An analyst at Barclays Plc claims that, with a high degree of probability, Toronto-Dominion Bank will not be able to conclude deals on the acquisition of retail banking services in the United States for the next few years.
The estimated terms of the financial institution’s inability to conclude transactions range from three to five years. According to John Aiken, an analyst at Barclays financial services, the reason for the current situation in which the bank found itself is the same regulatory problems that previously prevented the lender from becoming the owner of First Horizon Corp.
In early May, the Canadian financial institution refused to implement a $13.4 billion deal that involved the acquisition of Memphis-based First Horizon. At the same time, the bank announced that it would not receive regulatory approval to introduce a lender in a difficult position into the ownership structure before the deadline of May 27.
Regulators have restricted TD Bank’s actions due to the practice of this financial institution in processing suspicious customer transactions. This reason was not announced at the official level. The relevant information was reported by the media with reference to sources who are aware of the details of the relationship between the lender and regulatory authorities.
Jonah Aiken believes that the problem of non-compliance of the practice of a financial institution with the requirements of the regulator is long-term in the sense that its solution takes time and cannot be instantaneous. According to him, the bank is ready for the fact that for a long period of time, its activities in the American financial market will have certain restrictions.
John Eyeken says that TD needs several years not only to change its systems but also to demonstrate the results of the work done to regulators.
The collapse of the deal with First Horizon left the financial institution with billions of excess capital, which was formed in anticipation of the successful completion of the acquisition process. According to John Aiken, due to this circumstance, TD is currently the safest lender. But he also noted that the bank does not have the ability to use an additional level of capital.
As we have reported earlier, TD Bank Blames Regulatory Uncertainty for Failed First Horizon Acquisition.