TD Bank Financial Group

The TD Bank Financial Group is one of Canada's leading banks, the fourth-largest when ranked by revenues. In 2003 it reported net income (cash basis) of $1.6 billion and total assets of $273.5 billion. For the 2003 fiscal year, the bank also reported almost 42 000 employees working in 1063 retail branches and 270 brokerage offices spread across the world but principally located in Canada, the United States, and the United Kingdom.

History
What today is called TD Bank Financial Group represents an amalgamation of principally three banks: The Bank of Toronto and The Dominion Bank, which merged in 1955, and, later on, Canada Trust, which was acquired in 2000.

The Bank of Toronto was established pre-Confederation in 1855 by a consortium of Ontario flour millers and commenced operations in 1856 with total holdings of 24 000 pounds and four employees. Shortly thereafter, in 1859, it branched out to Montréal before establishing branches in other parts of Ontario and British Columbia in support of the burgeoning mining industry in 1898. Further inroads into the west were made in 1907 with the establishment of additional branches in British Columbia, and prosperity continued until the crash of the stock market in 1929 and the Depression that followed.

The establishment of the Bank of Canada in 1934 removed the right of banks to issue bank notes and put in place a central authority to manage the monetary system of the country. The business of the Bank of Toronto and its counterparts was dramatically altered with the onset of World War II when they participated in the war effort through the sale of bonds, foreign exchange controls, and the rationing of commodities.

While the end of the war heralded the onset of a new boom and prosperity, the Bank of Toronto and the Dominion Bank decided to join forces in 1955 to better face the competition. With this move, the Toronto-Dominion Bank (or TD Bank) was born.

The history of the Dominion Bank does not begin until 1869, 14 years after the founding of the Bank of Toronto. Soon thereafter, and much like its future merger partner, it began to expand west of Ontario, first into Manitoba, and then Saskatchewan before reaching Alberta and British Columbia in 1906. It, too, prospered in the period leading up to and following the war (except for the period of the Depression), with total assets increasing seven-and-a-half fold from $62.7 million in 1910 to $471 million in 1950. By the time of the merger in 1955 the two banks were comparable in size along a number of variables, such as assets and net earnings, making this a veritable merger of equals.

With their forces duly combined under one banner, the TD Bank set out to expand their lines of business as well as their geographical reach. The bank entered into the real estate and asset management business, and in the three decades beginning in 1960 it established wholly-owned subsidiaries primarily in the United States and Europe but also in other regions of the world.

In August of 1968, TD Bank joined together with three other banks to form Chargex Limited, a credit card business and the precursor to the VISA card in Canada. The company's results improved steadily and no losses were recorded during this period. Assets grew from $1.3 billion in 1955 (the first year of post-merger operation) to $66.9 billion in 1990, while net earnings increased from $978 000 to $595.7 million over the same period.

In 1973, in partnership with the Bank of Nova Scotia, the bank formed Scotia-Toronto Dominion Leasing Limited, which leased equipment to Canadian industry. In 1985 it acquired Euro-Pacific Finance Corp, an Australian merchant bank.

The TD Bank's first move to expand significantly within Canada through acquisition came in 1993, when it acquired the operations of the Central Guaranty Trust Company in a $125 million transaction. The deal added 154 branches to its network and close to $10.5 billion in deposits.

In 1996 the bank's discount brokerage business, Green Line Investor Services, merged with Waterhouse Investor Services Inc to become TD Waterhouse, one of North America's largest companies of its kind.

In 1998 the bank announced it was in merger talks with CIBC, a move designed to improve the ability of both banks to conduct business globally and compete with other large international banks. Since this would affect the competitive landscape in a profound manner, the government was required to review the plan. It ultimately decided against it, but not before merger speculations about the other banks started to circulate. A moratorium on bank mergers remains in effect in 2004.

TD Bank would eventually get to expand its Canadian operations with the share-based acquisition of Canada Trust Financial Services in an $8 billion transaction in February of 2000 and the purchase of 57 branches of the Laurentian Bank in October 2003 for $112.5 million. The Canada Trust transaction was significant in that the bank was just one year shy of its centenary and, with $38 billion in deposits and $176 billion in assets, was considered to be one of the largest financial institutions not operating as a bank. Moreover, it employed 11 000 people in 413 branches across the country.

Operations
The banking conglomerate known today as TD Bank Financial Group operates along three principal lines of business: Personal and Commercial Banking (57.5 percent of 2003 revenues); Wealth Management (21.3 percent); and Wholesale Banking (21.3 percent).

The Personal and Commercial Banking arm of the TD Bank is the most visible division, as it operates the consumer branches and the bank machines. At the end of the 2003 fiscal year the bank operated 1093 domestic retail outlets and 2638 automated banking machines. Through this segment, the TD Bank serves some ten million customers and provides a full range of services, including Internet banking. The businesses in this segment include TD Canada Trust, TD Insurance, and TD Meloche Monnex. The average balance of all deposits during the 2003 fiscal year was $110 billion.

The Wealth Management segment of the TD Bank operations addresses the needs of investors wishing to have their funds professionally managed or to engage in trades themselves. The segment encompasses three companies: TD Waterhouse, TD Wealth Management, and TD Asset Management. With this segment, TD Bank has also gained clientele in the United States and the United Kingdom. During the 2003 fiscal year, the Wealth Management segment of the TD Bank was responsible for the administration of some $267 billion.

Finally, the Wholesale Banking segment of TD Bank encompasses the operations of TD Securities and caters to corporate financial needs through investment banking services, debt financing, and derivatives trading. The most global segment of the TD Bank, it has customers as far away as Singapore, Hong Kong, and Sydney. Average loans and customers' liabilities under acceptances totalled $17 billion during the 2003 fiscal year.

The operations of the TD Bank Financial Group are diverse and are involved in all aspects of private and corporate financial transactions. If the government pronounces itself on the conditions and procedures under which a merger of banks can happen, it will likely set off renewed activity in the sector. For the time being, TD Bank Financial Group has progressed to be one of the largest players in the North American market.

Community Work
As a significant player in the lives of Canadians, the TD Bank Financial Group makes it a matter of policy to contribute to the well-being and ongoing development of the communities of which it is part. During the 2003 fiscal year, for example, the bank made cash donations of $20.1 million to various charitable groups across three identifiable segments: children's health, children's education and literacy, and the environment.

Another way in which TD Bank contributes is through the commissioning and subsequent dissemination of studies examining issues of relevance to the private or corporate community in the context of urban development. In 2003, this included a report on the impact of the Calgary-Edmonton corridor and a study of affordable housing in Canada.

Author SASHA YUSUFALI

Links to Other Sites
Canadian Bankers Association
The website for Canadian Bankers Association. Features a list of domestic and international banks operating in Canada, timeline of the banking industry, useful consumer information, a glossary, and related resources. CBA is the main representative body for banks in Canada and is the country’s oldest industry association.

TD Bank Financial Group
The website for TD Bank Financial Group. Features the latest news and information about personal, commercial and wholesale financial products and services, investor relations, current economic trends, and community relations.

TMX Group
The online home of TMX Group, which owns and operates the Toronto Stock Exchange and the TSX Venture Exchange. For real-time and historical market data, sector profiles, and financial information about listed companies, click on listed company directory on left side of page or enter stock symbol in the search box.

Personal Investing
The lastest news on Canadian equity markets, personal investment plans, and more. From thestar.com.

Bank of Canada
The official website for the Bank of Canada. A great information source about monetary policy, the role of the Bank, the history of money, security features in Canadian bank notes, and much more. Check out the fact sheets, online glossary, and educational resources.

Office of the Superintendent of Financial Institutions
The website for OSFI, the primary regulator of banks and other federally incorporated financial institutions in Canada. Check out "About OSFI" for background information about this independent agency of the Government of Canada.

Reuters
Search the Reuters website for the latest news and reports about specific Canadian companies and business sectors.