TD discloses $350M charge

TD Bank became the latest of the big five Canadian banks to disclose large charges it will take in its fourth quarter as it will book $350 million in credit trading losses.

TD's earnings are due to be released in two weeks, but the bank said in a preview it will post a profit of $642 million, after factoring out one-time gains or charges.

Investors responded by sending TD shares down $6.36, or more than 12 per cent, to close at $43.57 on the TSX.

TD said it was taking the $350-million charge due to a "dramatic" absence of liquidity in world credit markets over the past two months, which has hurt the bank's credit-trading revenues.

"We're clearly disappointed with this outcome, but we are also realistic enough to know you can't totally outrun the most extraordinary financial markets since the Great Depression," bank president and CEO Ed Clark said during a conference call with analysts.

"Even though we tried, it was just not possible to build a wholesale bank that could withstand a world with no buyers, only sellers," he said.

Despite the charge, TD said it will post about $1.05 billion profit from its retail banking division, and will produce a profit of $4 billion, after adjusting for special charges and gains, for the division for the full year.

The news wasn't all bad from TD, as the bank said it will record a $323-million after-tax gain from a reserve fund it set aside for claims related the collapse of energy-trading company Enron.