Moody’s downgrades TD’s outlook to negative on cost of U.S. probe
The rising cost of a U.S. investigation into Toronto-Dominion Bank’s money-laundering controls is casting a darkening shadow over one of the strongest bank credit ratings in the world, with Moody’s Ratings following rivals in placing a negative outlook on the firm.
TD’s announcement last week that it’s stockpiling an additional US$2.6 billion to resolve inquiries raises concerns about the severity of the case and its ultimate toll, Moody’s said in statement late Tuesday.
The shift “reflects the inherent uncertainty related to the magnitude of financial penalties and nature and duration of possible nonfinancial penalties that it could incur related to these challenges,” Robert Colangelo, a senior credit officer at Moody’s, said in the statement. The episode “may not be consistent” with the bank’s a1 baseline credit rating, he said, noting the firm is among the highest-rated banks globally.
A spokesperson for the bank declined to comment.
Canada’s second-biggest lender estimated Aug. 21 that it may pay US$3 billion related to its U.S. compliance lapses. Standard & Poor’s and Fitch Ratings changed their outlooks to negative earlier this year, citing government scrutiny of its controls.
Bloomberg.com
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