Could TD’s Colleen Johnston Emerge as Canada’s First Female Bank CEO?

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Although the odds are against it, one of the potential candidates to be TD Bank’s next chief executive officer is a woman: the bank's current CFO, Colleen Johnston.

Johnston helped Canada’s second biggest bank get out of risky businesses prior to the financial crisis—enabling TD Bank to emerge from the turmoil around sub-prime mortgages in better shape than most of its peers. Plus, last year, American Banker named her one of the 25 Most Powerful Women in Banking and more recently described her as “one logical candidate” for the CEO’s role, pointing out that over her seven-year stint as TD CFO she also helped to lay the foundations of TD’s successful U.S. expansion. TD now has roughly 1,300 branches in the U.S., more than it has north of the border.

However, the recruiters we talked to said there are three other candidates who appear even stronger, and all of them are male.

“I haven't heard that [Johnston] is considered to be in the running,” says Boyden recruiter Janice Detta Colli, who is headquartered in Toronto.

Speaking in Toronto recently, TD Chairman Brian Levitt said the board was confident that TD CEO Ed Clark's eventual successor will be an internal candidate. Even Clark reportedly quipped in 2010 that he could envision a woman running a Canadian bank sometime in the next “20 years.”

Also, though Clark turns 65 next year, he told Reuters that he plans to stay in his job for at least two more years. His current contract will move to an open-ended employment agreement after April 2013.

The three men in the running are all long-time, hands-on bankers, according to Detta Colli, and all are internal TD candidates. They are:

  1. Mike Pederson, group head of wealth management, insurance and corporate shared services with TD. He is responsible for TD’s wealth and insurance businesses, as well as the bank’s corporate shared services (IT, real estate, strategic sourcing, corporate security and the project management office). In addition, Mike champions the bank’s environmental agenda.
  2. Tim Hockey, currently TD's group head of Canadian banking, auto finance and credit cards.
  3. Bharat Masrani, group head of U.S. personal and commercial banking.

Reuters recently cited both Hockey and Masrani as likely candidates, and Robert Sedran, an analyst at CIBC World Markets, told the news agency that he considered them to be "the two frontrunners, no question."

Detta Colli wonders whether Johnston has “received recognition early enough in the process” to be a CEO contender. On the other hand, “It would certainly shake up the Canadian landscape if she were to become the selection,” says the recruiter. Such positions are scant if not entirely non-existent across North America, where BNY Mellon has a female vice chairman and J.P. Morgan’s Asset Management unit has a female CEO, but women have yet to get to the level of bank chairman or chief executive.

After TD’s annual meeting in New York last week Johnston downplayed the speculation about her as a successor to Clark. "There is always room to expand within your existing role or potentially take on different roles," American Banker quoted Johnston saying, adding, "I am very open to whatever that brings.”