Alarms of danger re-emerged from the banking industry. After being lit up in the US because of Silicon Valley Bank and in Switzerland triggered by Credit Suisse, now it's the turn of Toronto-Dominion Bank or TD Bank in Canada.
In recent weeks, short sellers have upped their bearish bets against Toronto-Dominion Bank, and now have about US$3.7 billion at stake in Canada's second-largest lender, according to analysis by S3 Partners.
This value is the highest among financial institutions globally and puts TD above France's BNP Paribas SA and Bank of America Corp. Bloomberg reported that it was partly due to general anxiety over the banking sector after three US regional banks went bankrupt and Credit Suisse was acquired by UBS Group AG.
In addition, there are some signs the Canadian lender has one of the liquidity problems investors have been concerned about recently. However, analysts also pointed to concerns about TD's exposure to the country's housing slowdown, as well as its ties to the US market through its stake in Charles Schwab Corp. and planned regional bank acquisitions.
Meanwhile, short interest as a percentage of TD shares available for trading remained relatively low at 3.3 percent and up from 2.8 percent last year. By that measure, TD is third among the top 20 US and Canadian financial firms.
TD topped the list of bank stocks that investors dumped as it seeks to seal a $13.4 billion deal for First Horizon Corp., which will expand its US foothold. TD is widely expected to renegotiate the deal after recent turmoil among US regional banks pushed share prices lower in March.
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