The
Toronto Dominion Bank's top executive shrugged off criticism yesterday
by two U.S. hedge funds that he and his management team were using the
bank's minority stake in TD Ameritrade Holding Corp. to scuttle
takeover talks for the online broker.
Ed Clark, president and
chief executive of parent company TD Bank Financial Group, said he was
"highly confident" that TD Ameritrade's board was managing the company
in the interest of all shareholders. TD Bank owns about 40 per cent of
TD Ameritrade.
"I am not going to get drawn in to people making
up allegations that have no basis in fact," Clark told reporters
following a presentation on the bank's U.S. operations.
"This is a game that they play. They have an interest in short-term performance of the stocks, so they can get in and out."
Jana
Partners and S.A.C. Capital Advisors LLC – which collectively control
about 8.4 per cent of TD Ameritrade – have been pushing the Omaha,
Neb.-based brokerage to merge with either E-Trade Financial Corp. or
Charles Schwab Corp. Officials of those companies could not be reached
for comment.
The activist hedge funds stepped up their campaign
yesterday with a letter to the company saying that TD Bank directors
serving on TD Ameritrade's board should be prevented from "playing a
significant role in such discussions."
The letter specified "the
board must remove Mr. Clark from this role and empower the independent
directors to reach out and lead discussions with potential strategic
partners."
The funds also demanded access to records relating to
the board's exploration of possible strategic combinations, including
TD Bank's influence on the process.
A spokesperson for TD Ameritrade acknowledged receipt of the letter but declined further comment.
The
controversy appeared to intensify as TD Bank announced plans for its
wholly owned U.S. banking division to snag a greater share of consumer,
small business and commercial deposits in that cutthroat market by as
much as $10 billion (U.S.) over the next five years.
That
aggressive goal comes months after TD Banknorth slashed jobs and closed
branches in an effort to contain costs in a "tough" U.S. banking
environment. Its overall goal is to chop operating expenses by $50
million to $80 million, while increasing earnings by 7 per cent to 10
per cent.
"The environment continues to be hugely challenging,"
said Bharat Masrani, Banknorth's new CEO, adding competition for
deposits and loans remains intense.
The Portland, Me.-based bank
has completed 27 mergers over the past 12 years but says any new
acquisitions are on the back burner.
