Masrani's legacy at TD Bank will be marred by failure to land big acquisition
Wearing the worst mistake in Toronto-Dominion Bank’s 169-year history is not how Bharat Masrani expected to end his 10-year tenure as CEO. U.S. allegations that TD facilitated money laundering by criminal drug gangs in three states to the tune of US$653 million are all that Bay and Wall Streets are talking about when his bank is mentioned these days.
Yet in the arc of TD Bank’s history, Masrani will be remembered not just for undermining the bank’s position with U.S. regulators, but also for stumbling on a larger project, one that began in the mid-1990s under Charles Baillie’s leadership. As president and later CEO, Baillie initiated an aggressive growth strategy that included large acquisitions, buying Waterhouse Securities in 1996 to complement the TD Securities business he had created some years before.
In 2000, Baillie struck a deal with Ed Clark, CEO of Canada Trust, to buy the London, Ont.-based trust company. The acquisition would see Clark installed as CEO of a larger TD Bank in 2002 to continue Baillie’s work.
What was different about the mid 1990s TD strategy that culminated in the Canada Trust merger in 2000? It cut a new path to growth for TD that it had historically avoided — using large acquisitions to supercharge expansion. It was a change that Clark and his successor, Masrani, fully embraced.
For much of its history, TD had been a master of organic growth, a lower-risk strategy that relies on a mix of operational excellence and business acumen to drive expansion. This approach typically helps preserve operational efficiencies through discipline and organizational culture. It requires the leadership of the bank to stress excellence in execution of basic banking principles.
These ideas were deeply embedded
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