Thursday, July 24, 2008

TD Bank Abandons US Brand Battle

Dow Jones Newswires, 24 July 2008

Toronto-Dominion Bank's renaming of US retail subsidiary because of legal wrangle with competitor already using the Commerce brand, brings an "unwelcome complication" to an already "daunting integration exercise," Brad Smith says at Blackmont Capital. As well, the elimination of established brand "could be viewed as having implications for acquired goodwill should future earnings potential be negatively impacted," Smith notes, adding this is "particularly relevant" since TD recorded more than $6B of goodwill when Commerce Bancorp acquisition closed in March.
Boston Globe, Ross Kerber, 24 July 2008

Changing course in the face of a lawsuit, TD Banknorth picked a new new name to use following its merger with Commerce Bancorp Inc. of New Jersey - TD Bank.

Previously the combined banks were to be known as TD Commerce Bank. The bank has not decided what name it will put on the Boston sports arena now known as the TD Banknorth Garden, where it owns naming rights. Bank officials said they expect to decide on a name for the arena later this year. Any final name would include the word "Garden."

TD Bank chief executive Bharat Masrani said he switched to the new name for his institution because of a lawsuit brought by Commerce Bank & Trust Co., a 12-branch company in Worcester. In a federal suit earlier this year, it claimed the name "TD Commerce Bank" would confuse customers.

Earlier this year, the Worcester bank won an injunction from a federal judge barring the merged banks from using the name TD Commerce Bank in much of Massachusetts, including Boston and Worcester.

Commerce Bank branches in mid-Atlantic states will start using the TD Bank name later this year, Masrani said, while New England branches won't see their names changed until fall 2009.

That also will give the bank time to settle on a new name for the Garden, home turf for the Celtics basketball team and the Bruins hockey franchise. TD Banknorth is allowed one name change under the terms of the $6-million-a-year rights pact signed in 2004 with building owner Delaware North Cos.

Masrani said the company has not reached a legal settlement with Commerce Bank & Trust. David H. Rich, an attorney representing Commerce Bank & Trust, said the two sides have held talks to resolve the situation. "It would appear they've elected to go down a different road," Rich said.

Executives said TD Bank's marketing will be built around its motto of being "America's Most Convenient Bank." TD Bank is a unit of Toronto-Dominion Bank of Canada.
The Globe and Mail, Tara Perkins, 24 July 2008 12:48 AM

Toronto-Dominion Bank will have to pursue its ambitious U.S. strategy without the help of the Commerce Bancorp name, a respected and quirky brand that had high value in its home market.

The Canadian bank has agreed to choose a new name for its 1,100 U.S. branches after a showdown with a Massachusetts bank that has only 12 outlets.

TD is abandoning the name TD Commerce Bank, the U.S. moniker it had chosen in the wake of its $8.5-billion (U.S.) acquisition of New Jersey-based Commerce Bancorp Inc.

Commerce Bancorp made a name for itself over the last 35 years with a business model based on Burger King, projecting a fun attitude that differentiated it from its competitors.

Rather than incorporating that name, TD will rebrand its U.S. operations as TD Bank, losing any reference to Commerce.

The decision was announced Wednesday, more than two months after a Massachusetts judge blocked TD from using the name in a handful of Boston-area counties. A small local bank with a similar name, Commerce Bank & Trust Co., had gone to court for an injunction to stop TD from using the name TD Commerce Bank in its backyard. It was worried its customers would be confused.

"After several weeks of looking at options and looking at what makes sense here, we decided to move forward and rename our entity into TD Bank, America's Most Convenient Bank," Bharat Masrani, TD's chief executive officer of U.S. operations, said in an interview.

Both sides said there was no financial component to their settlement.

While it was a difficult decision, Mr. Masrani played down any concern about the loss of the Commerce name.

"Obviously, when you go through an event like this, it is never easy, but from my perspective, brands are what they stand for," he said.

"We love the position we have, and that positioning does not change. I'm feeling pretty relaxed about it going forward, that this is the right thing for our bank," he said.

The new name will be marketed in mid-Atlantic states in November, with the rest of the bank's branches (which Mr. Masrani now refers to as "stores," part of the Commerce Bancorp lexicon) in the New England area rebranded by the fall of 2009.

Mr. Masrani said he was disappointed by the court's decision to grant the injunction, "but rather than spend countless time as well as valuable resources fighting this legal challenge in court, we have decided to remain focused on our customers and employees and move forward under our new brand name of TD Bank."

Brian Thompson, a spokesman for Commerce Bank & Trust Co., said "We're pleased from our end, because we're going to be able to continue to use our name in the way that we have for the last 55 years."

Mr. Thompson noted that "in the banking business, it's hard to change your name. You have the goodwill built up over years and years."

He said the bank had been in discussions with TD, looking at ways to make the situation work for both financial institutions, but "not necessarily settlement talks.

"We really didn't see other options," he said. "We really felt that we had been in this market, had spent a lot of money over the years and developed a great reputation."

"We've had a lot of discussions here," Mr. Masrani said. "Again, the view we took is that it's better for us, all of our stakeholders, our customers, employees and our shareholders that we move forward here."

He added that the integration is otherwise on track, and he remains confident the bank will be "an outlier" during the U.S. slowdown, noting the bank concentrates on the Northeast U.S. and that both TD and its recent acquisition have maintained conservative risk-management practices.

The situation in the U.S. banking sector is "very fluid," he noted.

"We've seen a major slowdown in various sectors; some might argue we are in a recession, and those are obviously troubling signals," Mr. Masrani said. "But then, on the other hand, having been here for a while, I've learned to respect the resilience of the American economy and how quickly it is able to transform and reorganize itself.

"My view is the world is not coming to an end, and, at some point, we will come out of this."