* Masrani to become COO in July, CEO in November 2014
* Does not see a shift in vision
* Investors do not expect disruption from succession
* Shares down 1.4 percent, in line with peers
By Andrea Hopkins
TORONTO, April 3 Ed Clark, who transformed
Toronto-Dominion Bank from a struggling Canadian lender
into one of the largest retail banks in North America, will step
down next year and hand the reins to the bank's U.S. unit
leader, Bharat Masrani.
The handover, part of a larger changing of the guard taking
hold in the Canadian banking sector, comes earlier than
expected, but does not suggest a change in direction for
Canada's second-largest lender, Masrani told Reuters.
"I don't see a change in vision," said Masrani, who had been
seen as one of two likely successors to Clark. Tim Hockey, who
runs TD's Canadian retail bank, was the other.
"We're a growth-oriented bank and we would like to grow all
our businesses in all of the markets we are in," Masrani said.
Clark, 65, said last year that he planned to retire in the
"next few years," but gave no signs that his departure was
Under Masrani's watch, TD's U.S. retail network has grown to
around 1,300, outnumbering the bank's 1,200 Canadian branches at
a time when the U.S. market is showing signs of recovering while
Canadian loan growth is stagnating.
"I think probably what (Masrani's appointment) is saying is
that they're going to stay with the focus on the U.S.," said
John Kinsey, a portfolio manager at Caldwell Securities in
The bank's shares were down 1.4 percent around midday,
moving in line with the 1.5 percent drop in the Canadian
financial sector, as investors said they expect few hiccups at
the bank resulting from the transition.
"Canadian banks have done a good job transitioning guys into
their jobs," said Paul Harris, a portfolio manager at Avenue
Investment Management in Toronto.
"He's got a year and a half to transition. That's a long
Masrani, 56, will take on the role of chief operating
officer on July 1 in preparation for the CEO job, which he will
officially take over on Nov. 1, 2014.
BIG SHOES TO FILL
Masrani, who joined the bank in 1987 and took over
leadership of its U.S. unit in 2006, will have big shoes to fill
when he takes over from Clark.
A one-time senior bureaucrat in the Pierre Trudeau
government of the early 1980s, Clark joined TD when it acquired
Canada Trust in early 2000.
He was named CEO of TD in 2002, when the bank was struggling
under a mountain of bad loans to the telecommunications sector.
He set about de-risking the bank's balance sheet, and in
2004 began building the bank's now significant U.S. network by
launching a takeover of a majority stake of Maine lender
Banknorth, making the purchase when rival Royal Bank of Canada
was struggling with its own U.S. retail bank.
Clark followed that with a string of other U.S.
acquisitions, including the $8.5 billion acquisition of New
Jersey-based Commerce Bancorp in 2008.
While the U.S. division's profit has struggled at times, it
earned C$315 million during the first quarter of 2013, out of
the bank's overall profit of C$1.79 billion.
In an interview, Clark said he has accomplished what he
wanted to as CEO, and he believed the bank was well positioned
to benefit from strength in the United States at the same time
as Canadian lending slows as the country's housing sector cools.
"We believe there is going to be a rotation away from Canada
generally in the next two years here, the U.S. will ... grow a
little faster than Canada, but we're well positioned for that,"
TD's changing of the guard also comes as some of its rivals
are doing the same.
Bank of Nova Scotia last year named longtime
executive Brian Porter as its president, making him the heir
apparent to current CEO Rick Waugh. Larry Pollock, who had held
the top job at Canadian Western Bank for 23 years,
stepped down earlier this year.
TD, like other Canadian lenders such as RBC, Scotiabank and
Bank of Montreal, has continued to make acquisitions in
the wake of the 2008 financial crisis.
Masrani said that would likely continue, but the bank's U.S.
footprint is such that it does not need to make any deals to
satisfy its growth objectives.
"When we started in the U.S. we were very clear that we need
to have sufficient scale such that we can organically grow our
franchise," he said.
"The great thing for us is we don't have to do a transaction
in the U.S. We do have sufficient scale from which to grow
organically, so that continues to be our outlook."
Mike Pedersen, currently group head of wealth management,
insurance and corporate shared services, will succeed Masrani as
head of U.S. banking operations on July 1.
Tim Hockey, who along with TD's Canadian banking wing, heads
its auto finance and credit card units, will also be responsible
for TD Wealth Management starting this July.