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Fitch revises TD Bank's outlook to 'negative' on regulatory concerns

FILE PHOTO: The Toronto-Dominion bank logo is seen outside of a branch in Ottawa

(Reuters) -Fitch revised the outlook on Toronto-Dominion Bank's credit ratings to "negative" from "stable" on Tuesday, citing risks to its business from the anti-money laundering probes it is facing.

The rating revision marks the latest headache from the investigations that have led to the termination of some employees and invited scrutiny from shareholders on the Canadian banking giant.

The regulatory actions have clouded the outlook for the bank's risk profile and earnings, Fitch said, adding that it could also hinder its ability to do acquisitions in the United States.

Canadian lenders have often looked to acquire industry players south of the border to grab growth opportunities outside of a saturated home market.

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Last week, TD said it had set aside $450 million to cover potential fines for one of the three regulatory probes on the issue and is anticipating more monetary penalties.

The issue could distract the management from the bank's operations, as they are likely to focus on addressing the shortcomings in the bank's risk controls, Fitch said.

Fitch, however, reaffirmed the bank's long-term ratings at 'AA-,' continuing to rate its as high-grade.

It lauded the bank for its "resilient" financial profile, diversified business, prudent underwriting and strong liquidity.

(Reporting by Niket Nishant in Bengaluru; Editing by Arun Koyyur)