TD announces successor to long-time CEO
TORONTO – After establishing a strong presence for TD Bank in the United States, the head of its U.S. operations will return to Canada to succeed retiring chief executive Ed Clark, a move that could signal where the bank intends to focus in the coming years.
Clark’s successor will be Bharat Masrani, 56, the man who has helped develop one of the bank’s biggest assets — its stateside presence in personal and commercial banking — since he took the role in 2006.
TD has chiselled out a presence in several parts of New England and the U.S. northeastern and mid-Atlantic states mostly through acquisitions, and a change in the top position will not signal a major shift in priorities, Masrani said Wednesday.
“The message here is continuity,” he said told analysts shortly after the announcement.
“This is not looking at a bank that is looking for a dramatic change in direction.”
Masrani will move back to Canada to become the TD’s chief operating officer starting July 1 and then become CEO when Clark retires.
Clark, 65, has been the bank’s top executive for more than a decade, managing TD through years that marked significant growth for the bank while avoiding many potential pitfalls. He will retire on Nov. 1, 2014.
“Bharat has been my colleague and partner almost since the time of I arrived at TD,” Clark said.
“He helped reshape the risk appetite of the bank and was critical to many of our earlier decisions.”
Clark and Masrani said in a joint interview that a key factor behind TD’s success is the team approach taken by its senior management as well as its focus on personal and commercial banking — both in Canada and the United States.
Masrani said TD (TSX:TD) has consistently outgrown other banks and expects to take further market share even while facing the challenges of a low interest rate environment, slow economic growth, high personal debt levels and an evolving global financial system.
“For the most part, as long as we are a growth company, we are able to withstand a lot of those headwinds. My expectation is that we will continue to do that, we will continue to take share,” Masrani said.
Stonecap Securities analyst Brad Smith said those hurdles won’t be easy for the bank when considering the economic climate and the challenges of slower growth expectations for the Canadian retail banking sector.
“They’ve got a leadership position to defend and you’ve got a couple of banks here that are going to make it more difficult for them,” said Smith, senior financial services analyst at Stonecap.
He pointed to Scotiabank (TSX:BNS), CIBC (TSX:CM) and Royal Bank (TSX:RY) as the three banks that will be most competitive in domestic consumer banking.
Smith said that Canadian banks were fortunate enough to have a domestic economy that was relatively unscathed through the financial crisis, though that could set all of them up for future troubles, including TD which has prided itself on building an accessible presence for its customers with longer branch hours.
“When things are expanding, being the market leader in terms of store hours and footprint is a great thing,” he said.
“Then when things slow down you’ve got to skate really fast to get your house in order.”
The transition period for the two executives provides ample time for investors to prepare for the changes, said Barclays analyst John Aiken in a note.
“Ed Clark is well respected in the market and it is hard not to believe that his departure is not a net negative for TD,” he wrote.
“That said, TD’s bench strength remains quite strong and Bharat Masrani has done an exemplary job in growing the U.S. retail operations. With a reasonable transition timeline, we believe that Mr. Clark’s departure will only be viewed as a modest negative. “
The announcement of Clark’s retirement follows a move by Scotiabank last year to promote Brian Porter to the role of president, a move seen by many to position the former head of international banking as next in line for the bank’s top job when current chief executive Rick Waugh decides to retire.
In addition to the appointment of Masrani to his new role, TD plans to reassign responsibilities among other senior executives.
Masrani’s successor as head of the U.S. personal and commercial banking sector will be Mike Pedersen, TD’s group head for wealth management, insurance and corporate services.
Tim Hockey, currently TD’s head of Canadian banking, auto finance and credit cards, will add TD Wealth to his responsibilities in July.
Shares of TD Bank slipped $1.02 to close at $83.43 on the Toronto Stock Exchange.
© The Canadian Press, 2013