TORONTO (Reuters) - Toronto-Dominion Bank (TD.TO) shares recovered some ground on Monday after falling by 5.6 percent on Friday following a report by CBC News that said staff had been put under pressure to meet sales targets.
The CBC News report suggested TD customers were moved to higher-fee accounts or had their overdraft and credit card limits increased without their knowledge to help staff meet targets. TD defended its business practices on Friday, saying the environment described in the report was at odds with its practices.
The decline in TD’s shares had knocked C$7.3 billion ($5.4 billion) off the bank’s value, and analysts and traders said that may have created a buying opportunity.
“With the information available we believe this is over-done and reiterate our buy,” analysts at Citi said in a research note.
TD’s shares were last up 1.7 percent on the day at C$67.09, having earlier risen as high as C$67.46, up 2.2 percent.
Sales practices at lenders have become a target of scrutiny in North America after Wells Fargo & Co (WFC.N) reached a $185 million settlement with U.S. authorities in September over findings that branch staff had opened up to 2 million unauthorized customer accounts amid pressure to meet internal sales goals.
TD reiterated on Sunday that it did not believe recent media coverage gave an accurate portrayal of its culture or reflected the experience of most of its staff, but said that it took the concerns very seriously.
“TD is in the trust business. We know we must earn our customers’ trust before we earn their business,” said Chief Executive Bharat Masrani in a statement.
TD said it had received “only a few hundred” complaints related to sales practices in the year ended Jan. 31, 2017. It said the complaints were investigated and handled in accordance with its procedures.Some analysts on Monday expressed concerns over possible damage to the bank’s reputation.
RBC’s Darko Mihelic cut his recommendation on the stock to “perform” from “outperform” and lowered his target price to C$68 from C$73.
“Any potential impact from recent allegations on sales practices could, in our view, have an important and material impact on TD’s reputation,” he said, adding that any significant damage to its brand could impact TD’s earnings and valuation.
“Recent allegations, whether true or false, will likely take time to investigate and we are unlikely to receive full clarity or comfort over the shorter term,” Mihelic said.
Reporting by Matt Scuffham; Editing by W Simon and Meredith Mazzilli