Toronto-Dominion Bank, Canada’s second-largest lender, should consider buying General Electric Co.’s finance operations to bolster assets in the U.S., National Bank Financial analyst Peter Routledge said.
GE said April 10 that it plans to exit the bulk of its lending business, keeping only operations that support its manufacturing arms.
Toronto-Dominion should consider GE’s commercial lending and leasing business, which includes equipment finance and corporate lending, to address the bank’s “strategic conundrum” of having a lack of assets and a surplus of deposits in the U.S.
“TD will have the opportunity to purchase higher-yielding assets, fund them with the bank’s low-cost deposits that have long economic lives,” Routledge said Monday in a note to clients.
Toronto-Dominion should specifically consider GE’s $74 billion U.S. commercial lending and leasing portfolio and its $16 billion private equity sponsor portfolio, known as GE Antares, which provides senior debt financing to middle market, private-equity backed companies, Routledge said.
“We do not imply that TD would be the sole purchaser of either business -- GE’s 18 to 24 month timetable suggests to us there will be several buyers; nor do we mean to suggest that TD will definitively be a buyer,” Routledge said. “We do hope, though, that the bank has already made inquiries.”