Toronto-Dominion Bank braced for stormy shareholder meeting
By Matt Scuffham TORONTO (Reuters) - Executives at Toronto-Dominion Bank will on Thursday face shareholders for the first time since media reports suggested branch staff were pressured to meet sales targets, causing its shares to tumble. Chief Executive Bharat Masrani is expected to be grilled by investors about how Canada's second-biggest lender is responding to the reports and whether the bank plans to scrap or re-shape sales incentives for branch staff, industry sources said. TD's shares are currently trading around 6 percent below the level they were at before a March 10 report by CBC News, Canada's public broadcaster, that cited branch staff as saying they moved customers to higher fee accounts and raised their overdraft and credit card limits without their knowledge. CBC News later reported that staff at Canada's other big banks had admitted to similar behavior. TD and the other banks have defended their practices. But Canada's financial watchdog has said it will start a review of their business practices in April. "There is tremendous pressure on all bank employees to sell bank products and there has been for quite a period of time. Their evaluation is done on the basis of moving product," said Tom Caldwell, chairman of Caldwell Securities, which holds shares in all of Canada's major banks. Banks in Britain have stopped sales incentives for branch staff after a number of selling scandals and U.S. bank Wells Fargo & Co ended the practice earlier this year. Some analysts have said similar moves in Canada could ultimately hurt banks' profits. The issue has exposed Canadian banks to an unusually high degree of public and media scrutiny in recent weeks. The banks came through the 2007-09 financial crisis without any failures and have, until now, managed to avoid the types of sales scandals that affected lenders in the United States and Europe. They have also remained popular with both retail and institutional investors, largely because of the high dividend yields they offer. "Canadians have a love-hate relationship with their banks," said Norman Levine, managing director of Portfolio Management Corp. "They hate doing business with them but they love owning their shares and I don't see anything out there that is going to change that." TD's annual meeting will be followed next week by Bank of Nova Scotia and Bank of Montreal on Tuesday and Royal Bank of Canada and Canadian Imperial Bank of Commerce on Thursday. (Additional reporting by Fergal Smith; Editing by Dan Grebler)
