UPDATE 4-TD Bank eyes Chrysler Financial -source

* Cerberus, TD currently in discussions – source

* Chrysler Financial worth $6 bln-$7 bln, – report

* TD CFO says not looking at “significant” M&A

* TD shares rise 1.9 pct
(Rewrites first paragraph, adds details from report)

By Paritosh Bansal and Cameron French

NEW YORK/TORONTO, Dec 7 (BestGrowthStock) – Toronto-Dominion Bank
(TD.TO: ) is in talks to buy lender Chrysler Financial from
private equity firm Cerberus Capital Management [CBS.UL], a
source said on Tuesday.

The deal, pegged by a Bloomberg report to be worth as much
as $6 billion to $7 billion, would continue TD’s torrid pace of
U.S. acquisitions and could give the bank a “first-mover”
advantage if Canada’s government amends laws that currently
prevent banks from offering auto leasing, said one observer.

TD Chief Financial Officer Colleen Johnston, speaking at an
investor conference in New York, declined to comment directly
on Chrysler Financial, but she appeared to pour cold water on
the idea of a big acquisition.

“Our current interest is in more modest-sized deals that
will perhaps give us some distribution or asset-generation
capabilities,” she said. “We are not looking at anything on a
significant scale at the moment.”

Separately, The Wall Street Journal reported that Cerberus
could retain some assets, which would cut the size of a deal.

It said several parties, including TD and ING (ING.AS: ),
were in talks with Cerberus for a deal for Chrysler Financial.

TD’s shares, which were flat for much of the session,
rallied late to close up 1.9 percent at C$72.17, rebounding
from a three week low on Tuesday

Cerberus declined to comment, while Chrysler Financial was
not immediately available for comment. The source asked for
anonymity because the TD-Cerberus talks are not public.

Chrysler Financial, the former lending arm of the
automaker, saw its scope of operations reduced as part of a
U.S. government-sponsored restructuring of Chrysler and General
Motors (GM.N: ) last year. Ally Financial Inc, the auto and
mortgage lender formerly known as GMAC, took over some of the
unit’s operations in connection with the restructuring.

Cerberus, co-founded by Stephen Feinberg and named after
the mythological multiheaded dog that guards the gates of the
underworld, agreed to buy Chrysler in May 2007.

Chrysler was put through bankruptcy with financing from the
U.S., Canadian and Ontario governments and is now
majority-owned by a trust fund aligned with the United Auto
Workers union, and operates in a partnership with Fiat SpA.
(FIA.MI: ) Cerberus retained ownership of Chrysler Financial.

In September, another source told Reuters that Chrysler
Financial was planning to boost its business through lending to
mid-market companies and “near-prime” customers.
[ID:nN24253751].

TD EXPANSION

TD, which is Canada’s second-biggest bank, has been pushing
aggressively into the United States over the past five years.

Its U.S. East Coast retail bank network now boasts about
1,300 branches — more than Toronto-Dominion operates in
Canada. It also owns just under half of U.S. online broker TD
Ameritrade (AMTD.O: ).

One analyst, who is not authorized to speak on the matter,
said the deal was a surprise as it would diverge from TD’s
recent approach of building its branch network gradually
through mostly small acquisitions.

However, he noted TD could leverage its already strong
customer base through its retail bank.

As well, he said TD is not wholly unfamiliar with the auto
lending business, having bought Canadian high-risk auto
financing company VFC Inc in 2006.

TD Chief Executive Clark has been the most vocal of
Canadian bank CEOs on the matter of allowing auto leasing
through banks, which has emerged as a hot-button issue in
advance of a five-year review of Canadian banking law.

Currently, the banks are not allowed to offer auto leasing,
but they have been pushing for that to change, citing the
financial crisis, which had a devastating effect on auto
leasing companies.

Ian Lee, a professor at Ottawa’s Carleton University and a
former banker, said buying Chrysler Financial would suggest TD
believes the government will approve a shift into leasing.

“Buying this company that’s been in this business for years
and years is astute on TD’s part, it will give them a
first-mover advantage into leasing,” he said.

Lee was not sure whether TD would be able to offer leasing
through its U.S. branches if Canadian banking laws are not
amended.

TD is generally seen as having the strongest government
connections of any of the country’s banks, as TD Deputy
Chairman Frank McKenna is a former provincial premier and
ambassador to the United States, while Clark himself is a
former bureaucrat.
($1 = $1.01 Canadian)
(Reporting by Cameron French in Toronto and Paritosh Bansal in
New York; editing by Peter Galloway, Rob Wilson and Matthew
Lewis)

UPDATE 4-TD Bank eyes Chrysler Financial -source