TD Bank settles Enron suit

Date: Tuesday, August 16, 2005
Author: Advisor.ca

Another Canadian bank has settled with Enron over its alleged role in the collapse of the energy trader. TD Bank Financial has agreed to pay a total of $130 million US to settle a number of claims.

"We have agreed to a negotiated settlement in this matter because we thought it was preferable to the time, expense and unpredictability of litigation and for that reason, believe that it is in the best interest of our shareholders," said Ed Clark, president and CEO, TD Bank Financial Group. He added that the bank has been bracing itself for the fallout of these proceedings for the past two years, shoring up its balance sheet.

The settlement includes: $50 million to settle common law claims; $20 million for payments made by Enron to creditors in the three years prior to declaring bankruptcy; and $60 million for Enron to allow the bank to transfer additional claims to third parties. The bank will take an after-tax charge of $238 million.

The settlement allows TD to admit no liability or wrong-doing, which would have been held against the bank in a massive class-action suit in Texas. The bank is adding $300 million to its existing litigation reserve. On August 5, CIBC agreed to pay $250 million to extricate itself from its Enron exposure, but also agreed to a $2.4 billion settlement, the largest so far in the case.