Canada bank buys Chrysler Financial

Toronto-Dominion Bank will buy Chrysler Financial from private equity firm Cerberus Capital Management for $6.3bn (£4.1bn), joining the throng of Canadian institutions expanding foreign operations.

The deal, comprising net assets of $5.9bn and about $400m in goodwill, will make Canada's number two bank one of North America's top five bank-owned auto lenders. It consists of net assets of $5.9bn and about $400m in goodwill, TD said.

The bank said it does not intend to issue common equity in connection with the deal, in contrast to rival Bank of Montreal, whose shares slumped on Friday on news that it would issue shares to fund last week's takeover of troubled Wisconsin lender Marshall and Ilsley.

TD said its purchase should not affect 2011 earnings and will add about $100m to adjusted 2012 earnings.

The transaction is a vote of confidence in the recovering US economy from TD, which has already expanded in the United States and which had been looking to grow its loan book.

Canada's big banks exited the financial crisis in stronger shape than most rivals, and have been buying up assets.

"This transaction represents a unique opportunity to purchase a great organic-growth platform at an attractive price," TD chief executive Ed Clark said in a statement.

"This acquisition will allow us to leverage our lending expertise and financial strength to expand our presence in a large North American market with tremendous potential upside."