TD eyes selling $9 billion of mortgages as it faces asset cap

Toronto-Dominion Bank is looking to sell about $9 billion of residential mortgage loans as the Canadian lender adjusts its balance sheet to comply with a new cap imposed by U.S. regulators, part of a plea agreement reached last year for its role in failing to prevent money laundering.

The portfolio for sale consists of so-called jumbo mortgages taken out by U.S. homeowners with relatively high credit scores, according to people familiar with the matter. Bids on the pool are due next week, the people added, asking not to be named because the details are confidential.

In October, TD agreed to pay almost $3.1 billion in fines and other penalties and have assets at its two U.S. retail banking units capped as part of a guilty plea for failing to prevent money laundering by drug cartels and other criminals. The cap is about $434 billion.

To give it the capacity to do day-to-day business with customers while subject to the cap, the bank is looking to restructure its holdings. It’s reducing assets, and it’s selling as much as $50 billion of lower-yielding investment securities and reinvesting the proceeds, according to a presentation from October. 

A spokesperson for TD declined to comment.