Toronto Dominion Financial Group

This paper looks at the Toronto Dominion Financial Group (TD) in terms of its international expansion. We will cover the methods used by TD to ‘go global,’ internal and external challenges facing the firm and look at the future of the company. As can be seen in Figure 1. 1, TD operates five distinct businesses and serves 13 million customers around the world. This paper will focus on TD Canada Trust, TD Securities, and TD Waterhouse, as these are the largest and most relevant operations of the firm.

TD competes with four other major banks in Canada – The Royal Bank of Canada (RBC), The Canadian Imperial Bank of Commerce (CIBC), The Bank of Montreal (BOM), and Scotiabank. TD Ranks second overall in total assets controlled, with just under $300 billion as at the start of 2001. However, they rank last of the five ‘big banks’ in net income, return on assets, and return on equity (see Appendix A). Despite being a large bank locally, TD is dwarfed by large multi-national banks such as Mizuho Financial Group of Japan, Citigroup, Deutsche Bank and JP Morgan Chase.

The bank’s history stretches back to 1855 when the Bank of Toronto was formed. In 1869 The Dominion Bank was chartered, and the two banks merged in 1955 under the name of The Toronto-Dominion Bank. In the year 2000, TD completed its acquisition of Canada Trust, moving it from fifth to second in the ranking of Canadian banks on size. The bank made a $2. 1 billion profit in 2001, with the greatest amount of its revenue coming from the personal and banking businesses of the firm, whilst its securities arm also performed well.

TD Waterhouse and Asset Management performed poorly in light of global economic downturn. See Appendix B for a breakdown of these results. In 1998, TD bank was looking to increase its power in the retail-banking sector. Therefore, TD handed over a plan to the government containing a proposed marriage with CIBC. When Paul Martin, the finance minister at the time, rejected the plan, TD went looking for another bride and in 1999, presented Mr. Paul Martin with another proposal to merge with Canada Trust.

Trust companies in Canada are roughly the equivalent of the Savings and Loans in the U. S.Originally established to allow small homeowners to finance their homes, they sell shares rather than take deposits and thus are not required to insure their quasi-depositors. “These do build up equity by putting money into the trust, which becomes a source of mortgages to them or others. Their main purpose in a distant past was to provide mortgages when banks could not lend on mortgage security and financing of modest homes was hard to obtain. ” (Krehm) Many had made a point of catering to the needs of the modest borrower not content to do his financing on the banks’ credit cards at twice prime or more.

Most spectacular of these was Canada Trust. “Well run since 1993 by a highly talented ex-civil servant, Edmund Clark, it took full advantage of the public resentment against the banks to build its retail business. ” (Krehm) Thus, after the Competition Bureau of Canada carefully reviewed TD’s merger proposal, Paul Martin announced in January 2000 his approval for the merger. TD paid $8 billion to acquire Canada Trust. This premium price was greatly due to the fact that CT was the last of the major trust companies still not taken over by a bank. On June 25 2001, TD’s retail and commercial banking unit officially became TD Canada Trust.

The merger of TD and Canada Trust was the largest in Canadian banking history. A member of the TD Bank Financial Group, TD Canada Trust (TDCT) is Canada’s leading retail bank. The industry leader in electronic banking and customer service, TD Canada Trust is focused on building a better bank for Canadians. It provides customers with such services as chequing and saving accounts, loans and credit, mortgages, US banking, electronic banking, and much more. (www. td. com) In Canada, TD is somewhat famous in the business world for developing strategic retail relationships.

You can find TDCT branches inside such stores as Sobeys, IGA, and Wal-Mart. Expanding TD Canada Trust In-Store networks across Canada is just a way for the bank to make banking more convenient for their customers. TDCT will provide customers with one-stop shopping convenience and accessibility to a broad range of products and services. It is part of TD’s strategy to increase the availability of retail banking services and to increase the customer experience. As well, Starbucks franchises are opening inside TDCT branches. TD Bank is the first major Canadian bank to bring a full-service retailer into one of its branches.

This leading retail strategy offers non-TD products and services through its retail customer channels. To date, 51 in-store TD Bank branches have been opened across Canada, with aggressive growth plans to triple the in-store distribution channel. (www. td. com) Nevertheless, TD is trying to expand it retail banking services abroad and to increase it competitiveness globally. TD customers can access their account information from virtually anywhere in the world with TD Access Telephone Banking: pay bills, transfer funds from one account to the other, make account enquiries and more.

Furthermore, TDCT offers Internet banking that is known the world over. It allows customers to service any one of their financial needs, seven days a week, 24 hours a day. You can even open an account through the TDCT web page. TD continues to rank among the top three financial services firms in the world, as measured by online accounts, and ranks number one in Canada (PriceWaterhouseCoopers: Canadian Banks: Analysis of 2001 Results). Finally, TD has affiliated itself with certain banks in the United States, allowing its customers to conduct their banking transactions when traveling to the U. S (www. td. com).