(Reuters) -Canada's Toronto-Dominion Bank said it would offload its 10.1% stake in U.S. financial services firm Charles Schwab, as part of a strategic review undertaken following a landmark U.S. fine.

TD holds 184.7 million shares in Charles Schwab, worth roughly $15.4 billion (C$22.07 billion) based on Friday's last close.

The companies said in separate statements early Tuesday that TD's unit will sell 165.4 million shares of Schwab at $79.25 apiece for about $13.1 billion.

U.S. regulators hit TD with an asset cap of $434 billion that limits growth in the U.S., a core market it had focused on for over a decade, and several other restrictions as part of a guilty plea for money laundering failures.

TD's new CEO, Raymond Chun, said the bank would use C$8 billion ($5.58 billion) of the proceeds for share buybacks and invest the rest in performance and organic growth.

Chun took charge this month. He has said "everything is on the table" in the strategic review and TD will look at exiting some loan portfolios.

In October, TD became the largest bank in U.S. history to plead guilty to violating a federal anti-money laundering law, and agreed to pay more than $3 billion in penalties.

Schwab said it had agreed to repurchase shares worth $1.5 billion from TD in a private transaction.

"We believe this will simplify TD's U.S. operations," said Jefferies analyst John Aiken.

"Whether this sets TD up for a different strategy in U.S. wealth management will be seen when its strategic review is complete and revealed."

Analysts estimated TD will free up capital of C$10-12 billion.

"That is a lot of capital to deploy organically on top of existing capital and any capital that the bank can generate through normal course earnings," RBC Capital Markets analyst Darko Mihelic said.

Like other Canadian banks, TD has generally held strong capital levels, which allowed it to expand in the U.S.

It had planned to buy Tennessee-based regional lender First Horizon until shortly before the probe was revealed.

($1 = 1.4338 Canadian dollars)