Canada’s TD Bank to exit Charles Schwab stake worth $15.4 billion

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Canada’s TD Bank to exit Charles Schwab stake worth $15.4 billion

A pedestrian walks by a Charles Schwab office on November 25, 2019 in San Francisco, California.

Justin Sullivan | Getty Images

Toronto-Dominion Bank announced on Monday it will exit from the 10.1% stake it has in financial services firm Charles Schwab, as part of a strategic review undertaken by the ********* lender following a landmark fine from U.S. regulators.

TD holds 184.7 million shares of Schwab’s common stock, worth roughly $15.4 billion based on its last closing price. Charles Schwab shares were last down 3.2% in premarket trading.

Canada’s second-largest bank had warned of a challenging 2025 in December and suspended its medium-term earnings forecast as it works through its anti-money laundering remediation program following a U.S. regulatory probe. TD also said it would hold a strategic review.

In October, TD became the largest bank in U.S. history to plead guilty to violating a federal law aimed at preventing money laundering, and agreed to pay more than $3 billion in penalties to resolve the charges.

The plea deal, which includes a rare imposition of an asset cap and other business limitations, was a result of multiple U.S. government investigations into what authorities described as pervasive issues.

“As part of our strategic review, we have been evaluating capital allocation and have made the decision to exit our Schwab investment,” TD’s newly appointed CEO Raymond Chun said.

Chun became CEO on February 1, replacing long-time chief Bharat Masrani more than two months earlier than initially planned.

TD said it plans to use C$8 billion ($5.58 billion) of the proceeds for share buybacks and invest the remainder in its businesses to boost performance and accelerate organic growth.

The bank added it will continue to manage capital prudently and strengthen its infrastructure.

TD is currently Schwab’s largest shareholder, a stake which it acquired as part of the financial services firm’s $26 billion purchase of TD Ameritrade in 2020.

Schwab in a separate statement said it has agreed to repurchase shares worth $1.5 billion from TD in a private transaction.

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