NEW YORK—Canada-based Toronto-Dominion (TD) Bank this week agreed to purchase Chrysler Financial Corp., the auto financing company formerly affiliated with the automaker bearing the same name.
The deal, agreed upon on Tuesday for $6.3 billion in cash, was completed by TD Bank and Cerberus Capital Management LP, Chrysler Financial’s owners.
“Chrysler Financial is a well-run business with the capacity for significantly higher returns over the next several years,” said Ed Clark, TD Bank’s CEO, in a statement this week. “This acquisition will allow us to leverage our lending expertise and financial strength to expand our presence in a large North American market with tremendous potential upside.”
TD Bank, the second-largest bank holding company in Canada, is flush in cash and did not require additional stock or bond issuances to finance the acquisition. Canadian banks largely escaped the global financial crisis unscathed.
TD agrees with that rationale. “Because we’re well-capitalized and a leading deposit franchise, we’ve been looking for opportunities to accelerate the growth of our loan book,” Clark continued. “This acquisition gives us that opportunity and also diversifies our lending portfolio.”
TD has gone on an aggressive spending spree during recent years. Its recent takeovers include Commerce Bancorp, which granted the bank an extensive network of retail bank branches in the Mid-Atlantic and Northeast region of United States. Earlier, it took over Main-based Banknorth Group, which started its expansion into the U.S. market. TD also has minority ownership in online brokerage firm TD Ameritrade.
Last week, another major Canadian bank, the Bank of Montreal, bought Wisconsin bank Marshall & Ilsley Corp. for around $4 billion.
Chrysler Financial, based in Michigan, has around $7.5 billion in customer loans, according to a presentation published by TD Bank.
Cerberus has owned Chrysler Financial since 2007, the same year it took over Chrysler Group in a bet on a rebound of the U.S. automotive industry. That acquisition turned out to be disastrous after the auto market collapsed at the onset of the 2008 financial crisis, and Chrysler was bailed out by the federal government.
Chrysler Financial is unrelated to Chrysler Group, which is now controlled by Italy’s Fiat S.p.A.
The deal, agreed upon on Tuesday for $6.3 billion in cash, was completed by TD Bank and Cerberus Capital Management LP, Chrysler Financial’s owners.
“Chrysler Financial is a well-run business with the capacity for significantly higher returns over the next several years,” said Ed Clark, TD Bank’s CEO, in a statement this week. “This acquisition will allow us to leverage our lending expertise and financial strength to expand our presence in a large North American market with tremendous potential upside.”
TD Bank, the second-largest bank holding company in Canada, is flush in cash and did not require additional stock or bond issuances to finance the acquisition. Canadian banks largely escaped the global financial crisis unscathed.
Canadian Banks Strong in Capital
Analysts say that TD is using its cash position to expand abroad during a time when its American competitors are still reeling from loan losses and capital constraints. The Chrysler deal is TD’s second biggest in its history.TD agrees with that rationale. “Because we’re well-capitalized and a leading deposit franchise, we’ve been looking for opportunities to accelerate the growth of our loan book,” Clark continued. “This acquisition gives us that opportunity and also diversifies our lending portfolio.”
TD has gone on an aggressive spending spree during recent years. Its recent takeovers include Commerce Bancorp, which granted the bank an extensive network of retail bank branches in the Mid-Atlantic and Northeast region of United States. Earlier, it took over Main-based Banknorth Group, which started its expansion into the U.S. market. TD also has minority ownership in online brokerage firm TD Ameritrade.
Last week, another major Canadian bank, the Bank of Montreal, bought Wisconsin bank Marshall & Ilsley Corp. for around $4 billion.
Chrysler Financial, based in Michigan, has around $7.5 billion in customer loans, according to a presentation published by TD Bank.
Cerberus has owned Chrysler Financial since 2007, the same year it took over Chrysler Group in a bet on a rebound of the U.S. automotive industry. That acquisition turned out to be disastrous after the auto market collapsed at the onset of the 2008 financial crisis, and Chrysler was bailed out by the federal government.
Chrysler Financial is unrelated to Chrysler Group, which is now controlled by Italy’s Fiat S.p.A.
