02:46 PM EDT, 10/15/2024 (MT Newswires) -- S&P Global Ratings said Tuesday it lowered its long-term issuer credit rating on TD Bank (TD.TO, TD) to 'A+' from 'AA-' and its short-term issuer credit rating on the bank to 'A-1' from 'A-1+'.

S&P also lowered its issuer credit ratings on TD Bank's core subsidiaries TD Securities (USA), TD Bank N.A., its U.S. intermediate holding company TD Bank US Holding Co., and Toronto Dominion (South East Asia). The rating outlook on TD and all of its subsidiaries is stable.

At the same time, S&P lowered its issue level ratings on all of TD Bank's obligations by one notch, including lowering its senior unsecured ratings to 'A+' from 'AA-' and its bail-in-able senior subordinated ratings to 'A-' from 'A' -- after TD Bank settled with U.S. authorities and regulators on anti-money laundering deficiencies.

It said: "Although the bank has already provisioned for most of the US$3.09 billion penalty and can maintain balance-sheet flexibility to serve its U.S. clients, we believe the asset cap on TD's U.S. subsidiary banks underscores the severity of the bank's AML-related deficiencies and failure of its operational risk management."

S&P added its stable outlook assumes that over the next two years, TD will strengthen its AML operational risk management processes and controls to meet U.S. requirements, that no further sizable fines or regulatory matters will emerge, and that the company's strategies to mitigate the asset cap won't meaningfully impair the profitability and customer flows associated with its U.S. franchise.

"In our view, management failed to live up to standards expected of one of the world's highest rated banks. The bank has taken several steps to address the deficiencies identified at its U.S. subsidiary banks, but we think it will take time to improve the risk management culture across the group, overhaul its practices, strengthen the organizational structure, and demonstrate the effectiveness of these measures."

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