TORONTO - Toronto-Dominion Bank said Thursday it would take $75 million of charges as it restructures TD Waterhouse International, its worldwide discount-brokerage business, and its U.S. equity options business to deal with a slowdown in trading.
TD Waterhouse International wants to streamline its U.K. operations and is in talks with its joint-venture partners about how to manage the businesses in light of current trading volumes, the parent company said in a press release.
It also said it would be forced to write down $207 million of goodwill and book value from TD Waterhouse International's joint ventures, excluding the one with the British bank NatWest.
Last month TD Waterhouse agreed to buy out Charles Schwab & Co.'s stake in their Scottish market-making venture, Aitken Campbell. Schwab has been getting out of the business of making markets for and selling sterling-denominated securities in Britain. TD Waterhouse also operates a retail brokerage unit in Britain. Neither company said how much TD Waterhouse is paying, but the two former partners had invested $88 million in the venture two years ago.
The $75 million charge includes about $20.4 million of restructuring costs, the bulk of which will be taken in the second quarter, with the balance coming during the rest of the fiscal year as the plan is implemented.
In the U.S. equity options business, dramatic declines in volume and margins have been a "major disappointment," Toronto-Dominion said. It has taken steps to stem the losses but says it now believes it cannot turn the business around without a major shift in strategy.
It said it will retain a "clearly focused" equity options group centered in Chicago, with floor operations on the Chicago and American stock exchanges.
Toronto-Dominion will take a restructuring charge of about $54 million in connection with the options business. The bulk of it will be taken in the second quarter, and the balance over the remainder of the fiscal year.
It said it would also write off $251 million of previously recorded goodwill associated with the equity options business. A restructuring to develop a profitable niche is expected to take six to nine months. If the initial plan does not meet expectations, Toronto-Dominion said it will take "further action," which could include up to an additional $34 million of restructuring costs.
