Banks Abandoned $13.4 Billion Acquisition Due to Regulatory Hurdles - Trade Oracle

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Banks Abandoned $13.4 Billion Acquisition Due to Regulatory Hurdles

On Thursday, Toronto-Dominion Bank (TD) and First Horizon called off their $13.4 billion merger, citing regulatory-approval hurdles. While no specific reason was given, sources familiar with the matter say that TD’s handling of suspicious customer transactions was the underlying issue.

The Proposed Merger

The proposed merger between TD and First Horizon was highly anticipated as it would have created a new banking powerhouse in the United States. First Horizon has a strong presence in the southern United States, while TD has a significant foothold in the northeast. Together, the two banks would have had a significant national presence, with over $600 billion in assets.

The Regulatory Hurdles

The main obstacle to the merger was the regulatory-approval process. The Office of the Comptroller of the Currency and the Federal Reserve were hesitant to give TD a clean bill of health on its anti-money-laundering practices. This reluctance was likely due to TD’s history of handling suspicious transactions. In 2019, TD was fined $950 million by US regulators for failing to report suspicious transactions.

The regulatory hurdles proved to be too much for the banks, and they decided to call off the merger. While TD and First Horizon did not provide a specific reason for the termination of the deal, sources indicate that the regulatory hurdles were the main issue.

The Fallout

The termination of the merger is a blow to both TD and First Horizon. TD was looking to expand its presence in the US, and the merger with First Horizon would have been a significant step in that direction. First Horizon, on the other hand, was looking to leverage TD’s technology and scale to compete with larger regional banks.

The termination of the merger could also have wider implications for the banking industry. It could make it more difficult for smaller banks to merge with larger banks, as regulators become more stringent in their scrutiny of anti-money-laundering practices.

Conclusion

The termination of the TD-First Horizon merger highlights the importance of regulatory approval in the banking industry. While the banks did not provide a specific reason for the termination of the deal, sources indicate that TD’s handling of suspicious transactions was the main issue. The fallout from the termination of the merger could have wider implications for the banking industry, making it more difficult for smaller banks to merge with larger banks in the future.

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