TD Bank announced that embattled CEO Bharat Masrani will retire in April, as the lender grapples with fallout from a major money laundering scandal. Masrani, who has been chief executive for more than a decade, will be replaced by Raymond Chun, current head of Canadian personal banking.

Money-laundering woes: TD has faced pointed questions about its succession plans amid major challenges at the firm. In August, TD disclosed it has set aside a total of US$3 billion to cover expected regulatory fines from multiple U.S. agencies over its role in a high-profile money-laundering debacle. Multiple U.S. court cases allege serious misconduct by TD employees and failure of the institution’s anti-money-laundering controls, including a US$653-million drug case in which multiple banks, including TD, are accused of taking cash deposits from a fentanyl ring and helping to move the money abroad.

Masrani takes the blame: In a release, Masrani said “the anti-money-laundering challenges we face took place on my watch as CEO and I take full responsibility.” He said he will keep working on initiatives to strengthen the bank’s controls and risk management until the transition in April 2025. Masrani will then retire after 38 years at the bank, according to the release. He will continue to serve as an adviser for another six months.

What we know about TD’s next CEO: Like Masrani, Chun, 55, has had a long career at TD, joining its management training program in 1992. Prior to his current position, he ran wealth management, insurance and direct investing at the bank. Chun was born in Korea and educated at the University of Western Ontario and Queen’s. Chun will be promoted to chief operating officer on Nov. 1, 2024 and will become CEO on April 10, 2025.

Chun’s challenges: In addition to weathering the money-laundering scandal, Chun will be tasked with turning around TD’s lagging share performance compared to its peers. Since Masrani took the top job at the bank on Nov. 1, 2014, TD’s stock price has increased about 54 per cent—less than the 62 per cent the S&P/TSX Composite Index returned over the same period and significantly less than rival RBC’s 108 per cent increase.

Who’s next: Canadian banks have succession planning on the brain. CIBC recently shook up its senior ranks for the second time in six months. Scotiabank unexpectedly hired outsider Scott Thomson for the top job in a transition that took place in February 2023. And RBC’s termination of former CFO Nadine Ahn after an internal review found she had an undisclosed personal relationship with an employee has highlighted the dearth of women in the CEO pipeline at the Big Five.