TD Bank Imposes a Hiring Freeze and Expense Cuts

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Toronto-Dominion Bank, the second largest bank in Canada, has established a nationwide hiring freeze and has entered an expense reduction mode for the first time in recent memory.

Compared with its peers, TD Bank has booked relatively good earnings of late, notes recruiter Janice Detta Colli of Boyden in Toronto. Yet, in an interview with eFinancialCareers, Detta Colli said, "They’ve got a hiring freeze on for most Canadian divisions,” a TD executive told her this week, and “all growth is being carefully monitored and controlled. No one can remember this happening before at TD.”

Currently, she says, TD President and CEO Ed Clark has to sign off on all hires at the bank, whereas normally Clark would be required to give his stamp of approval only to Executive VP and Senior VP hires.

TD’s earnings picture

Toronto-Dominion Bank recently became the second large Canadian bank (after Royal Bank of Canada) to disclose executive compensation is going down. On top of that, its board of directors says it has decided that TD Bank President and Chief Executive Ed Clark would receive no raise for his 2011 service.

Citing “the current economic outlook,” the bank decided to hold Clark’s total direct compensation at $11.28 million in Canadian dollars, which was about the same as in 2010, according to regulatory filings.

At the time, TD Bank said in a statement that TD posted record profit in 2011, and after reporting profits that beat analysts’ estimates for the first quarter of 2012, TD Bank raised its dividend.

Excluding a litigation reserve for costs related to a Ponzi scheme in Florida and other one-time items, Toronto-Dominion said it earned C$1.86 a share. That topped the C$1.77 average estimate of 15 analysts surveyed by Bloomberg. TD’s Canadian Personal and Commercial Banking posted a record quarter with reported net income of $826 million. Adjusted net income was $850 million, up 11 percent from the same period last year.

Detta Colli, a Boyden managing director in Toronto heading the recruiter’s financial services practice in Canada, puts the hiring freeze and expense controls down to “global anxiety layered with typical Canadian conservatism”—and the fact that Clark plans to retire next year. “A lot of senior executives would want to be very carefully adding to their teams at this point in time," she says. "They don’t want to make a political misstep and grow their team in a way that won’t meld with a [new] CEO’s vision.” Whatever the rationale, Detta Colli says, the fact is is that “everyone is in a holding pattern” now at TD.

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