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TD Bank reports Q3 loss as it takes US$2.6B charge on anti-money laundering probe

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TORONTO – TD Bank Group swung to a rare loss in its latest quarter as it took a US$2.6-billion charge related to ongoing U.S. investigations into its anti-money laundering program.

The charge led to a reported quarterly loss of $181 million, the first for the bank since 2003, but it also provided clarity on the expected total cost of the investigations after some speculation it could go even higher.

“The US$2.6-billion provision we just announced, combined with the US$450-million provision announced last quarter, represents our current estimate of the total fines to be paid related to these matters,” chief executive Bharat Masrani told financial analysts on a conference call Thursday to discuss the company’s latest results.

TD also added it expects a global resolution of the issues will be finalized by the end of the calendar year.

“While we are not through the tunnel yet, we can see the light at the end of this journey,” Masrani said.

The anti-money laundering investigation has been a major overhang for TD for some time. The investigation helped scuttle its US$13.4-billion acquisition of U.S. bank First Horizon Corp. in May last year, while the bank disclosed last August it expected U.S. regulators to impose penalties because of deficiencies in the program.

Earlier this year, the bank admitted serious deficiencies in its program after media reports that criminals had laundered at least US$653 million in proceeds from illicit drugs through the bank.

“As I’ve said before, the failures were serious,” Masrani said Thursday. “We own it, we know what the issues are and we are fixing them.”

The bank said the expected resolution will include both the monetary penalties it outlined, along with non-monetary ones. Analysts have been concerned those penalties could include restrictions on growing its balance sheet, but Masrani declined to provide any details on what non-monetary penalties could entail.

“You know, there might be compliance requirements, there can be various other requirements, hard to speculate. We are in the middle of this, negotiations, investigations, so we just want to make sure that we give you a fulsome disclosure when it’s appropriate.”

Along with announcing the provision, the bank said it had sold 40.5 million shares of the Charles Schwab Corp., worth about US$2.6 billion.

Analysts questioned the need for the sale, but Masrani said it was about keeping capital levels high.

“It’s prudent to have capital. There is still a lot of volatility and economic conditions are not as predictable as one would like.”

The need for capital came as the loss in its latest quarter stood in sharp contrast to a profit of $2.88 billion a year ago. The loss amounted to 14 cents per diluted share for the quarter ended July 31 compared with a profit of $1.53 per diluted share a year ago.

Revenue in the quarter totalled $14.18 billion, up from $12.91 billion a year ago.

On the credit question that will be a key focus for other banks, TD reported provisions for credit losses amounted to $1.07 billion, up from $766 million in the same quarter last year, though essentially flat from the previous quarter.

On an adjusted basis, TD said it earned $2.05 per diluted share in its latest quarter compared with an adjusted profit of $1.95 per diluted share in the same quarter last year.

The adjusted profit fell a little short of the $2.07 analysts on average had expected, according to LSEG Data & Analytics.

One of the big reasons for the miss was a big pullback in earnings from TD’s insurance unit because of extreme weather events.

Insurance earnings of $15 million were down significantly from the $145 million last quarter after it saw $186 million in claims during the quarter from the Toronto area flooding and the Alberta wildfires. The bank has also seen a rise in claims from hailstorms in Calgary and flooding in Montreal this month.

“We’ve seen an increase in the frequency of weather events,” said Masrani.

However, analysts were more focused on the anti-money laundering issue than the slight miss, noting the clarity is welcome.

“It doesn’t answer all the outstanding questions, but it does provide some important clarity on the ultimate timeline for a full resolution of the bank’s U.S. AML issues, as well as a clearer picture of the total monetary penalty,” said Scotiabank analyst Meny Grauman in a note.

While the approximately US$3 billion in total penalties is at the upper end of some forecasts, Grauman noted that some were expecting as high as US$4 billion.

He said the real issue in his view are the potential non-monetary penalties and the lack of details on them, but he’s not as worried as the market.

“We continue to believe that the market is pricing in a worst-case scenario that does not really have a precedent.”

National Bank analyst Gabriel Dechaine said the bank’s long-term outlook is challenged by the potential restrictions on U.S. asset growth, along with a multi-year increase to compliance costs.

He said the clarity on the total monetary penalties removes an overhang on the bank, while also clearing the way for a potential CEO succession.

“CEO succession at TD would have been topical if only because current chief Bharat Masrani has been at the helm for a decade. Succession questions have become even more intense because of the bank’s U.S. regulatory issues.”

Investors will have to wait longer to find out the full fallout from the affair, but Masrani said he’s keen to lay out the full picture.

“I look forward to providing additional clarity as soon as I can.”

This report by The Canadian Press was first published Aug. 22, 2024.

Companies in this story: (TSX:TD)

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Statistics Canada reports wholesale sales higher in July

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OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.

The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.

The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.

The personal and household goods subsector fell 2.5 per cent to $12.1 billion.

In volume terms, overall wholesale sales rose 0.5 per cent in July.

Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.

This report by The Canadian Press was first published Sept. 13, 2024.

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Dolphins’ Tua Tagovailoa sustains third concussion of his career after hitting head on turf

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MIAMI GARDENS, Fla. (AP) — Miami Dolphins quarterback Tua Tagovailoa sustained a concussion for the third time in his NFL career, leaving his team’s game Thursday night against Buffalo after running into defensive back Damar Hamlin and hitting the back of his head against the turf.

Tagovailoa remained down for about two minutes before getting to his feet and walking to the sideline after the play in the third quarter. He made his way to the tunnel not long afterward, looking into the stands before smiling and departing toward the locker room.

The Dolphins needed almost no time before announcing it was a concussion. The team said he had two during the 2022 season, and Tagovailoa was diagnosed with another concussion when he was a college player at Alabama.

Dolphins coach Mike McDaniel said Tagovailoa would get “proper procedural evaluation” and “appropriate care” on Friday.

“The furthest thing from my mind is, ‘What is the timeline?’ We just need to evaluate and just worry about my teammate, like the rest of the guys are,” McDaniel said. “We’ll get more information tomorrow and take it day by day from here.”

Some players saw Tagovailoa in the locker room after the game and said they were encouraged. Tagovailoa spoke with some players and then went home after the game, McDaniel said.

“I have a lot of love for Tua, built a great relationship with him,” said quarterback Skylar Thompson, who replaced Tagovailoa after the injury. “You care about the person more than the player and everybody in the organization would say the same thing. Just really praying for Tua and hopefully everything will come out all right.”

Tagovailoa signed a four-year, $212 million extension before this season — a deal that makes him one of the highest-paid players in the NFL — and was the NFL’s leading passer in Week 1 this season. Tagovailoa left with the Dolphins trailing 31-10, and that was the final score.

“If you know Tua outside of football, you can’t help but feel for him,” Bills quarterback Josh Allen said on Amazon following the game. “He’s a great football player but he’s an even greater human being. He’s one of the best humans on the planet. I’ve got a lot of love for him and I’m just praying for him and his family, hoping everything’s OK. But it’s tough, man. This game of football that we play, it’s got its highs and it’s got its lows — and this is one of the lows.”

Tagovailoa’s college years and first three NFL seasons were marred by injury, though he positioned himself for a big pay bump with an injury-free and productive 2023 as he led the Dolphins into the playoffs. He threw for 29 touchdowns and a league-best 4,624 yards last year.

When, or if, he can come back this season is anyone’s guess. Tagovailoa said in April 2023 that the concussions he had in the 2022 season left him contemplating his playing future. “I think I considered it for a time,” he said then, when asked if he considered stepping away from the game to protect himself.

McDaniel said it’s not his place to say if Tagovailoa should return to football. “He’ll be evaluated and we’ll have conversations and progress as appropriate,” McDaniel said.

Tagovailoa was hurt Thursday on a fourth-down keeper with about 4:30 left in the third. He went straight ahead into Hamlin and did not slide, leading with his right shoulder instead.

Hamlin was the player who suffered a cardiac arrest after making a tackle during a Monday night game in January 2023 at Cincinnati, causing the NFL to suspend a pivotal game that quickly lost significance in the aftermath of a scary scene that unfolded in front of a national television audience.

Tagovailoa wound up on his back, both his hands in the air and Bills players immediately pointed at him as if to suggest there was an injury. Dolphins center Aaron Brewer quickly did the same, waving to the sideline.

Tagovailoa appeared to be making a fist with his right hand as he lay on the ground. It was movement consistent with something that is referred to as the “fencing response,” which can be common after a traumatic brain injury.

Tagovailoa eventually got to his feet. McDaniel grabbed the side of his quarterback’s head and gave him a kiss on the cheek as Tagovailoa departed. Thompson came into the game to take Tagovailoa’s spot.

“I love Tua on and off the football field,” Bills edge Von Miller said. “I’m a huge fan of him. I can empathize and sympathize with him because I’ve been there. I wish him the best.”

Tagovailoa’s history with concussions — and how he has since worked to avoid them — is a huge part of the story of his career, and now comes to the forefront once again.

He had at least two concussions during the 2022 season. He was hurt in a Week 3 game against Buffalo and cleared concussion protocol, though he appeared disoriented on that play but returned to the game.

The NFL later changed its concussion protocol to mandate that if a player shows possible concussion symptoms — including a lack of balance or stability — he must sit out the rest of the game.

Less than a week later, in a Thursday night game at Cincinnati, Tagovailoa was concussed on a scary hit that briefly knocked him unconscious and led to him being taken off the field on a stretcher.

His second known concussion of that season came in a December game against Green Bay, and he didn’t play for the rest of the 2022 season. After that, Tagovailoa began studying ways where he may be able to fall more safely and protect himself against further injury — including studying jiu-jitsu.

“I’m not worried about anything that’s out of my hands,” McDaniel said. “I’m just worried about the human being.”

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David Beckham among soccer dignitaries attending ex-England coach Sven-Goran Eriksson’s funeral

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TORSBY, Sweden (AP) — David Beckham and former England coach Roy Hodgson were among the soccer dignitaries who attended the funeral of Sven-Goran Eriksson on Friday in the Swedish manager’s small hometown of Torsby.

Eriksson’s wooden coffin was covered in white flowers and surrounded by six tall candles and other floral wreaths as the ceremony began inside the 600-seat Fryksande church.

“It is a day of grief but also a day of thankfulness,” the priest, Ingela Älvskog, told those in attendance.

Beckham, who arrived by private jet on Thursday, greeted Eriksson’s 95-year-old father Sven and other family members with hugs inside the church before the funeral started.

Eriksson became England’s first foreign-born coach when he led the national team from 2001-06, and made Beckham his captain.

Eriksson, who also won trophies at club level in Italy, Portugal and Sweden, died on Aug. 26 at the age of 76, eight months after he revealed he had been diagnosed with pancreatic cancer and had at most one year to live.

Some 200 seats in the neo-Gothic church from 1898 were reserved for his family, friends and players from his career in the football world, according to his agent. The remaining seats were open for the public, according to Eriksson’s wish, with a big screen set up outside the church where hundreds more gathered to watch the ceremony. The funeral was also broadcast live on some Swedish media websites.

The wooden coffin was wheeled in by pallbearers at the church Friday morning as fog wrapped Torsby — a town of about 4,000 people located about 310 kilometers (193 miles) west of Stockholm. Next to the casket was a photo of Eriksson on a small table. The floral wreaths included ones sent by FIFA and Lazio, the Italian team that Eriksson led to the Serie A title in 2000.

The ceremony began with somber piano and organ music, but later took on a more upbeat note with Swedish singer Charlotta Birgersson performing Elton John’s song “Candle In The Wind” and then “My Way” in a duet with Johan Birgersson, who later intoned the popular Italian song “Volare” after the family had gathered around the casket to lay flowers.

Beckham also visited Eriksson in Sweden in June to say goodbye. Others attending the funeral included the Swedish coach’s longtime partner Nancy Dell’Olio. Eriksson’s agent had said that guests from England, Italy and Spain were expected.

After the funeral, the casket was carried out of the church by eight men to the hearse. The guests then walked in a procession accompanying the coffin to a nearby museum where speeches and eulogies to the coach fondly known as “Svennis” were planned on an outdoor stage. A brass band played during the procession through Torsby, including the tune “You never walk alone” from the musical “Carousel” which has become the anthem of Liverpool, the club Eriksson supported since childhood.

The local soccer club Torsby IF, where Eriksson started his career in the 1960s, wrote on its webpage that “you also showed your greatness by always being yourself, the caring Svennis who talked to everyone and took the time, for big and small, asking how things were and how the football was going. We will miss you.”

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