Toronto-Dominion Bank - History


The origins of the Toronto-Dominion Bank lie in the efforts of a group of businessmen in the Province of Canada West (as Ontario was formerly called between 1840 and 1867), involved in the buying, milling and marketing of grain. They were determined to create a financial institution to meet their specific needs in banking, insurance and commodities exchange. The first petition to the legislature of the province of Canada, in 1854, for the incorporation of the Millers, Merchants and Farmers Bank of Canada West, was rejected. However, on March 18, 1855, their application for a charter for the Bank of Toronto, with an authorized capital of £500,000, was granted.

In July 1856, the Bank of Toronto opened its offices at 78 Church Street, Toronto, with a staff of three and immediately began development of a provincial network of branches. In 1860, it opened its first branch outside of Ontario, in Montreal.

The Bank of Toronto established itself as an efficient, profitable, but essentially conservative bank through the 19th century. It maintained a very high reserve against its capital and enjoyed the highest share price of any bank in Canada. Growth was very slow and deliberate with a few new branches opened in emerging regional centres. Core customers remained farmers, merchants, and processors of farm products (millers, brewers, distillers).

In 1871, the Bank of Toronto was joined on the Ontario scene by the Dominion Bank, launched by entrepreneurs and professionals under the leadership of James Austin. They were dedicated to creating a new institution “conducive to the general prosperity of that section of the country.” Like the Bank of Toronto, the Dominion Bank was a cautious institution, “selecting its customers carefully, serving them well, and duly prospering with them” (in the words of the official history). It too created a network of branches, and in 1872 became the first Canadian bank to have two branches in one city – Toronto.

With the maturing of the Canadian economy and the opening of northern Ontario and the West in 1880s and 1890s, the banks became more aggressive in loans to resource industries, utilities, and manufacturing. In 1897, the Dominion Bank opened its first western branch in Winnipeg and two years later the Bank of Toronto opened a branch in the British Columbia mining town of Rossland. In the first decade of the twentieth century, the banks rapidly expanded their branch networks in central Canada and across the west.

To mark their rise as significant national institutions, the Dominion Bank moved into a large new head office building at the corner of King and Yonge Streets in Toronto in 1879 and the Toronto Bank followed with another landmark head office at King and Bay Street in 1913.

World War I brought new challenges for the two banks when they were called upon to finance war expenditures and to support the innovation of war bonds marketed to the general public. Half the staff of the two banks served in the armed forces.

Except for some contraction in the western provinces due to drought, the decade following the war was one of expansion and increasing profitability due to resource development and industrial expansion. Both banks weathered the storm of depression in the 1930s without great difficulty, despite a decline in earnings. Like all Canadian banks, they endured criticism of its credit policies and resisted the introduction of a central bank to control the money supply and advise on fiscal policy. Ultimately the Bank of Canada was established and the banks relinquished their right to issue their own currency.

The coming of the Second World War involved the banks, once again, in the marketing of war bonds and in participation in the control of foreign exchange, rationing, and other financial war measures. Approximately 500 staff, or almost half the total, entered the armed forces.

The Bank of Toronto and Dominion Bank emerged from the war in 1945 stronger than ever, with assets more than doubled since 1939. With the post-war boom they became more active in business lending and in the penetration of new markets. However, they quickly realized that the costs of expansion and competition with much larger rivals made their objectives difficult to realize. Neither bank had engaged in acquisitions or mergers in order to grow, but both determined that a union with a bank of equal size would place them in a much stronger position to take advantage of the opportunities of the post-war economy.

In 1954 negotiations began between the Bank of Toronto and the Dominion Bank, and by the end of the year an amalgamation agreement was reached. In their brief to the Minister of Finance the banks stated: “It is more burdensome for a small bank to keep pace with the development of our country than for a large bank, with the result that the effective growth and comparative influence of smaller banks will probably in the future decline in comparison with that of the larger banks.”

On November 1, 1954, Canada's Minister of Finance announced that the amalgamation was accepted and shareholders were asked for their approval. This was forthcoming in December and on February 1, 1955, the Bank of Toronto and the Dominion Bank became the Toronto-Dominion Bank.

The first years of the new bank were dedicated to the demands of amalgamating the two predecessors, institutions of roughly equal size, but with different strengths and unique corporate cultures. Head office functions were combined, branches were consolidated, and a new regional organization was established. An aggressive program of branch modernization and expansion extended TD's presence in its traditional markets and took it into new territory in the Maritime provinces and on the natural resource frontier. The identity of the new bank was established through an active public relations campaign focused on customer service - “The Best in Banking Service”, the bank’s first slogan evolved into the highly successful “The Bank Where People Make the Difference”.

The competitive banking environment, and the need for effective integration of two administrations, led the Bank to re-assess and modernize business practices and methods through the second half of the 1950s. Procedures were streamlined, new technology was introduced, and the human resources function acquired new importance as the bank placed increased weight on customer service and product knowledge.

The bank’s emergence as a forward-looking institution was highlighted by the announcement in 1962 that it would have a new and very high profile head office in downtown Toronto. The Toronto-Dominion Centre, designed by Mies van der Rohe, the leading architect of the day, would include the tallest building in Canada. It would revolutionize both the skyline of Toronto and the public perception of TD.

By the 1960s, the bank had solidified its domestic base and established its credentials as a major institution. It began to look beyond its traditional spheres of operation and to explore the international scene and opportunities, domestic and foreign, for large scale project financing. A network of U.S. representative offices was developed and partnerships with global merchant banks and venture capital operations were undertaken. Heralding a new commitment to independent and syndicated project financing, in 1967 the bank undertook the financing of the massive Anvil lead-zinc-silver mining operation in Yukon, the construction of the Rainbow crude oil pipeline in Alberta, and resource development ventures in Ireland.

The bank offered the first debentures in Canadian banking history on May 29, 1967. The Bank Act of 1967 ushered in a period of enormous change on the Canadian financial scene. Banks were permitted for the first time to charge more than six-per-cent interest on loans, encouraging a new emphasis on personal and specialized consumer loans. More significantly, banks could now make mortgage loans on real estate and the mortgage loan portfolio quickly gained enormous significance.

By the close of 1960s the bank’s customer base had become more diverse and new products and services were being launched almost daily. The Visa card made its appearance (as Chargex) and mutual funds were marketed for the first time. In addition, the options for product and service delivery were greatly expanded thanks to computer and communications technology. An “On-Line Savings” system was introduced in Toronto in 1967 and ten years later the Green Machine appeared (the first “full-service” automatic teller machine (ATM) or ABM (automatic banking machine - the general term within Canadian banking), greatly enhancing the customer service capabilities of the Bank.

To establish a modern and popular brand a new logo was introduced and an official “TD green” was adopted in 1969. In the same period, television and radio advertising were utilized for the first time in order to promote the new range of products.

The bank kept in step with the times on other fronts as well. Women were encouraged to move into management roles and the first female bank manager was appointed in 1968. Little more than a decade later more than 40% of all management trainees were women.

International operations, which had gained in importance in the late 1960s, became a major focus of the Bank after 1970. New subsidiaries were launched in the United Kingdom, United States, and the Middle East. In 1970, TD became first Canadian bank to make a substantial investment in commercial banking in Hong Kong and by the end of the decade TD's role in international lending and money market trading was supported by operations in almost every corner of the globe.

Following upon the success of the Toronto TD Centre, the bank was active in financing retail and commercial real estate projects across Canada. It was a partner in the Toronto Eaton Centre and participated in such major developments as the Pacific Centre in Vancouver, Edmonton Centre, TD Square in Calgary, and the Toronto-Dominion Bank Building in Halifax.

The bank easily weathered the economic downturn of the early 1980s, showing consistent (and sometimes remarkable) revenue increases from 1980 to 1984. By the late 1980s, however, the Bank was caught up in the debt crisis in the developing world caused by the recession and the dramatic rise in interest rates. Significant loan losses were reported in 1987 and while the bank participated actively in debt restructuring initiatives, it also committed itself to more conservative lending practices.

Despite the difficult economic conditions and the negative impact on earnings, the 1980s and early 1990s saw many positive developments. Deregulation began to break down the barriers between the various elements of the financial sector, particularly with the Bank Act of 1987. The bank moved into the discount brokerage business in 1984 with the introduction of Green Line Investor Services and less than a decade later launched its full service brokerage, TD Evergreen. In 1987, Toronto Dominion Securities Inc. was established to provide corporate, treasury and investment banking services to corporate clients. In 1992 the Bank acquired the assets of a major trust company, Central Guaranty Trust and began the operation of TD Bank and Trust.

The 1990s saw TD responding swiftly to the challenges of the Internet and leading the way in e-banking. In 1996 the bank’s web site was created and TD Access: PC was launched, North America’s first fully integrated banking and brokerage PC package. In 1998 Web Access was introduced and within a year e-banking services were available to a growing number of customers internationally. By the 21st century, the bank had positioned itself as a multi-channel e-commerce company.

The need to build TD into a major player in world financial markets prompted the Bank to acquire Waterhouse Investor Services Inc. in 1996 (and in a stroke more than double its size as a discount broker). The $8 billion purchase of Canada Trust was completed in 1999 and the merger took effect in February 2000.

Canada Trust brought a history as long and as rich as that of the TD Bank itself. It had grown out of the same need for basic financial services in a young Canada. Local businessmen in London, Ontario, in 1864, founded it, as the Huron & Erie Loan and Savings Company. But through mergers it could trace an ancestry to 1855 and the establishment of the Canada Permanent Mortgage Corporation by many of the same individuals who established the Bank of Toronto. It also had direct ties to Toronto General Trusts, Canada’s first trust company, incorporated in 1872. These institutions were instrumental in providing a pioneering farming community and residents of the growing towns across Canada with mortgage funds and other financial services.

Huron & Erie/Canada Trust established itself as a dynamic mortgage and trust company, first in Ontario, then across Canada through the late 19th and early 20th centuries. It was consistently aggressive in building its business and marketing its services and became an innovator in customer service. Following its merger with Canada Permanent in 1989, Canada Trust became the country’s sixth largest financial institution.

The Canada Trust acquisition gave the Bank new momentum, significantly expanded the breadth and depth of the Bank’s branch coverage, and enhanced TD's customer service commitment. Some have incorrectly referred to the new corporation as TD Canada Trust, though the latter only makes up the largest division. Toronto-Dominion Bank has now been operating under the brand Toronto-Dominion Bank Financial Group (TDBFG).

With the merger of Toronto-Dominion Bank and Canada Trust, the Competition Bureau required them to sell either their MasterCard or Visa business. Citibank Canada bought TD Canada Trust's MasterCard business and clients. TD began advertising its Visa cards under the corporate brand TD Visa.

In the 1990s, TD acquired US discount brokerage Waterhouse, renaming it "TD Waterhouse". In Canada, TD's own "Green Line" discount brokerage adopted the TD Waterhouse name.

In June 1999, TD spun off 42 million shares or 12.4 per cent of TD Waterhouse in an initial public offering, with shares priced at $35.28 CAD or $24 USD per share, earning $1.01 billion USD. In 2001, with the bursting of the Dot-com bubble and lower trade volumes that brought down Waterhouse's share price, TD bought back that minority stake at $9 USD per share for only $378 million USD, earning a profit on the privatization. The acquisition was conditional on TD owning at least 90 per cent of Waterhouse's outstanding common shares, and it owned almost 89 per cent when the privatization was announced.

In 2003, TD held talks with E-Trade about merging TD Waterhouse with E-Trade, but they broke down over issues of control. On August 26, 2004, the bank announced a definitive agreement to acquire a 51 per cent interest in Banknorth Group, Inc. (now TD Banknorth), a bank in the US northeast. In 2005, TD announced an agreement to sell TD Waterhouse (USA) to Ameritrade; TD would own a 30 per cent stake in the newly created TD Ameritrade.

In late September 2009 and early October 2009, significant technical problems related to the integration of computer systems with the previously purchased Commerce Bank caused chaos for many customers as funds for scheduled direct deposits were not available and account balances were reported incorrectly. The bank's telephone lines experienced extremely high call volume and branches were crowded with customers looking for information.

In April 2010, TD Bank acquired three failed banks in the United States. It acquired certain assets and liabilities of Riverside National Bank of Florida, First Federal Bank of North Florida and AmericanFirst Bank from the Federal Deposit Insurance Corporation (FDIC).

On August 16, 2011, Toronto-Dominion and Bank of America announced an agreement for Toronto-Dominion to acquire MBNA Canada′s credit card business for $8.5 billion.

In June 2012, TD Canada Trust introduced a new enhanced Access Card with the new VISA Debit /Interac Flash Access Card which will allow customers to use it over the phone/online and Internationally. through the Visa network

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