TD CEO Bharat Masrani asked for patience Thursday during the bank’s annual general meeting, with regard to U.S. regulators’ investigation into the lender’s anti-money laundering practices.
“Without a doubt, shareholders have some anxiety regarding our issue in the U.S.,” Masrani said, according to The Globe and Mail. “I’ve said to our shareholders as I’ve said today: Be patient, we will be able to share more details on that. But fundamentally, your bank is doing very well.”
The AML probe has stretched into its second year.
Masrani acknowledged Thursday that the bank’s AML compliance was not up to par and that the bank is working diligently to address concerns raised by U.S. regulators and law enforcement agencies.
“We have onboarded globally recognized talent and leadership, and invested in technology, process design, training and other activities,” Masrani said Thursday, according to Bloomberg.
TD hired BMO veteran Herbert Mazariegos to serve as the bank’s new chief global AML officer. It hired another BMO alum, Fnan Desta, to serve as associate vice president in AML and head of TD’s Canadian financial intelligence unit. Both executives started in November, according to their LinkedIn profiles.
Around the same time, the bank brought onboard two key people with U.S. regulatory agency experience. It hired Sophia Siddiqui, a former Justice Department and Federal Trade Commission attorney, to be its senior counsel responsible for U.S. regulatory matters, as of November.
The following month, Maryann Kennedy, a 29-year veteran of the Office of the Comptroller of the Currency, joined TD’s board, according to her LinkedIn profile. Kennedy left the OCC in 2021 as senior deputy comptroller for large bank supervision.
“I understand that you want to know more,” Masrani said, according to Bloomberg. “However, given the confidential nature of regulatory discussions, I cannot provide additional detail or speculate on timing or announcements.”
TD is already implementing an action plan to strengthen its AML controls and risk management practices in Canada and the U.S. in response to regulators’ concerns, The Globe and Mail reported in January.
The bank’s AML issues have been a focus since the bank last May terminated its proposed acquisition of Memphis, Tennessee-based First Horizon. The Capitol Forum in January reported that TD executives knew as early as November 2022 that multiple U.S. agencies had found AML deficiencies serious enough to put the deal at risk of rejection.
During TD’s first-quarter earnings call in March, Masrani said, “We know what the AML issue is, and we’re making progress in fixing it every day.”
TD could pay between $500 million and $1 billion in penalties over the issue, The Globe and Mail reported Thursday, citing analysts’ estimates.
CEO succession
Investors are also getting impatient over the lack of indication as to who will serve as TD’s CEO after Masrani, 67, retires.
“A bank of our size, scale and profile would have very robust succession plans — and we do. Our board is very engaged, as would be other departments of the bank,” Masrani said Thursday, according to The Globe and Mail. “When the time comes, you will see that TD, like it has for many years, will see a seamless and terrific executive takeover for my position.”
At least one leading candidate, Michael Rhodes, formerly TD’s Canadian personal banking chief, left the bank in December to join Discover as its CEO — only to leave for Ally within three months.
Ray Chun, the former head of wealth management who became the head of the Canadian personal-banking unit after Rhodes left, is also a potential candidate, according to Bloomberg.
Leo Salom, head of TD’s U.S. operations, is also seen as a contender, but it is unclear how the AML probe’s affect will affect his career trajectory.
“Bharat is focused on strengthening the bank, serving our customers and creating value for shareholders,” TD spokesperson Lisa Hodgins said in an email to Bloomberg on Thursday. “He leads a deep and highly experienced bench of leaders with proven track records driving growth across large complex businesses.”
“I’m healthy,” Masrani reassured Thursday. “I wake up every morning saying, ‘How can we serve customers even better, create more value for our shareholders?’ I feel great.”
