TD Bank agrees to buy Chrysler Financial

Nike said rising raw cotton costs could affect its full-year earnings.
Nike said rising raw cotton costs could affect its full-year earnings. (Jin Lee)
Wednesday, December 22, 2010

Toronto-Dominion Bank has agreed to buy Chrysler Financial, the automaker's old lending arm, from private equity firm Cerberus Capital Management for $6.3 billion.

New York-based Cerberus bought Chrysler Financial in 2007 as part of a $7.4 billion deal to take over Chrysler's automaking business and lending business. Cerberus handed over control of Chrysler's automaking operations to the government, when the automaker nearly ran out of cash and faced liquidation in 2008.

The car business was a drain on Cerberus, but the financial services business could end up at least breaking even. The private equity firm is expected to recoup its investment in Chrysler Financial, returning some money to investors who had been unhappy with Cerberus's deal with the automaker from the start.

Toronto-Dominion Bank has expanded its U.S. presence in recent years and now has about 1,300 branches in the United States.

The deal announced Tuesday is the latest example of a healthy Canadian bank using its muscle to snap up U.S. institutions battered by the financial crisis. On Friday, the Bank of Montreal said it is buying Milwaukee-based bank Marshall & Ilsley for $4.1 billion.

- Associated Press


Nike warns of impact of rising cotton prices

Nike's second-quarter profit jumped 22 percent, to $457 million, to beat Wall Street forecasts as demand for its products rose around the world. The company said it earned 94 cents per share for the quarter that ended Nov. 30, well ahead of analyst expectations of 88 cents per share, according to a poll by Thomson Reuters. Revenue rose 10 percent to $4.8 billion, meeting expectations. Nike warned of challenges to its profit margins for the rest of its fiscal year, as cotton and freight costs are expected to rise. Shares of Nike fell 5.7 percent in after-hours trading.

- Associated Press

Also in Business

l Deutsche Bank settles tax fraud probe: Deutsche Bank admitted criminal wrongdoing and agreed to pay more than $550 million in connection with its participation in tax shelters that enabled the rich to temporarily avoid paying hundreds of millions of dollars in U.S. taxes, authorities announced Tuesday.

Federal prosecutors and the Justice Department's tax division announced the deal, saying a nonprosecution agreement requires the bank to continue cooperating and to submit to the appointment of an independent expert who will review its compliance measures and ensure it does not help people dodge taxes in the future.

In a statement, Deutsche Bank said it was pleased that the investigation had been resolved.

"Since 2002, the bank has significantly strengthened its policies and procedures as part of an ongoing effort to ensure strict adherence to the law and the highest standards of ethical conduct," it said. The bank said the payment had already been accounted for.

Authorities said the scheme enabled wealthy U.S. citizens to evade, from 1996 through 2005, about $5.9 billion in individual income taxes on capital gains and ordinary income. The court papers said they dodged taxes by claiming $29.3 billion in bogus tax benefits that enabled them to claim losses that did not exist.

- Associated Press

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