Here’s what I do know to this point about TD Bank’s anti-money laundering problems. Canada’s second largest bank has been slow to implement the needed checks and balances. It was so loose that the Canadian regulator Fintrac fined TD of $9.2 million – not a significant penalty for one in every of North America’s largest financial institutions. TD has already paid this effective.
Subject to the outcomes of an ongoing investigation by U.S. regulators and the Department of Justice into the bank’s ties to a $653 million A money laundering case involving fentanyl and Chinese criminal organizations says TD could face fines of as much as $2 billion and potentially be forced to limit its growth strategy within the United States
Over the past decade, TD has been on an acquisition spree south of the border, growing into one in every of America’s 10 largest banks.
How much has TD stock fallen?
Given the bank’s size and long-standing status as a blue-chip investment, TD is an integral a part of many Canadian portfolios, either directly or not directly through mutual funds and exchange traded funds (ETFs). Therefore, although TD Bank CEO Bharat Masrani admitted that the bank had failed in its responsibilities, the news didn’t have a significant impact on the stock’s value. The price fell to a 52-week low of just below $74 per share before rising back to around $77. However, the stock was already in a downward trend before the cash laundering allegations.
What the TD situation could mean for Canadian investors
When this TD situation got here up, I began serious about the crash and demise of Nortel Networks. It was also a secure investment and widely utilized in the Nineties and early 2000s until the accounting scandal that sent the telecommunications giant into chapter 11. However, unlike Nortel, TD is not going anywhere. The company has a solid structure, a powerful business model and good margins. The dividend yield stays at 5.3%, down barely from 5.5%.
For now, TD is weathering this storm well. Although it’s difficult to know what is going to occur when governing bodies within the US make their judgments, for a controversial investor like myself, I view TD as a long-term investment with a possible return on the share price of $109 in October 2022 .
Although I actually have already purchased TD stock, it’s a situation where the client must watch out as we still have no idea what the penalties can be. I tell individual investors that things are going to be bumpy within the short term. How bumpy it’ll be depends upon the final result of the investigation. In the long run I believe it’ll be effective. I do not buy it expecting it to get well quickly (although that may occur and if it does, unbelievable, I’ll take the win).
Otherwise, I decide to own it since it pays a healthy dividend, since it’s the second-largest bank within the country, and since it is a high-quality name that I should purchase today at an important price.
