Toronto-Dominion Bank, referred to as TD Bank, is planning to offload around $9bn in residential mortgage loans, reported Bloomberg.
This move is aimed at reshaping its balance sheet to adhere to the new cap set by US regulators.
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The sale is part of the plea agreement with government authorities entered last year over anti-money laundering lapses.
The mortgages up for sale are categorised as jumbo loans, which are typically extended to US homeowners with above-average credit scores.
Unnamed sources privy to the development have indicated that bids for the mortgage pool are expected by next week. The specifics of the portfolio have not been made public.
TD Bank ranks as Canada’s second-largest bank and the tenth biggest in the US.
As part of an October agreement, TD Bank consented to pay nearly $3.1bn in fines and other penalties. This agreement also included an asset cap for its two US retail banking subsidiaries, fixed at approximately $434bn.
To maintain operational capacity for customer transactions while under the asset cap, TD Bank is restructuring its assets.
This includes the sale of up to $50bn in lower-yielding investment securities and reinvesting the proceeds, as revealed in an October presentation.
The US government has criticised TD Bank for historically neglecting warning signs from high-risk clients, thereby facilitating a conducive environment for illicit activities, reported Reuters.
In one case, the bank was implicated in processing over $400m in transactions to launder money for individuals involved in the sale of fentanyl and other dangerous drugs.
Moreover, TD Bank was accused of inadequate monitoring of over $18tn in customer transactions over a ten-year period.
This oversight allegedly allowed three distinct money laundering networks to move illegal funds through the bank’s accounts, according to US authorities.
