Toronto\u002DDominion Bank may seek a lower price for First Horizon Corp., but it still has an incentive to close the deal. Find out more.
A First Horizon bank branch in Peachtree Corner, Ga.That also fits with the view of analysts such as Paul Holden at CIBC Capital Markets, who argued in a note to clients earlier this month that Toronto-Dominion would need a minimum 10 per cent price cut, to US$22.50 a share, to “stay engaged.” If the transaction doesn’t receive regulators’ blessing by May 27, the Canadian bank can walk away simply by not extending, he said.
Canadian bank stocks have held up much better than their US counterparts during the recent market turmoil. The nine-member S&P/TSX Composite Commercial Banks index has dropped about six per cent since the beginning of March in U.S. dollar terms, better than the KBW Bank Index and the Bloomberg World Banks Index.Article content
Toronto-Dominion is the second-worst performer of the Canadian bank index in that span with a drop of more than 11 per cent. It was recently theInvestors in Canadian bank shares have been trained to buy the dip after years after strong returns and relative stability, Wessel said. The last institutional failure handled by the Canada Deposit Insurance Corp. was in 1996.
“The Canadian banks over the years have done so well that there is always a category of investors who are interested in buying them when they’ve done poorly,” Wessel said. Last week, Hamilton introduced a new fund aimed at capturing some of that demand. The Hamilton Canadian Bank Equal-Weight Index ETF, which invests in the country’s six largest domestic banks in equal proportion, is similar to an exchange-traded fund that’s sold by Bank of Montreal’s asset management division and has about $3.8 billion in assets. The Hamilton fund has a lower management expense ratio.
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