TD sets aside US$2.6bn for US compliance, triggering negative outlook from Moody’s
Toronto-Dominion Bank's ongoing issues with US money-laundering controls are causing increasing concern about its strong credit rating, as reported by Financial Post.
Moody’s Ratings has joined other agencies in placing a negative outlook on the bank.
Last week, TD revealed it is setting aside an additional US$2.6bn to address the investigation's inquiries. Moody’s highlighted that this development raises serious concerns about the case's severity and the potential impact on the bank's financial stability.
Robert Colangelo, a senior credit officer at Moody’s, noted that this shift reflects the uncertainty surrounding the possible financial penalties and the nature and duration of any nonfinancial penalties TD may face.
He also mentioned that this situation “may not be consistent” with the bank’s a1 baseline credit rating, even though TD is one of the highest-rated banks globally.
On August 21, TD, Canada's second-largest lender, estimated that it might have to pay up to US$3bn due to its compliance issues in the US. Earlier this year, both Standard & Poor’s and Fitch Ratings adjusted their outlooks to negative, citing government scrutiny over the bank’s controls.
A spokesperson for TD declined to comment on the ongoing situation.
