TD Bank CEO Bharat Masrani will retire next year and hand over the job to the head of its Canadian banking unit Ray Chun, as Canada’s second-biggest lender braces for expected U.S. fines for weakness in its anti-money laundering protocols.
Masrani, who became CEO in 2014, is set to step down in April, Toronto-based TD said. TD also said Riaz Ahmed, the head of its capital markets unit TD Securities, will retire in January.
Masrani has focused on the bank’s U.S. unit as it sought growth opportunities outside of Canada, building that business to become the 10th largest bank in the United States, with about $400 billion in assets and a network of 1,150 branches on the East Coast.
The bank last year ran into trouble with the U.S. government, including the Justice Department, for weakness in its anti-money laundering protocols after TD terminated its $13.4 billion acquisition of Tennessee-based First Horizon that would have grown its network in the Southwestern United States.
The U.S. regulatory investigations relate to allegations that Chinese drug traffickers used TD to launder at least $650 million from 2016 through 2021 and that an employee took a bribe to facilitate laundering of drug money.
TD reported its first loss in decades in August as it set aside $2.6 billion to cover expected fines from U.S. regulators.
“The anti-money laundering challenges we face took place on my watch as CEO and I take full responsibility,” Masrani said in a statement on Thursday.
“In the coming months, I will continue to advance and direct the critical remediation program required to meet our obligations and responsibilities and strengthen our risk and control foundation,” Masrani added.
Chun joined TD’s management training program in 1992 and has served in a number of senior positions over the past 32 years, including president of TD Direct Investing, CEO of TD Insurance, head of wealth management and insurance, and head of Canadian personal banking.
Shareholders and analysts interviewed by Reuters last month had said a CEO change was coming next year.
“The timing is a bit of a surprise,” Jefferies analyst John Aiken said on Thursday. “We had assumed that the announcement would be made after the (U.S.) investigation was complete.”
Aiken added that Chun “has not had any direct ties with the U.S. retail banking operations, which probably moved him up the list.”
TD’s stock has gained nearly 54% during Masrani’s tenure, though it is in negative territory this year. Its shares were up about 1.5% on Thursday morning.
Masrani will continue to serve as an advisor until the end of October 2025, TD said.
TD also announced a slew of executive changes: Paul Clark will head its Wealth Management unit, Sona Mehta will take Chun’s role as head of Canadian personal banking and Tim Wiggan will replace Ahmed as head of TD Securities.