TD Takes $2.6B Hit on Probe, Sells Schwab Shares

Toronto-Dominion Bank is taking a provision of $2.6 billion for fines it expects to pay for failures in its money-laundering controls, and has sold part of its stake in Charles Schwab Corp. to fund it.

Canada’s second-biggest bank made the announcement on Wednesday after markets closed. Its Schwab stake will fall to 10.1% from 12.3%.

Last year, Toronto-Dominion’s landmark $13.4 billion deal to acquire First Horizon Corp. fell apart, with the Canadian lender saying it was unclear regulators would ever greenlight the deal.

Soon after, TD acknowledged that it was receiving inquiries from the U.S. Department of Justice, in addition to financial regulators and the Treasury Department.

The core allegations are that it failed to catch money laundering and other financial crimes at several U.S. branches.

Toronto-Dominion has more than 10 million customers in the country and a network of almost 1,200 branches along the US east coast.