UPDATE: This article includes analysis and additional information from TD's announcement, as well as comments from the company's Thursday morning conference call.
TD Bank Group's president and CEO is stepping down next year after a decade at the helm, the final few years of which have been
Bharat Masrani, who joined the Toronto-based bank nearly 40 years ago, plans to retire on April 10, 2025, the bank announced Thursday. He will pass the torch to Raymond Chun, who currently serves as the head of Canadian personal banking at TD.
While the bank has seen massive digital transformation and stateside expansion during Masrani's tenure, TD has recently faced public scrutiny as failures in its U.S. anti-money-laundering program have come to light. The bank expects to pay
"We have a strong bench of senior leaders and will execute a smooth and seamless CEO transition," Masrani said Thursday in a prepared statement. "The anti-money laundering challenges we face took place on my watch as CEO and I take full responsibility. 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."
In a prepared statement, Alan MacGibbon, chair of TD's board, said Masrani "led the bank through a period of profound change in our industry." MacGibbon said the board extends "its deep appreciation" for Masrani's contributions to the bank.
"[Masrani] accelerated our transformation in the digital age, enhanced the competitiveness of our businesses, nurtured one of the world's most valuable brands, and steered TD through complexity with a steady hand," MacGibbon said.
Chun will take on the chief operating officer role and join the board of directors, effective Nov. 1, before transitioning to the CEO job next spring. Following his retirement, Masrani will continue as an advisor to TD until Oct. 31, 2025.
TD's stock price rose more than 2% following the leadership announcements, trading at $63.90 on the New York Stock Exchange as of Thursday mid-morning.
John Aiken, an analyst at Jefferies, wrote in a note following the announcement that Chun had been flagged as a contender for TD's next CEO, and that his lack of direct ties with the U.S. retail banking operations, where the anti-money-laundering problems occurred, "probably moved him up the list."
"While Bharat Masrani's retirement is not a surprise given his tenure and the impact that the U.S. regulatory issues have had on TD, the timing is a bit of a surprise," Aiken wrote. "We had assumed that the announcement would be made after the investigation was complete."
Masrani said on a Thursday morning conference call that the timing of his retirement was chosen to line up with TD's annual leadership meeting in Toronto, where 2,500 bank executives are currently gathered.
"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, supporting [Leo Salom and Chun] in that endeavor," Masrani said.
Salom, the president and CEO of its U.S. subsidiary based in Cherry Hill, New Jersey, had once seemed like a reasonable heir to Masrani. But the
Chun was chosen as next-in-line after a "lengthy and competitive process," which included external contenders, Masrani said.
Although Chun comes from TD's Canadian line of business, the company is still focused on its presence in the U.S., where it markets itself as "America's Most Convenient Bank," Masrani said. He added that Chun and Salom have a strong working relationship, and he doesn't expect additional changes to the executive team.
Chun, on the conference call, said Masrani has been a "steady hand guiding us forward" and thanked him for his support through "a tough period." The incoming CEO added that he is "energized by the opportunity" to lead the bank forward, and is focused on fixing its risk management south of the border.
"TD has so many advantages: a powerful balance sheet, terrific talent, high performing businesses and leading franchises in Canada and the U.S.," Chun said on the conference call. "We also have a significant challenge in front of us. … We have the team in place to strengthen our foundations, overcome the current challenges and write the next chapter of TD's story."
Before heading up the bank's home country's personal banking strategy, Chun served in roles leading direct investing, insurance and wealth management.
The bank also announced that Riaz Ahmed, president and CEO of TD Securities and head of wholesale banking, will retire at the end of next January following nearly three decades at the bank. TD's head of wealth management and insurance, Tim Wiggan, will move into Ahmed's former post, effective Nov. 1.
The bank said that Sona Mehta, who leads real estate secured lending, everyday banking and saving and investing, will be Chun's successor as the head of Canadian personal banking.
