Standard&Poor's today said The Toronto-Dominion Bank's (TD Bank; AA-/Stable/A-1+) announced plans to repurchase a 10.5% minority interest in TD Waterhouse Group Inc. for a total consideration of C$558 million (US$9.00/share), would not affect the ratings or outlook on the bank. The reacquisition will be partially equity financed with at least C$350 million. By Standard&Poor's calculations for risk-adjusted assets, TD Bank's capitalization is weaker than its Canadian peers due to the C$5.3 billion in goodwill and intangibles created by the acquisition of CT Financial Services Inc. Nevertheless, TD Bank is generating tangible capital at a rapid pace, and capitalization should continue to improve after this acquisition, assuming earnings and loan quality do not deteriorate markedly.
