TD’s merger with Canada Trust was evidently a strategy for the bank to increase its international clout. In terms of the Dunning reading, we can categorize TD as a strategic asset seeker. Such a move would “add to the acquiring firm’s existing portfolio of assets, others which they perceive will either sustain or strengthen their own overall competitive position. ” (Dunning, 60) Many of the big Canadian banks in the late 1990s were looking to merge because of the fact that they were too small to compete in the world stage, for example, the Royal Bank also attempted a marriage with the Bank of Montreal, but Paul Martin rejected it.
Therefore, TD’s merger with Canada Trust helped increase the bank’s reputation and competitiveness globally. In fact, it helped bump up its position in the world ranking. “The $8 billion [CT] deal would push it up 23 spots to 46th place, nestling it snugly between Japan’s Tokai Bank and France’s Paribas” (Krehm). Furthermore, we can also look at Ohmae’s reading and see how TD is trying to form alliances with huge multinationals in order to be able to spread its retail banking services around the world.
In a bid to continue its leading retail strategic relationships, TD had announced in September of 2001 that it would offer its banking services to Wal-Mart customers in the US. “Through TD Bank USA, a wholly owned subsidiary of TD Bank Financial Group [headquartered in New Jersey], Wal-Mart customers will be offered chequing and savings accounts, as well as certificates of deposit and overdraft protection. ” “The first stores to offer TD Bank USA services will primarily be new ‘Supercenters.
‘ Over time, TD Bank USA intends to expand the initiative to other Wal-Mart locations in the U. S. ” (www. td. com) However, every strategy has its hurdles. Toronto Dominion Securities (TDS) is the wholesale banking arm of the TD Bank Financial Group. TD Securities works with clients around the world, focusing selectively and strategically on the key financial centers of Toronto, Montreal, Calgary, Vancouver, New York, London, Singapore, Hong Kong and Sydney.
Their services include the underwriting and distribution of new debt and equity issues, providing advice on strategic acquisitions and divestitures, and executing daily trading and investment needs. As the most profitable wholesale bank in Canada, TDS provides this wide range of capital market products and services to corporations, governments, institutions and private clients in five key business areas. They are the following: Investment Banking, Debt Capital Markets, Institutional Equities, also known as TD Newcrest, Private Equity, formally TD Capital and Foreign Exchange.
Investment Banking The investment banking arm of TDS provides financial advisory and capital-raising services to clients in Canada, the U. S. , Europe, Asia and Australia. More precisely, they provide financial advisory services in mergers and acquisitions, divestitures, capital structuring and risk management. Within TD’s investment banking, its capital-raising services include the placements of common equity, preferred shares, private equity, public and private debt securities, and bank debt including syndications and bridge financing.
This is achieved through a newly developed client organization scheme, whereby client coverage is organized around specialized industry teams in communications ; media, diversified industries, financial institutions, oil ; gas, real estate, technology ; utilities, and power. Debt Capital Markets Ranked No. 1 in corporate debt underwriting in Canada by the Financial Post, TDS Debt Capital Markets sector provides trading, sales and origination of money market, investment and non-investment grade fixed income products and interest rate and credit derivatives to clients in Canada, the U.S. , Europe, Asia and Australia.
Within this branch, there exists three subgroups which yet again focus on providing a variety of assistance to a range of institutions. The first of these is their Fixed Income Group, which offers a full range of underwriting, sales and trading products for Canadian, U. S. , and European debt issuers and investors. Following this is the Government Finance team, which provides full-service coverage to both the federal and provincial governments of Canada along with their respective agencies.
Lastly, the Money Market group extends to issuing and investing clients a complete selection of products maturing in less than two years including treasury bills, provincial securities, bankers’ acceptances, commercial paper, bonds, structured notes, securitized commercial paper and derivatives. Institutional Equities As one of Canada’s leaders in institutional bloc trading, underwriting and distribution, the Institutional Equities division of TD Securities, known as TD Newcrest, provides equity sales, trading, research, underwriting and distribution services from offices worldwide.
Acquired in November of 2001, Newcrest Capital, one of Canada’s leading independent investment dealers has been a formidable asset to TD Securities Institutional Equities. Together they provide comprehensive and insightful research coverage of communications, technology, financial services, oil & gas, mining & metals, industrial products, forest products, technology, utilities & pipelines and real estate. This is conducted with a heavy emphasis on quantitative analysis and technical strategy. TD Capital
Established in 1968 by Toronto Dominion Bank, TD Capital is the independent private equity arm of TD Securities. With over CAD $3. 0 billion (approximately US $1. 9 billion) under management and a portfolio of approximately 200 companies worldwide, TD Capital is now headquartered in Toronto, with offices in New York and Boston. TDC focuses on generating strong returns by forging partnerships with driven, innovative management teams, and providing them with capital and strategic support to grow their businesses into leading companies in their field.
Through its five distinct investment groups, TD Capital invests in compelling opportunities across a broad range of industries in North America, including financial services, healthcare, information technology, media and communications and participates in leading private equity funds. The first of these five groups is termed the Canadian Private Equity Partners group. This division invests equity in Canadian-based, middle-market business across a variety of industries to fund buyouts, growth and expansion, acquisitions and recapitalization.
Following this are the Communications Partners and Private Equity Investors units, which invest in media and communications businesses in the U. S. , and top-tier North American and European private equity funds, respectively. The Mezzanine Partners group offers subordinated debt capital to diversified North American businesses, while the final group, Technology Ventures, invests equity in early and growth stage technology companies across all industry sectors. Foreign Exchange The final division of TD Securities is the Foreign Exchange arm.
As one of the top providers of spot, forwards and currency options, this group provides foreign exchange trading and sales through offices in Canada, the U. S. , Europe, Asia and Australia. The goal of TDS-FX is to help its institutional, corporate, commercial and retail clients to manage the risk and opportunities associated with the volatile foreign exchange markets. This is achieved through an integrated sales approach which helps TD Securities provide its clients with market intelligence and strong risk management advice.
TD Securities and the World Today, with more than 3,500 employees and offices situated in twenty cities in thirteen countries, it is quite apparent that Toronto Dominion Securities has made significant advancements in its internationalization process. The closing of the 2001 fiscal year has further proven this as TD Securities has achieved numerous significant gains. TDS revenue has more than doubled in recent years, moving from approximately (CAD) $1. 4 billion in 1996 to a staggering (CAD) $ 3. 1 billion at the closing of 2001.
Furthermore, internationally speaking, the source of this revenue has also increased dramatically, leaping from 34% in 1997 to 41% in 2001. The key to the aforementioned success within TD Securities has derived from a number of fundamental advancements made in the previous 24 months. As its most successful year ever, in 2001 TDS completed some of the largest deals in Canadian history, and further solidified its reputation as a leading wholesale bank. The first and most vital of these deals was TDS acquisition of Newcrest Capital Inc.
for an estimated (CAD) $224 million. As an “alliance of complimentary equals” (Ohmae) this transaction will combine the strengths of Newcrest as a leading Canadian investment banking and institutional equities firm, with the global capabilities of TD Securities. The deal, which adds to TDS existing strengths in investment banking and institutional equities in Canada, further positions TDS as a full-service provider of investment banking services in North America and in selected markets around the world.
Donald A.Wright, CEO of TDS commented, sating, “It’s an excellent strategic fit that provides TDS with a solid base for further expansion in the U. S. and other global markets. ” Similarly, Robert Dorrance, CEO of Newcrest said that, “Combining our people, our expertise and our entrepreneurial approach as a boutique dealer with the existing integrated financial, advisory and distribution clout of TD is bound to be a winning combination. ” The following acquisition that TDS made in 2001 was that of the Stafford group of firms and the LETCO group, both based out of Chicago.
Operating on U. S.and European exchanges, the over-the-counter marketplace, and fully electronic environments, Stafford acts as a market-maker in more than 700 securities. It has been a leader in innovating technology and incorporating sophisticated quantitative research and analytics to increase the efficiency, profitability and risk management of its trading and market-making business. It has a tradition of attracting the industry’s most talented trading, support, quantitative research and information technology professionals and is well-known for its superior proprietary technological infrastructure.
LETCO, recognized as an industry innovator, is consistently rated one of the top three options trading firms in terms of transaction volume and quality of market performance on the Chicago Board Options Exchange (CBOE), American Stock Exchange (AMEX), Philadelphia Stock Exchange (PHLX) and the Pacific Exchange (PCX). LETCO is known for its customer-centered approach, providing the highest quality, liquid markets and speed of execution. This combination deal went for an approximate (USD) $ 430 million and closed in March of 2002.
From a Dunning point of view this deal would be regarded as a market-seeking acquisition. It will provide a gateway into the an attractive market that has experienced high growth while, according to Charlie Baillie, “The deal allows TDS to acquire significant market presence, and will rank it among the leaders in this growing industry. ” The final deal that TD Securities made was confirmed in May of this year. This is when TDS completed its purchase of Botta Plus from Botta Capital Management.
Established in 2001 by BCM, Botta Plus provides multiple value-added services to broker-dealers, banks and institutions located throughout North America and Europe. Botta Plus products include facilitating the management of options exchange floor operations, helping clients maximize payment potential for their order flow, consulting on global trading issues, such as addressing regulations, and developing programs to help firms internalize their order flow.
As a resource-seeking move, in this case TDS hopes to acquire what TDS Equity Options President Jason Marks describes as, “Botta Plus’s in-depth industry knowledge and its commitment to client service, which are an excellent fit with TD Securities equity options market-making capabilities and our leading edge technology. ” These acquisitions should clearly be instrumental in TD Securities success in the years to come.
By successfully integrating the operations of Newcrest, TDS has strengthened its position in institutional equities and investment banking, while enhancing its ability to deliver outstanding corporate finance service to its clients. The acquisitions of LETCO, Stafford and Botta Plus will enable TDS to provide its clients with access to a significantly broader range of products and resources. Furthermore, as a result of the acquisitions TDS has achieved scale in this market, becoming the second-largest listed equity options specialist in North America.
To compliment the insightful strategic acquisitions that TD Securities made in recent months, it also completed some of the largest deals in Canadian history, thereby solidifying its reputation as a wholesale bank. After the Canadian government enacted legislation allowing certain insurance companies to de-mutualize and convert into shareholder-owned companies TDS aided Clarica Life Insurance Company through a process of evaluating and pursuing various strategic ownership alternatives.
When a merger with Sun Life financial emerged, TD Securities provided advice on negotiating and structuring the deal, eventually leading to the approval of the merger with SLF, creating the largest life insurance company in Canada. Equally as impressive, in 2001 TD Securities worked with Vancouver-based Telus Corporation to complete the largest corporate financing in Canadian history, with total proceeds of (CAD) $9. 2 billion. This TDS accomplished by designing a complex series of interdependent transactions that would enable Telus to extend the maturity of its debt and substantially reduce its capital cost.
Finally, it was Swiss-based Eurofima that turned to TD Securities to launch its landmark “Kangaroo” bond issue in 2001. At the time of launch, the Triple-A rated 10-year Kangaroo was the largest liquid corporate bond outstanding and is now, at A$ 500 million, the largest 10-year issue of its kind in the Australian dollar market. In July of 2001, TDS solely arranged an A$ 200 million 10-year kangaroo, and in August and November increased the issue by a further A$ 100 million respectively. In February 2002, market demands were such that TD Securities re-opened the trade bringing the total size of that issue to the target A$ 500 million.
This part of the report will focus on TD Waterhouse, the broking department within the TD Financial Group. TD Waterhouse is a global firm in which the TD Financial Group held an 89% equity stake until November 2001, when it purchased the remaining 12% for $3. 4 million. This puts a value on TD Waterhouse of approximately US $28 billion, and it is now a wholly-owned subsidiary within the TD Financial Group. TD Waterhouse’s main business is its discount broking service, which it offers around the globe in many different markets.
Whilst Waterhouse also provides full-service brokerage and provides information to its clients via analysis and research, the main focus of the business is its online discount broking, which will be the focus of this section. TD Waterhouse is the second largest discount broker in the world, second only to Charles Schwab ; co. In 1999, TD Waterhouse conducted 13. 3% of the world’s online trades, according to a study by US firm Bancorp Piper Jaffray. TD Waterhouse services over 4 million clients, and has expanded rapidly across the globe in recent years.