Toronto-Dominion Bank and First Horizon Call Off $13.4 Billion Merger Due to Regulatory Hurdles
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Summary:
Toronto-Dominion Bank (TD) and First Horizon have canceled their $13.4 billion merger due to regulatory challenges, resulting in a nearly 37% drop in First Horizon’s shares. The deal was initially announced in February 2022, and its termination arrives during a challenging time for U.S. regional banks like First Horizon. TD faced scrutiny from U.S. regulators in recent years, including a $122 million settlement with the Consumer Financial Protection Bureau in 2020. As part of the termination agreement, TD will pay First Horizon $200 million in cash and an additional $25 million fee reimbursement.
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TD cancel their $13.4 billion merger due to regulatory challenges
Toronto-Dominion Bank (TD) and First Horizon have decided to cancel their $13.4 billion merger after encountering regulatory challenges. The deal, initially announced in February 2022, faced uncertainties regarding approval from regulators, prompting both banks to terminate the agreement.
First Horizon’s shares fell nearly 37% in afternoon trading. This cancellation arrives during a challenging time for U.S. regional banks like First Horizon, as the recent seizure and sale of First Republic Bank to JPMorgan Chase have impacted confidence in midsize lenders. Moreover, the collapse of Silicon Valley Bank and New York’s Signature Bank in March further exacerbated the situation.
The merger would have positioned TD as the sixth-largest U.S. bank by assets, expanding its reach into Louisiana, Tennessee, Texas, and Georgia. The Canadian bank has faced scrutiny from U.S. regulators in recent years, including a $122 million settlement with the Consumer Financial Protection Bureau in 2020.
Sen. Elizabeth Warren of Massachusetts requested the Office of the Comptroller of the Currency block the First Horizon deal last year, citing “unchecked fraud and abuse” at TD Bank. TD Bank has denied any liability or wrongdoing in relation to its regulatory issues.
As part of the termination agreement, TD will pay First Horizon $200 million in cash and an additional $25 million fee reimbursement. First Horizon’s CEO, Bryan Jordan, stated that the termination fee would help the bank boost its capital ratios.
Key takeaways
- Toronto-Dominion Bank (TD) and First Horizon canceled their $13.4 billion merger due to regulatory challenges.
- The merger would have positioned TD as the sixth-largest U.S. bank by assets, expanding its reach into Louisiana, Tennessee, Texas, and Georgia.
- Sen. Elizabeth Warren requested the Office of the Comptroller of the Currency block the First Horizon deal last year.
- TD faced scrutiny from U.S. regulators in recent years, including a $122 million settlement with the Consumer Financial Protection Bureau in 2020.
- TD will pay First Horizon $200 million in cash and an additional $25 million fee reimbursement as part of the termination agreement.
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