TD Bank Financial Group will announce Thursday at the bank’s 147th Annual Meeting in London, Ont. that it will restructure the international unit of its wealth management business, TD Waterhouse, and the U.S. equity options arm of its wholesale banking operation, TD Securities, to address issues in these under-performing businesses.

Restructuring plans are to be finalized and in place by the end of the second quarter and substantially implemented by the end of the current fiscal year.

“We have indicated on a number of occasions over the last few months that there were three issues that we were addressing – our corporate loan portfolio, our international wealth management business and our equity options business in the United States,” said Edmund Clark, TD president and CEO.

Declining volumes in the discount brokerage business worldwide have resulted in excess capacity. Restructuring plans for TD Waterhouse International will include a streamlining of U.K. operations and discussions with its joint venture partners to agree on appropriate plans to manage the businesses in light of current trading volumes. TD will incur restructuring costs of approximately $30 million, 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.

“We made a commitment to take the necessary steps to bring TD Waterhouse to break even internationally by 2004, and it is now clear we needed to restructure,” said Clark. “Once our restructuring plan is complete, we believe we will have the right infrastructure, market position and customer base to meet this commitment.”

Dramatic volume and margin declines have been a major disappointment for the bank’s US equity options business since making the acquisition in March 2002. TD has taken steps to stem the losses but has now reached the conclusion that it cannot turn the business around without a major shift in strategy and restructuring. TD will retain an equity options group centered in Chicago, with floor operations on the Chicago and American Stock Exchanges. TD will take the bulk of a restructuring charge of approximately $80 million during the second quarter and the balance over the remainder of the fiscal year as the plan is implemented. Restructuring to develop a profitable niche is expected to take six to nine months.

If the initial plan does not meet expectations, the said bank will take further action that would include up to an additional $50 million in restructuring costs.

As a result of the restructurings, TD will write-down in TD Waterhouse International goodwill and book value of $305 million (excluding the goodwill associated with the Bank’s joint venture with NatWest) and write-off $369 million of previously recorded goodwill associated with the equity options group through a charge to earnings in the second quarter.

“In total these restructuring charges
will cost us 12¢ per share and will save us 4¢ per share of losses per
quarter that we have been incurring to date. These actions will make a
positive difference in our earnings going forward and we look forward to
moving ahead without distraction,” said Clark.

TD expects little or no decline in its Tier 1 capital ratio, which stood at 8.5% as at January 31, for the second quarter because goodwill is largely already deducted in calculating the Tier 1 capital ratio.

As a result, the bank sees no change in its stated intention to review what to do with its capital surplus at the end of the year. Earnings are expected to be reduced approximately $1.15 per share when you consider the impact of both the restructuring and goodwill writedowns.