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TD Bank Financial to increase ownership stake in TD Ameritrade

TDBFG to increase its direct ownership of TD Ameritrade Holding by approximately 5%

Canada-based TD Bank Financial Group, or TDBFG, has entered into an arrangement to increase its direct ownership of TD Ameritrade Holding by approximately 5%. Under the terms of a TD Ameritrade stockholders agreement, TDBFG’s ownership of TD Ameritrade has been limited to 39.9%. This limit increased to 45% in January 2009.

In September 2006, TDBFG entered into an arrangement that provided a financial hedge for the potential future purchase of 27 million shares of TD Ameritrade common stock. On February 5, 2009, TDBFG amended the hedging arrangement to provide for settlement in TD Ameritrade common shares, instead of cash settlement. TDBFG expects the 27 million shares to be delivered on the settlement date on or about March 2, 2009, at an approximate cost to TDBFG of $515 million which was determined in accordance with the terms of the hedging arrangement.

Since the hedging arrangement was struck in 2006, it has been consolidated in TDBFG’s financial statements as part of its reported investment in TD Ameritrade, with the related income recognised. For this reason, TDBFG expects the replacement of the hedging arrangement with the approximate 5% increase in direct ownership to have no material impact on TDBFG’s earnings or capital levels.

Ed Clark, president and CEO of TDBFG, said: We continue to be rewarded for our investment in TD Ameritrade, as it delivers great performance despite the difficult market environment. As we’ve said before, it’s been our intention for some time to take advantage of this opportunity to increase our ownership stake in this strong franchise. Now the largest retail broker in the U.S. as measured by trades per day, TD Ameritrade’s significant long-term potential is a key part of our U.S. growth strategy.