Despite completing seven broker-dealer acquisitions in six years and with another one pending, Toronto-Dominion Bank is still not ready to put away its checkbook.
TD Waterhouse Group, the New York-based discount brokerage arm of the Canadian bank, is intent on growing through acquisitions or joint ventures, said Stephen D. McDonald, its chief executive officer and a bank vice chairman.
The company plans to have an operation on the ground in Japan by the end of the year and is currently talking to a number of possible joint-venture partners there. However, Mr. McDonald indicated that the next acquisition or joint venture could occur elsewhere. TD Waterhouse is also actively exploring opportunities elsewhere in Asia and in Europe, he said.
"Our intention is to globalize our business," Mr. McDonald said. "We need to be in every major securities market."
Mr. McDonald has headed the brokerage unit since April. He succeeded Duncan Gibson, now vice chairman of the commercial bank. Mr. McDonald described the acquisition strategy as preferable to building a global presence using internal resources, which he said can be "time consuming and expensive."
Like other financial services companies, TD Waterhouse is trying to capture the wave of retail investors looking to capitalize on an enduring bull market.
Toronto-Dominion made its first brokerage acquisition in Canada in 1993. Since then, the bank has added to its empire in the United States, Australia, and the United Kingdom, where it announced its most recent transaction just last week. The $15.7 million deal for the Bradford-based broker-dealer YorkShare, a subsidiary of the Yorkshire Building Society, is pending regulatory approval. TD Waterhouse, which also has a presence in Hong Kong, now employs roughly 6,000 people around the world.
Competing in the global discount brokerage arena demands currency, and in June TD Waterhouse went public, raising $1 billion to fuel its expansion plans. The company will launch a $100 million branding campaign next week.
Toronto-Dominion has been vocal about modeling itself on Charles Schwab & Co. of San Francisco, which, with 6.2 million active customer accounts, is currently the biggest discount brokerage in the world. With 2.1 million accounts, TD Waterhouse is No. 2, though not quite a close second, conceded Mr. McDonald.
"We have been growing at a faster rate than Schwab," he said. A Schwab spokesman said it does not comment on the competition as a matter of policy.
TD Waterhouse may have to capture more than just accounts to catch up with Schwab, said Michael Gazala, research director at Forrester Research in Cambridge, Mass.
"Having the largest number of customers is not the most important factor,'' said Mr. Gazala.
Schwab has distinguished itself as a "mid-tier" broker, offering customers both electronic and full-service access, said Mr. Gazala.
Mr. McDonald said that TD Waterhouse's model, which he describes as "a combination of bricks and clicks" is just such a hybrid of full-service and discount brokerage.
"Our intention is to provide as broad an array of financial products as possible," he said. Last month, TD Waterhouse took a step in that direction when it electronically linked its Waterhouse National Bank with the brokerage unit.
Waterhouse National Bank will allow TD Waterhouse to gain deeper market penetration in the United States, said Michael Goldberg, an equity analyst with HSBC Securities Canada. In addition to increasing market share through acquisition, "they are selling those customers other things through the bank,'' Mr. Goldberg said.