Canada-based The Toronto-Dominion Bank (TD - Snapshot Report) said on Thursday that it plans to expand corporate lending business in the U.S. This expansion is anticipated to be carried out through the acquisition of loans from other foreign banks, which are planning to exit the country, per a Reuters report.
This was confirmed in an interview last week when Glenn Gibson, the U.S. head of Toronto-Dominion Securities, said, “Ultimately we're looking to buy assets. What we're looking for in the corporate space is if there are opportunities as foreign banks continue to rejig their strategy.”
At a time when the European lenders are retreating from their U.S. investment banking operations due to tougher regulations and weak balance sheets, Toronto-Dominion had been fueling its operations in this space.
Hence, driven by the initiatives, Toronto-Dominion has grown to be one of the ten biggest banks in the U.S. and enjoys a major retail presence through its 1,300 branches in the country. Further, the bank also exhibits the financial strength to accelerate the expansion of its U.S. capital markets business.
Why the Persistent Expansion Initiatives in U.S.?
Earlier in September, Toronto-Dominion announced a deal to acquire Albert Fried & Co, a New York-based broker-dealer, with a view to expand its presence in the U.S. prime brokerage sector. Also, Toronto-Dominion Securities, whose investment banking clients include AT&T, Inc. (T - Analyst Report) , beer-maker Anheuser-Busch InBev SA/NV (BUD - Snapshot Report) and private-equity firm KKR & Co. L.P. (KKR - Snapshot Report) , has been constantly expanding its commercial lending business in the U.S.
The current plan to expand further in the U.S. is in line with the Toronto-Dominion’s statement last year that it might double the size of its capital markets business over the next three to four years. Further, this is being done with a view to counter the sluggish growth in Canada’s domestic markets, where the concerns over possible housing bubbles in Vancouver and Toronto are hovering over the banks.
Toronto-Dominion plans to attract new multinational clients along with enhancing its existing client-relationships. Also, as a result of the initiatives, the bank expects the global companies, which are already its clients in Canada, to boost their borrowing activities with them in the U.S.
Gibson said, "We're trying to build out the depth of the relationships we have with some of the multi-nationals that we deal with that have business in Canada and we're also trying to expand the number of relationships."
Currently, Toronto-Dominion holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
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