Toronto-Dominion Bank has moved up the start date for Raymond Chun as CEO in response to a recent money-laundering scandal. Bloomberg
Toronto-Dominion Bank has moved up the start date for its new CEO, Raymond Chun, by two months, signalling a major shift in leadership following the bank’s involvement in a large-scale money-laundering scandal. The scandal, which saw criminal organizations using TD’s U.S. branches to launder hundreds of millions of dollars, has had a lasting impact on the bank’s reputation and finances. To address the fallout, TD has made significant changes to its leadership and board structure, including slashing executive compensation and overhauling its corporate governance.
The changes come after TD’s board faced sharp criticism for failing to prevent the illegal activities in its U.S. branches. The bank announced that five long-serving directors, including board chair Alan MacGibbon, will step down by the end of the year. MacGibbon will retire as a director after serving on the board for more than a decade. Along with these departures, TD is also planning a major shake-up in its leadership, including the replacement of key board members. Four new directors, with strong backgrounds in compliance and risk, will be elected at the next shareholder meeting in April 2025.
The pay of 41 executives, including some who have already left the bank, has also been significantly reduced. In total, executive bonuses were slashed by C$30 million ($21 million) due to the costly lapses in TD’s anti-money-laundering controls. This move highlights the seriousness of the issue and serves as a reflection of the high costs the bank has incurred due to the scandal.
Raymond Chun, a long-time TD executive, will now take over as CEO on February 1, 2025, ahead of the previously planned date of April 10. Chun, who has led TD’s Canadian retail banking and other divisions, has already begun reviewing the bank’s strategy and operations. His swift action is seen as a positive step toward restoring confidence in the bank and addressing the aftermath of the scandal.
In a statement, MacGibbon expressed excitement over Chun’s leadership, noting his quick response in engaging with customers, clients, and colleagues across the bank. Industry experts agree that this move is a crucial step in turning the bank’s fortunes around. John Aiken from Jefferies Financial Group sees it as a way for Chun to move past the mess caused by the scandal and make the bank his own.
In response to the regulatory challenges and fines, TD has already spent millions to enhance its compliance efforts. The bank agreed to pay a $3.1 billion fine to settle the case with U.S. authorities, and it has committed another $850 million to improve its anti-money-laundering programs. Despite these efforts, TD’s U.S. expansion ambitions have been severely hampered, as the bank is now barred from growing its retail operations in the U.S. beyond its current size.
Additionally, TD had to call off its $13.4 billion acquisition of First Horizon Corp. in 2023, costing the bank $200 million in breakup fees. The money-laundering scandal and regulatory issues are also expected to result in a reduction in TD’s earnings, with one-time costs of up to $1.5 billion after taxes.
As part of the ongoing restructuring, TD’s board is also making changes to its corporate governance practices. Director term extensions will now be limited to two years, down from five years, after an initial 10-year term. These moves are part of the bank’s efforts to rebuild trust with investors and regulators.
The recent leadership changes and restructuring at Toronto-Dominion Bank mark a significant step in the bank’s attempt to recover from its money-laundering scandal. With Raymond Chun set to take over as CEO, TD is hoping to put this dark chapter behind it and focus on its future growth and stability.
