Magazine article American Banker

Toronto Bank Buying Billions in U.S. Loans

Magazine article American Banker

Toronto Bank Buying Billions in U.S. Loans

Article excerpt

Raising its profile in U.S. commercial lending, Toronto-Dominion Bank said Monday it will buy up to $5.5 billion in loans and commitments from Westpac Banking Corp.

Analysts said the transaction offers Toronto-Dominion an inexpensive way to boost its U.S. assets and build relationships with U.S. corporations.

"Toronto-Dominion is being opportunistic and looking for growth in a no-growth environment," said one Canadian analysts. "They're putting their surplus capital to work."

Part of a Three-Year Plan

Australia-based Westpac is selling the assets as part of a plan launched in November to trim its balance sheet by around $7 billion over the next three years, improve capital ratios, and emphasize business with customers in Australia and New Zealand.

The purchase price was not disclosed. But Stephen McDonald, senior vice president for U.S. operations at Toronto-Dominion in New York, said that if the bank buys the whole portfolio, it will pay Westpac at least $1.2 billion for loans that have already been drawn down.

The Canadian bank would also have to set aside at least $240 million in capital.

Assuming the entire $5.5 billion portfolio is acquired, the deal would increase Toronto-Dominion's loans and commitments to U.S. borrowers by 72%, to $13.1 billion.

The bank had total assets of more than $64 billion as of Oct. 31.

The credits and commitments, which exclude real estate loans, are to more than 100 major U.S. corporations, largely ones based in the Midwest. …

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