TD sells its entire 10.1% stake in Schwab after US regulatory fine, reshaping its capital strategy
TD Bank Group has announced its intention to sell its entire equity investment in The Charles Schwab Corporation (Schwab) through a registered offering and a share repurchase agreement with Schwab.
TD, which currently holds 184.7 million Schwab shares—representing 10.1 percent economic ownership—will maintain its business relationship with Schwab through the Insured Deposit Account (IDA) Agreement.
Schwab has agreed to repurchase US$1.5bn worth of its shares from TD, conditional on the completion of the offering.
A preliminary prospectus supplement for the secondary offering of TD’s Schwab shares will be filed with the US Securities and Exchange Commission (SEC). TD Securities and Goldman Sachs will act as joint bookrunning managers for the offering.
“As part of our strategic review, we have been evaluating capital allocation and have made the decision to exit our Schwab investment,” said Raymond Chun, group president and CEO of TD Bank Group. “We are very pleased with the strong return we are generating on the Schwab shares we acquired in 2020.”
TD plans to use $8bn from the proceeds to repurchase its own stock, while the remaining funds will be invested in business growth.
“We are confident in TD’s growth opportunities and long-term potential, and we plan to use the balance of the proceeds to further support our customers and clients, drive performance, and accelerate organic growth,” Chun added.
This announcement follows a broader strategic review by TD, which has faced increased regulatory scrutiny in the US.
According to Reuters, TD is selling its stake in Schwab following a landmark US fine.
The bank warned in December that 2025 would be a challenging year, suspending its medium-term earnings forecast as it works through anti-money laundering remediation after a US regulatory probe.
TD’s stake in Schwab is valued at approximately US$15.4bn based on the last closing price. Following the announcement, Schwab’s shares dropped 3.2 percent in premarket trading, while TD’s US-listed shares rose 2.7 percent.
Analysts are watching TD’s next steps closely.
Jefferies analyst John Aiken commented, “We believe this will simplify TD’s US operations. Whether this sets TD up for a different strategy in US wealth management will be seen when its strategic review is complete and revealed.”
In October, TD became the largest bank in US history to plead guilty to violating federal anti-money laundering laws, agreeing to pay over US$3bn in penalties.
The plea deal included an asset cap and other business restrictions.
Meanwhile, Schwab confirmed in a separate statement that it has agreed to repurchase US$1.5bn worth of its shares from TD in a private transaction.
In the past, TD has offloaded non-core assets, including selling TD Ameritrade to Schwab in 2020 as part of a US$26bn merger deal. That transaction granted TD its current stake in Schwab.
The bank continues to focus on prudent capital management and strengthening its infrastructure. Additional details on TD’s normal course issuer bid were provided in a separate news release.
A conference call will be held for further details.
