The writing was on the wall for TD Banknorth. It was only a matter of time before Canada's Toronto Dominion Bank bought the remaining 43% of the Portland, Me.-based bank that it didn't already own.
Clues were clearly evident when long-time CEO William Ryan announced last month plans to retire effective March 1. His replacement is an in-house TD veteran,
Bharat Masrani. Even Ryan admits it was inevitable that the institution he built from a sleepy Maine savings bank into a regional player that spans from the northernmost reaches of New England down into the New Jersey suburbs of New York and Philadelphia.
"I don't think anybody should be surprised at this transaction," Ryan said during a conference call with analysts and investors. "You may have thought it might have taken a shorter time or a longer time, but this certainly is consistent with what we've told you before — that at some point, Toronto Dominion would own all of TD Banknorth."
Of course, the slated executive changes aren't the only reason the deal was inevitable. Canada's prohibition on new bank mergers have left deal-hungry institutions to turn their attention to the U.S. marketplace. Three Canadian banks have sought acquisitions in the U.S., but like gentleman, the three have steered clear of direct competition as TD has focused on the Northeast, Bank of Montreal has focused on the Great Lakes region of the upper Midwest and Royal Bank of Canada has focused on the Southeast.
In addition, TD's $3.2 billion agreement to buyout Banknorth's remaining shareholders will prompt additional speculation on the future of rival Northeast bank Sovereign Bancorp Inc. of Redding, Pa. The two banks have closely aped each other's strategies of growth through acquisitions over the last 17 years ultimately leading both to sell stakes to foreign banks.
Last year, Sovereign sold a 20% stake to Spain's Banco Santander. It is widely believed Banco Santander will eventually exercise its option to buy the rest of Sovereign. If TD's acquisition receives no push back from U.S. regulators, then expect Banco Santander to keep alive the tradition of copying each other. —Matthew Wurtzel
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