Bank of America Acquires $9B TD Bank Mortgage Portfolio Amid U.S. Compliance Challenges

Bank of America has agreed to purchase a $9 billion portfolio of residential mortgage loans from Toronto-Dominion Bank (TSX:TD), according to a source familiar with the deal. TD has yet to respond to requests for comment.

The Canadian bank has been reassessing its loan portfolios, with CEO Raymond Chun previously stating at a January banking conference that TD was considering divestments. This decision aligns with the bank’s ongoing restructuring efforts, particularly following its guilty plea last year for violating U.S. anti-money laundering laws. As part of the settlement, TD agreed to pay $3 billion in penalties.

With an asset cap imposed by regulators, TD is narrowing its U.S. expansion plans. The lender, which operates more than 1,100 branches and serves nearly 10 million customers in the U.S., had previously invested heavily in its American retail banking business. However, regulatory constraints now require a shift in strategy to focus on compliance and balance sheet optimization in fiscal 2025.

The acquisition strengthens Bank of America’s mortgage portfolio while allowing TD to refocus on regulatory obligations. The deal underscores the challenges faced by foreign banks operating in the U.S. under strict financial regulations.

By optimizing its asset base, TD aims to ensure long-term financial stability while maintaining a strong presence in North America’s banking sector. The sale of the mortgage portfolio is a key step in its strategic overhaul as it works to regain regulatory confidence and streamline operations.