TORONTO, Canada

TORONTO-DOMINION Bank has agreed to buy Chrysler Financial, the automaker’s old lending

arm, from private equity

firm Cerberus Capital Management LP for US$6.3 billion.

The deal is the latest example of a healthy Canadian bank using their muscle to snap up US institutions battered by the financial crisis.

Toronto-Dominion CEO Ed Clark said Canada’s second-largest bank is looking to accelerate growth in the US and this deal makes them a top-five North American

auto lender.

“We’re taking advantage of a disruptive market to add on assets that in the heyday you could never buy for these kind of prices,” Clark said in an interview with The Associated Press. “We’re already a top 10 player in the US. We’re getting even bigger.”

New York-based Cerberus bought Chrysler Financial in 2007 as part of the US$7.4-billion deal to take

over Chrysler’s automaking business and lending business. Cerberus handed over control of Chrysler’s automaking operatings to the government when Chrysler nearly ran out of cash and faced liquidation in 2008. The carmaker received a government bailout, went through a speedy bankruptcy court process, and then became owned by Italy’s Fiat SpA.

Cerberus kept ownership of Chrysler Financial, and could end up making money on the lending arm when the Toronto- Dominion deal goes through.

TD wants to expand its loan business, and said the deal will give it access to technology that can process more than two million credit applications per year. The auto lending market hasn’t taken as much of a hit as other kinds of consumer loans over the last several years. And the value of used cars is picking up as the economy improves.

The deal is the second US acquisition in a week by a Canadian bank. Last Friday the Bank of Montreal announced it is buying Milwaukee-based bank Marshall & Ilsley Corp for US$4.1 billion in stock.

Canadian banks are investing in the US from a position of strength, as they weathered the economic crisis far better than their counterparts in other countries. In a concentrated banking system dominated by five major players, Canadian banks have been looking across the border to find growth opportunities.

Toronto-Dominion Bank has expanded its US presence in recent years with the purchase of New Jersey-based Commerce Bancorp in what has been its largest acquisition. TD also bought smaller, troubled banks in the Carolinas and Florida such as South Carolina-based South Financial Group. Earlier this year, TD agreed to buy the risky assets of three insolvent Florida banks worth US$3.8 billion. TD didn’t have a presence in US six years ago, but now has about 1,300 branches in the US compared to about 1,100 in Canada.

TD also holds a 45 per cent stake in Omaha, Nebraska-based online brokerage TD Ameritrade Holding Corp.

“We’re not in any hurry to do anything more but we’ll keep our eyes out, as long as they are small. I define that as US$10 billion in assets or less,” Clark told The AP. “We said when we went into the United States that we would go big or go home and then we did a series of small deals, but those small deals have now put us in the top 10 in terms of deposits.”

Mark Williams, an author and teacher in the

Boston University School

of Management’s Finance Department, said a decade ago no Canadian bank made the North American top-10 list.

“Canadian banks are flush with cash and are using their stronger financial position to look outside of their home market. Since the 2008 financial crisis, zero Canadian banks failed while over 300 have in the US,” Williams said.

TD Bank expects to rebrand Chrysler Financial under the TD name by spring 2011. The acquisition is expected to add about US$100 million in adjusted earnings to TD in 2012, the first full year

of operations.

The deal should close in TD’s fiscal 2011 second quarter, the companies predict, pending regulatory approvals and other conditions. Chrysler Financial will keep its top executive, CEO Tom Gilman, after the deal closes. TD hopes to double the number of dealerships the auto lender offers leases to in the US to 5,000.

A TD spokesman said the purchase is comprised of net assets of USUS$5.9 billion and approximately US$400 million in goodwill. TD does not intend to issue common

equity in connection with

the deal.

Shares of TD rose US$1.92, or 2.7 per cent, to US$71.43 in midday trading on the New York Stock Exchange.