TD Bank issues common shares

Mon Nov 24, 2008 5:48pm EST
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By Lynne Olver

TORONTO (Reuters) - Canada's two largest banks announced equity financings on Monday that will increase their regulatory capital ratios.

After markets closed, Toronto-Dominion Bank said it will issue common shares worth up to C$1.38 billion, boosting its Tier 1 capital ratio with the goal of reassuring investors about its capital strength.

Toronto-Dominion, Canada's second largest bank, said it plans to issue 30.4 million common shares at C$39.50 each, for proceeds of C$1.2 billion. A group of underwriters led by TD Securities will be able to buy up to 4.56 million additional shares, for maximum gross proceeds of C$1.38 billion.

TD Bank shares closed at C$42.90 on the Toronto Stock Exchange on Monday, up 3.9 percent. Most Canadian bank stocks got a lift from news of U.S. government support to Citigroup.

In a separate announcement after the bell, Royal Bank of Canada said it would issue C$225 million of five-year rate reset preferred shares. Earlier in the day, RBC had said its quarterly profit would be lower than analysts had expected because of C$670 million in pretax losses on various securities.

For its part, TD said that its new common equity issue, plus a preferred share issue done earlier this month, would push up its Tier 1 capital ratio to about 9 percent, versus 8.3 percent as of November 1.

The market had expressed concern about the low number, and TD would not have been able to issue a large amount of preferred shares quickly, TD President and CEO Ed Clark said in an interview.

"Part of the attraction of common shares is you can do that overnight," Clark told Reuters.   Continued...

<p>A view of a branch of a TD Canada Trust bank in Toronto, November 9, 2007. REUTERS/Mark Blinch</p>