Thursday, August 27, 2009

TD Bank Check Out Off Balance Sheet Issues

Toronto Dominion Bank Financial Group (TD) announced some great results and the stock popped 2.5% by mid day. Imagine a financial institution that has some good news. The press release is long and elaborate. Banks of this size are wondrous complicated beasts. So if you want to climb the wall of worry read this quote and plan your ascent.


The Bank carries out certain business activities via arrangements with special purpose entities (SPEs). We use SPEs to obtain sources of liquidity by securitizing certain of the Bank's financial assets, to assist our clients in securitizing their financial assets and to create investment products for our clients. SPEs may be organized as trusts, partnerships or corporations and they may be formed as qualifying special purpose entities (QSPEs) or variable interest entities (VIEs). When an entity is deemed a VIE, the entity must be consolidated by the primary beneficiary. Consolidated SPEs have been presented in the Bank's Consolidated Balance Sheet.

No numbers are presented to illustrate the situation. Difficult if not impossible to truly assess.