Canada's Toronto-Dominion Bank (NYSE:TD) is reportedly expected to bid for Coral Gables, Fla.-based thrift BankUnited Financial Corp. (NASDAQ:BKUNA) as Canadian banks begin to look abroad for acquisitions now that the credit crisis is easing.
The Wall Street Journal reported Tuesday that the Toronto-based bank is expected to team up with Goldman Sachs Group Inc. (NYSE:GS) to make the bid.
Citing people familiar with the situation, the Journal said BankUnited has been staggered by losses on real estate loans and has been threatened with seizure by regulators if it doesn't find a buyer or new capital. The report added that the Federal Deposit Insurance Corp.'s auction of BankUnited ends Tuesday.
BankUnited stock has lost 71% of its value in the past year and now trades around $1 per share, giving it a market capitalization of about $35 million.
If TD is successful, the purchase will mark a continuation of the bank's five-year march down the Eastern Seaboard. The bank entered the U.S. market in 2004 when it bought 51% of BankNorth in Portland, Maine. After buying out all of the Maine bank, Toronto-Dominion continued to move into the New York-New Jersey market, culminating with its $8.5 billion purchase of Cherry Hill, N.J.-based Commerce Bancorp last year.
In all, the No. 2 Canadian bank has announced $17.9 billion of bank purchases in the U.S. in five yeras and has accrued the largest exposure to the U.S. market of any Canadian bank. The bank also has 40% of Omaha-based online broker TD Ameritrade Inc. (NASDAQ:AMTD).
Canadian banks have diversified businesses and strong balance sheets, and have therefore weathered the recent financial crisis without any government support. Their strength has created growing anticipation that they would take advantage of low asset prices in the U.S. to build up their U.S. businesses.
Royal Bank of Canada (NYSE:RY), the largest Canadian bank, already has a sizable retail banking outlet in the Southeast, and Bank of Montreal (NYSE:BMO) has a beachhead in Chicagoland and Michigan. Bank of Nova Scotia's (NYSE:BNS) foreign holdings concentrate on emerging markets rather than the U.S., and Canadian Imperial Bank of Commerce (NYSE:CM) focuses mainly on the domestic market. - Peter Moreira
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