S&P revises TD Bank's outlook to 'negative' on risk management weakness
Adds details throughout
By Niket Nishant and Nivedita Balu
May 29 (Reuters) - TD Bank TD.TO on Wednesday received a rating outlook revision fromS&P Global SPGI.N to "negative," the second downgrade from a rating agency for a lender facing probes into anti-money laundering practices in the U.S.
S&P Global said itrevised the rating outlook to "negative" from "stable," citing weakness in risk management and controls.
The move comes a day after a similar action byFitch Ratings, which cited risks to the bank's business from the anti-money laundering probes.
TD faces a U.S. regulatoryprobe on allegations that Chinese drug traffickers used the bank to launder at least $650 million from 2016 through 2021 and that anemployee took a bribe to facilitate laundering of drug money.
The bank has said it was setting aside $450 million to cover potential fines for one of three regulatory probes and expects more monetary penalties. The lender has also been fined C$10 million by the Canadian financial intelligence unit for administrative violations.
"Our outlook revision reflects that the extent and implications of the bank's risk management and control issues are still uncertain," S&P Global ratings said in a press release.
TD bank has said it is making investments of about C$500 million to overhaul its compliance program and has also terminated employees.
"Nevertheless, we think it will take time to overhaul the AML infrastructure to regulatory satisfaction," the rating agency said.
The negative outlook reflects a one-in-three chance S&P could lower the ratings on TD Bank in the next two years, it said. The agency, however, reiterated its "AA-" rating on the bank's debt.
So far this year, TD's shares has slid over 10%, the biggest declinerr among Canada's six biggest banks.
At its conference call in May, CEO Bharat Masrani said there were serious instances where the bank did not effectively monitor detect, report and respond to suspicious activity. "This is unacceptable," he said.
Reporting by Niket Nishant in Bengaluru and Nivedita Balu in Toronto; Editing by Alan Barona and David Gregorio
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
