Bharat Masrani TD Group President and CEO
Well, one thing. Weve always been very mindful in any acquisition. And I mean, lets be transparent, we learned the hard way, that there is no point
buying something that is really made available for sale because generally its dressed up for sale and not much is left after you become proud owners.
In our case, weve been good acquirers. I think legacy Commerce Bank was a terrific acquisition that was not dressed up for sale because circumstances
made it available in the market. South Financial also fits that description, and frankly First Horizon as well because they were going through their own integration, bringing those banks together. So, it was not actually dressed up for sale.
Same applies to Cowen. They were not looking they are a terrific company, did very well. But we had identified Cowen. Riaz and his team were looking at
Cowen for a while. It fills out a particular capability we think is important for us to have few years down the road, thinking of, in the US, equity capital markets and the investment banking business. So the core business is there. And with
TDs strength and balance sheet and rating and funding advantages, that kind of supercharges that growth.
And the part that sometimes is not well
known is that First Horizon is a terrific middle market business, and Cowen is uniquely positioned on the middle market side as well. So thats an added benefit we see. And then lastly in Cowen, we felt very comfortable with the management team
and the individuals. Very TD-like from a culture perspective.
So again, I go back to its not often you sort
of do a deal where strategically it makes sense, financially attractive, 14% ROIC deal. Risk appetite, very comfortable. In fact, it did generate all these revenues without a balance sheet. And so, we feel good about that. And culturally, we felt
very comfortable.
So, it does a lot for our TD Securities business. Its very complementary to what weve said we want to do. Your point, doing
two deals, theyre separate deals. And were not looking at disturbing either one of them, thats a different segment. Were a large bank and we think we can manage that.
Meny Grauman Scotia Capital Analyst
Related
to Cowen, it seems like theres a general orthodoxy among bankers that says that buying investment dealers, especially foreign banks buying Wall Street investment dealers, its just a very risky proposition. It might work in the short
term, but in the long term, how do you retain the talent? And so, I thought I would pose that to you and wonder out loud maybe, does the experience with Newcrest, is that some part of the answer? Does that give you confidence in your ability to do
this? Obviously south of the border in this case, but is that part of the calculus for you?
Bharat Masrani TD Group President and
CEO
Well, in fact, the premise you set up doesnt only apply to investment banking. I think people say that any foreign bank going to the U.S. in
any financial services ultimately fails and goes back home, takes a write-down or whatever. I think we have proven that at TD, we are different. Weve been there for many years and quite successful with our U.S. strategy.
I think one thing weve always done is whenever weve acquired and this is historic, this is not over the past few years we very much
value the management team we acquire. But when you think about it, any of these acquisitions, were paying a good premium. They dont come for free. And most of the value thats been created is through that management team. So why go
there and destroy it? And I dont understand. Many buyers do that, but at least at TD, we dont.
If you look at our management team in the U.S.
on the retail side at TD Bank, Americas Most Convenient Bank, most of the talent, the top talent there, the most senior management is acquired talent from the banks we bought Commerce Bank, South Financial, Banknorth and
thats the way weve set it up. And you talk about Newcrest. Well, Bob Dorrance came from Newcrest. Robbie Pryde came from Newcrest. You look at the whole part of TD Securities and Bob ran it and still is very much involved as Chairman of
TD Securities.
Same applies to my predecessor, Ed Clark. We acquired Canada Trust and we said, well, lets not go destroy it. We paid I dont
know how many times book, but it was quite expensive, but turned out to be great and we were able to retain the talent.
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TD Bank Group Scotiabank Financials Summit Presentation September 7, 2022 |
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