Charles Schwab's investment portfolio is set for a change, with TD announcing its plans for a complete sale.
In a strategic move aimed at capital allocation and exiting the Schwab investment while realising strong returns, TD Bank Group has announced the sale of its entire investment in Charles Schwab. The sale, which was made public on a Monday, is expected to fetch $14 billion.
The decision to sell comes after TD agreed to pay more than $3 billion in penalties in October in connection with its AML woes. As a result, the bank must now operate under a $434 billion asset cap for its U.S. retail operations.
TD had previously sold 40.5 million Schwab shares last August, reducing its stake from 12.3% to 10.1%. Charles Schwab has since agreed to repurchase $1.5 billion of its shares from TD, conditional on the completion of a registered offering. According to The Wall Street Journal, Schwab is expected to repurchase its shares with cash on hand over the course of the year.
TD's CEO, Raymond Chun, stated that the bank made the decision to exit its Schwab investment as part of a strategic review. The bank will use C$8 billion ($5.6 billion) of the sale's proceeds to repurchase its own stock. The remaining funds will be reinvested into TD's core businesses to support customer services, improve performance, and accelerate organic growth.
Improving AML practices is a top priority for TD, as stated by CEO Raymond Chun. This move aligns with comments Chun made at an investor conference in January, where he mentioned reconsidering the investment in Schwab.
Despite the equity divestiture, TD will continue collaboration with Schwab through the Insured Deposit Account Agreement. This move reflects TD’s confidence in its growth opportunities and long-term prospects independent of its Schwab investment, while maintaining a business relationship with Schwab in specific areas.
Charles Schwab continues to perform strongly, with solid revenue and earnings growth in Q2 2025, indicating strong operational momentum that TD is opting to exit from in favor of focused investment in its own businesses.
[1] TD Bank Group press release, [link to press release] [2] The Wall Street Journal, [link to article] [3] Charles Schwab Q2 2025 earnings report, [link to earnings report]
TD Bank Group, seeking to redirect capital and independently bolster its businesses, will utilize C$8 billion from the sale proceeds to repurchase its own stock. The remaining funds will be reinvested into TD's core businesses for enhancing customer services, augmenting performance, and fostering organic growth, as stated by TD's CEO, Raymond Chun.
Aligning with this strategy, TD will focus its investments on expanding and improving its own business operations, thereby choosing to exit its investment in Charles Schwab, while continuing collaboration through the Insured Deposit Account Agreement in specified areas.
