TD Bank to get $20 billion from selling Charles Schwab stake

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This article was published 11/02/2025 (262 days ago), so information in it may no longer be current.

TORONTO – TD Bank Group is gearing up for Canadian expansion efforts as it cashes in $20 billion worth of stock in The Charles Schwab Corp.

The bank, which is still working to fix its money laundering controls, says it plans to use about $8 billion of the proceeds to buy back stock and spend the rest on growth opportunities its finding through a strategic review.

The company plans to reveal the full results of the review in the second-half of the year, but a key focus will be looking closer to home.

“We are seeing significant opportunities here within Canada,” said Raymond Chun, who took over as CEO of TD at the start of February, on an analyst call Tuesday.

The bank also sees promise in the banking wholesale business as not only an integrated North American dealer but with reach across the globe, he said.

TD’s more than US$3 billion settlement with U.S. regulators last year also included an asset cap on its U.S. retail operations, leading to speculation the bank would look more to the Canadian side of retail banking for growth. 

The breakdown of the Schwab sale proceeds leaves the bank with something in the range of $12 billion to spend toward those efforts.

“We will invest in a targeted and value-driven manner to drive organic growth,” said Chun.

“As just one example, in Canada, the single largest opportunity for TD is to deepen our relationships with our more than 14 million customers.”

On the division of the sale proceeds, Chun said the bank wanted to make a “meaningful” buyback of TD shares so it went with a 100 million share target, while also leaving plenty of cash to do the full range of investments and initiatives it is identifying in the review. 

A day after initially announcing the Schwab sale, the bank revealed it was selling the shares for US$79.25 each, which it says values the stock at about 19 times the investment broker’s expected earnings per share this year.

TD ended up with the Schwab shares after the company bought TD Ameritrade in 2019. 

Canaccord Genuity analyst Matthew Lee said in a note that the bank investing in its core business will enhance its competitiveness in deposits and support loan growth, reinforcing the bank’s market position.

“Overall, we view this transaction favourably, as it represents the first step in TD’s strategic review to reallocate capital,” said Lee. 

He noted the sale of the shares doesn’t affect TD’s deal with Schwab that lets cash balances held in Schwab brokerage accounts to be swept into TD Bank deposit accounts. The program gives clients federal deposit insurance, while providing TD a stable funding source that stands at about US$80 billion, he said.

Chun said if there was more money left over from the sale the bank could consider further share buybacks in the future.

This report by The Canadian Press was first published Feb. 11, 2025.

Companies in this story: (TSX:TD)