Dive Brief:

• TD Bank is launching a new credit access program geared toward Black entrepreneurs, the Canadian lender announced on Monday.
• The program’s features include an enhanced credit review process, which includes a “holistic view of the applicant's credit application,” TD Bank said. Applicants, whose businesses must be 50% or more Black-owned, can also access a secondary credit review by a specialized credit review committee, the bank said.
• The new lending program comes as the bank is seeking regulatory approval of its pending $13.4 billion merger with First Horizon. The banks, which recently agreed to extend until May 27 the date by which their proposed deal must close, are also in the midst of crafting a Community Benefits Plan associated with the tie-up.

Dive Insight:

"TD is committed to supporting Black communities by helping remove obstacles when it comes to loan access, wealth management and specialized advice," Al Ramsay, the bank’s vice president of 2SLGBTQ+ and Black customer segments, said in a statement.

The bank said the program is the latest iteration in its efforts to understand the needs of Black communities in Canada.

TD Bank launched its Black customer experience strategy in October 2021, which focuses on hiring and training regional managers to provide support to local Black communities, the bank said.

The bank’s latest effort to expand credit access to an underserved group will likely be touted to regulators and community groups as it looks to gain support ahead of its planned acquisition of First Horizon Bank.

While federal bank regulators haven’t formally rejected a merger application in 15 years, according to a 2021 article in the Yale Journal on Regulation, TD’s proposed deal with First Horizon could face headwinds on its road to completion. 

The Biden administration has urged bank regulators to adopt “more robust scrutiny” of tie-ups in the banking sector, and community advocates continue to warn of the negative impact of acquisitions on low- to moderate-income communities.

TD Bank has already had to defend its mortgage lending record against community groups, one of which cited a 2018 report by the nonprofit group Reveal indicating TD, among large banks, was the most likely to deny a loan application from a Black or Latinx person.

During an August public hearing on the proposed deal, Rachel Labush, a supervising attorney at Community Legal Services of Philadelphia, claimed the bank was tied for the lowest percentage of home loans to Black and Hispanic people among its peers and was less likely to approve a high-income Black applicant than a low-income White one.

TD Bank executives at the hearing, responded by touting some of the bank’s recent initiatives, such as a credit program meant to boost homeownership in communities of color, and a $105 million equity fund TD established in 2021 to support nonwhite-owned small businesses.

“We are proud of the role we play in our communities and we’re excited about the opportunity to expand our impact through our combination with First Horizon,” Leo Salom, TD’s U.S. CEO, said during the public hearing.

Meanwhile, TD CEO Bharat Masrani has expressed uncertainty as to the timeline by which the deal may be accepted.

“The final one is the regulatory approvals by the major agencies in the U.S.,” Masrani said last month, according to The Globe and Mail. “That is an unknown. The latest deals seem to take longer than it used to.”