Toronto-Dominion Bank is making major changes to its top executive ranks that overhaul the leadership of its retail banking operations and that appear to anoint a set of potential successors to CEO Bharat Masrani.
Canadian personal banking head Teri Currie will retire at the end of January after five years in charge of the bank’s largest division and nearly 35 years at the bank. Taking her place will be Michael Rhodes, who moves to run retail banking operations after a stint as head of innovation, technology and shared services. Ms. Currie will join the board of directors of TD’s U.S. banking arm.
The chief executive officer of TD Bank in the United States, Greg Braca, will also move to a new job as vice-chair, where he will nurture relationships with clients and look to drum up new business. The current head of TD’s wealth management and insurance businesses, Leo Salom, will succeed Mr. Braca as CEO of the U.S. business. Raymond Chun, the president of TD’s direct investing business, will become group head of wealth and insurance. The executives will start their new jobs on Jan. 1.
“Michael, Leo and Ray bring significant experience and proven track-records leading critical businesses and functions to their new roles,” Mr. Masrani said in a statement.
The turnover on TD’s senior executive team comes as investors look for signs that the bank is turning around financial performance in retail banking that has lagged rivals’ during the COVID-19 pandemic. It also creates a clear set of candidates who could one day succeed Mr. Masrani, who is entering his eighth year as CEO. The bank made changes to Mr. Masrani’s pay agreement in 2019 that gave him incentives to stay in the job until the end of 2023.
Thursday’s shuffle was the second set of significant changes to the executive group that reports to Mr. Masrani in the past four months. In late June, the bank announced that Riaz Ahmed would become CEO of TD Securities, the bank’s investment dealer, as the division’s long-time head Bob Dorrance retired. Kelvin Tran was also promoted to chief financial officer, filling the role left open by Mr. Ahmed’s move.
“I think it sets the stage for a new rank of leadership,” said Ebrahim Poonawala, an analyst at Bank of America Securities, in an interview. “Maybe [Mr. Masrani] has two more years, three more years, but this is setting the stage now to have a clear path to succession.”
TD’s overall financial performance has trailed other major Canadian banks in recent quarters, partly because of “lagging growth in Canadian banking,” said Gabriel Dechaine, an analyst at National Bank Financial Inc. in a research note last month. Investors are also concerned about emerging risks tied to falling trading commissions at discount brokerages and regulatory pressure on fees charged on credit card transactions and overdrafts.
That presents a particular threat to TD, which earns a larger share of its revenue from retail banking than its peers, especially in the U.S., where it has more than 1,100 branches. The bank’s profit margins on personal loans have been squeezed especially hard as interest rates fell to ultralow levels during the COVID-19 pandemic.
“I think there has been some anxiety among shareholders and investors around what’s next for TD,” Mr. Poonawala said. “Maybe this kind of kicks in a little bit of energy and a sense of urgency around management actions and management messaging.”
There are also reasons TD could be poised for a rebound, however. This week, the Bank of Canada moved forward its timeline to raise interest rates, signalling that hikes could come as soon as April, and analysts expect that TD has the most to gain among Canadian lenders as the cost of borrowing rises. Credit card lending – a business where Mr. Rhodes has experience – is a key source of revenue for TD that has shown signs it is starting to recover as pandemic restrictions ease and consumers spend more.
And TD has more excess capital than any other major Canadian bank, which will allow it to raise dividends and buy back shares once regulators lift temporary restrictions on capital distribution, or could open the door for acquisitions to bolster its U.S. business.
The bank’s share price has rallied in the last month, gaining 6 per cent, and edged slightly higher on Thursday on the Toronto Stock Exchange.
As part of Thursday’s executive changes, Mr. Rhodes’s technology and innovation role was split in two. Greg Keeley, the bank’s chief information officer, was named senior executive vice-president of technology and platforms. And Christine Morris, senior executive vice-president of enterprise transformation, enablement and customer experience, takes on added oversight of shared services, digitization and data analytics.
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James Bradshaw