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Chun becomes CEO after three decades at bank

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Stock gets upgrades after CEO transition accelerated

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Chun says improving anti-money laundering program is

priority

By Nivedita Balu

TORONTO, Feb 3 (Reuters) - A longtime TD Bank executive

took over as the Canadian lender's CEO on Saturday, tasked with

steering it through an anti-money laundering remediation program

after it paid a historic fine to U.S. regulators.

Raymond Chun, 55, has spent over 30 years at Canada's

second-largest bank, running TD's wealth, insurance and Canadian

personal banking business. As CEO he will be in charge of

cleaning up the bank's U.S. retail banking business, including

the potential sale of certain assets.

Unlike other CEO contenders, Chun maintained a low profile

on Bay Street - Toronto's financial district - while running

many of TD's businesses and was known for his broad knowledge of

the bank business, former colleagues and industry executives

said.

Perhaps his biggest challenge in his new role will be

proving he is capable of navigating regulatory issues in the

U.S., given most of his career has been spent in Canada, some

analysts said.

Chun takes over from Bharat Masrani as TD works through an

anti-money laundering remediation program after U.S. regulators

fined the bank $3 billion, imposed growth restrictions and

appointed an independent monitor to track activity after they

found criminals used the bank's U.S branches to launder millions

in fentanyl proceeds by bribing staff.

TD in December warned of a challenging 2025 and suspended

its medium-term earnings forecast.

Some shareholders had floated the idea of an external

candidate with knowledge of the U.S. banking business to help

clear the bank's image as it works with regulators, so the

pressure is on Chun to prove he can give the bank a fresh start.

Chun assured investors in September that he comes with prior

experience running "big businesses, complicated businesses" and

working with control and risk teams as he steps into the hot

seat.

In a memo to staff on Friday afternoon, Chun said his first

priority was to improve the bank's anti-money laundering program

and build the risk and control environment the bank needed by

removing barriers and simplifying operations. Chun said he was

already engaged with clients.

"This is a fantastic starting point as we plan the next

chapter," he wrote in the note.

'NOT JUST A HOUSEKEEPER'

Chun's plan to do a full strategic review of its operations

suggests he will be more "aggressive than people are assuming,"

said Anthony Visano, head of investment research at Kingwest and

Co., an independent investment firm and TD investor since 2010.

"He's not just a housekeeper," Visano said. "He is here and

he's on his front foot."

TD disclosed the U.S. regulatory probe shortly after it

terminated its $13.4 billion acquisition of Tennessee-based

lender First Horizon in 2023, a deal that would have given it a

bigger presence in the U.S. southeast.

TD shares have underperformed peers and the broader Toronto

Stock Exchange. In December, the stock got its first new strong

buy rating in two years, LSEG data showed, and has gained about

4% since TD expedited the CEO transition to February from April.

"New CEO means business," BofA Securities analyst Ebrahim

Poonawala said when he upgraded the stock to 'buy' from

'neutral' in January.

Chun, who has spent all of his banking career with TD, in a

2016 interview with the Korean Canadian Scholarship Foundation

said he aspired early in his career to lead a large business at

the bank.

Chun also described himself as an introvert who had to

learn over time "how to give speeches, how to get comfortable in

front of large crowds."

"It is not a natural thing for me," he said.

He joined TD in 1992 through a management associate program

and quickly climbed up the ladder, holding senior roles at TD

Insurance, heading global wealth management and insurance for

two years and Canadian personal banking for a year before being

named the CEO.

"I'm hoping that he will assemble good talent south of the

border. He can do no wrong compared to the management group that

was in there before. So we're optimistic," said Chris King, vice

president at Toronto-based Morgan Meighen & Associates.