skip to content
  1. Home
  2. >
  3. Questions
  4. >
  5. TD: 5i and I agree on the importance of good management teams (think CSU and ATD). [Toronto-Dominion Bank (The)]
You can view 2 more answers this month. Sign up for a free trial for unlimited access.

Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: 5i and I agree on the importance of good management teams (think CSU and ATD). I'm inclined to pin the giant mess TD has created with money laundering woes in the US on its management team and most especially the CEO and Board. Do you agree and if so, would it not be prudent to stick with other banks until we see changes in the upper ranks of TD?
Asked by Dave on August 23, 2024
5i Research Answer:

We absolutely agree on the importance of management teams. The TD money laundering scandle is being heavily pinned on its CEO and National Bank's Analyst noted, "Succession questions have become even more intense because of the bank’s U.S. regulatory issue." and “Providing clarity (if not certainty) of the direct financial consequences ‘clears the deck’ for a potential successor.” So the theory that the Bank's actions are ultimately a reflection of their CEO is correct. We do think that a lot of the uncertainty has been cleared up with the initial provision being disclosed now and this could be a bottoming out. Other banks not facing such challenges of course look better, but if an investor were to move on from TD now our concern is that this could be a sell at the bottom scenario. Now, to be a bit fair to the CEO as well, the bank does have 95,000 employees. While the CEO needs to instill 'culture' it is of course impossible to monitor every employee's actions. Not an excuse, as the buck does stop at the top, but highlights how difficult instilling culture can be.