Leo Salomé.
“Ray (Chun) and Leo have a close working relationship. Ray runs a number of businesses and looks forward to working closely with Leo in the years to come,” Maslany told analysts.
TD shares have risen about 54% during Masrani’s tenure, though the company has turned negative this year. Its shares were up about 1.8% on Thursday morning.
“The timing is a bit surprising,” Jefferies analyst John Aiken said on Thursday. “We had thought the announcement would come after the (U.S.) investigation was complete.”
TD also announced several senior executive changes: Paul Clarke will lead its wealth management unit, Sona Mehta will replace Chun as head of Canadian personal banking, and Tim Wigan will replace Ahmed as head of TD Securities.
Masrani said the news comes as about 2,500 senior executives from around the world gather in Toronto for the annual Senior Management Conference.
