TD’s Strategic Pivot Under Ray Chun: From Investment Banking to Shareholder Returns

Ray Chun’s ascendancy to CEO has triggered a rebalancing of priorities at TD Bank: from growth-at-all-costs and wholesale expansion, particularly in the US, to a more disciplined capital allocation framework weighted heavily toward shareholders and risk mitigation. The traditional investment banking and capital markets businesses—which tend to require large capital bases, carry heavy regulatory scrutiny, and deliver episodic rather than stable returns—are being deprioritized relative to wealth and fee-based verticals.

Key moves supporting this shift include:

• Divestment and capital recycling: The sale of TD’s remaining ~10.1% stake in Charles Schwab is not simply an exit from a minority investment, but part of an explicit reallocation of capital away from low-return or non-core positions toward internal priorities, and chiefly shareholder returns. ([wsj.com](https://www.wsj.com/finance/banking/td-bank-to-sell-investment-in-charles-schwab-648f5d2a?utm_source=openai))
• Share buybacks and shareholder-first messaging: A CA$6–7 billion buyback signals a renewed discipline in returning capital, matching or exceeding what might have been previously deployed in investment banking expansions or large M&A projects. ([reuters.com](https://www.reuters.com/business/finance/td-bank-reinstates-medium-term-growth-target-focuses-high-fee-segments-2025-09-29/?utm_source=openai))
• Focus on fee-based, high-margin businesses: Underperformance and risk in wholesale banking, especially amidst AML penalties and the US asset cap, have made wealth management and insurance more attractive as stable, scalable sources of revenue with lower capital strain. ([reuters.com](https://www.reuters.com/business/finance/td-bank-reinstates-medium-term-growth-target-focuses-high-fee-segments-2025-09-29/?utm_source=openai))
• Regulatory constraints shaping strategy: TD’s settlement in the US involved not only a large financial penalty (approximately US$3 billion) but also imposed constraints on its US asset size and business activities. These external limits mean that internal discipline—cost reduction, risk model overhaul, and cleaning up of compliance—is not just a preference but a necessity. ([reuters.com](https://www.reuters.com/business/finance/tds-plan-pay-money-laundering-fines-clears-path-new-ceo-2024-08-28/?utm_source=openai))

Strategically, this means:

• Analysts and shareholders will likely measure Chun’s success not in terms of balance-sheet size or deal flow in capital markets, but through metrics like return on equity (ROE), cost-to-income ratios, CET1 capital ratio, and dividend / buyback yields.
• TD’s investment banking unit (TD Securities) may face constraints in scaling underwriting or advisory roles that demand high capital or elevated regulation exposure, or it may be selectively focused rather than broad-based.
• Opportunities are likely in wealth management, portfolio advisory, insurance, and digital banking where scale, margin, and cross-selling opportunities are high and capital intensity is lower.

Open questions to monitor:

• How TD balances growth opportunities in the US, given the asset cap and regulatory scrutiny—will it accept slower US expansion or find ways to work within constraints (e.g., service offerings, joint ventures)?
• What investment banking areas will remain—or be spun off—and how will this impact fee income volatility versus shareholder return expectations?
• Will operational execution around AML remediation and control enhancements be swift and credible enough to satisfy regulators and restore reputation, allowing more strategic flexibility?
• How will technology and AI investments be balanced against cost-cutting mandates—i.e. what level of upfront spending is tolerable to enable long-term gains?