Precious metals house of the year: TD Securities

Energy Risk Awards 2019: Bank reaps rewards of long-term strategy to grow precious metals business and strengthen key partnerships

David Swinburne, TD Securities

For TD Securities, a strong performance in precious metals in 2018 was the result of the bank’s long-term, strategic commitment to the market during a period when most other Canadian and international banks were pulling out or paring down operations, says David Swinburne, managing director and global head of metals and energy.  

The bank’s metals sales and trading business was set up in 2010 to provide hedging services to the Canadian miner and producer sector – a core segment for the bank’s reserve base lending business. Its customers now span the entire value chain, from producers and refiners to central banks, sovereign wealth funds and large hedge funds to wholesale bar and coin dealers and jewellers.

In just eight years, TD has grown its metals trading business into one of the largest liquidity providers in precious metals. In 2018, it had one of the largest volumes in over-the-counter precious metals trading, as well as a significant presence on the Chicago Mercantile Exchange and the London Metal Exchange, says Swinburne. It is also a market maker on the London Bullion Market.

“We’ve built the business out strategically, step by step over the years, continuing to take market share,” says Swinburne. “The critical mass we now have in the market allows us to compete on pricing very effectively and to bring that added value back to our client.”

Timing has been a key differentiating factor for TD’s metals team. Entering the sector after the 2008 financial crisis meant the business was able to grow from the bottom up, without needing to reorganise or shrink down, which was the position many banks found themselves in. “These are two very different positions to be in,” comments Swinburne. “We were fortunate in that we weren’t left with legacy businesses and our balance sheet was strong and intact. As our focus was on organic growth and building businesses around our clients, we were well positioned to grow post-crisis.”

And while the withdrawal of many major banks from commodities at this time cast a cloud over the metals market, it did provide a superb hiring opportunity for TD.

“We were able to attract tier-one talent and grow extremely quickly,” says Swinburne. 

As part of its ongoing efforts to increase services to its clients, the bank focused in recent years on strengthening relationships across the supply chain. One noteworthy partnership is with the Royal Canadian Mint. The TD metals team provides two major services for the RCM. Firstly, it is a liquidity provider for Canadian producers, taking title of production ahead of the refinery process. Secondly, it takes the finished products to new markets, usually in Asia.

We’ve built the business out strategically, step by step over the years, continuing to take market share. The critical mass we now have in the market allows us to compete on pricing very effectively

David Swinburne, TD Securities

“The RCM brand is now starting to get recognised in Asia and people are asking for it,” says Swinburne. “The RCM business model is a good example of how we’ve been able to facilitate the entire value chain from some of the largest gold producers in the world through one of the largest refiners in the world to some of the biggest consumers of gold in the world, with the two ends of the chain being at the opposite sides of the planet.”

RCM expresses great satisfaction with the relationship. “It’s really important for us to work with banks such as TD that can act as a liquidity provider and maintain accounts with us for the purposes of purchasing metals from the producers,” says Amanda Bernier, sales director, bullion, storage and refining solutions at the RCM. The sales side of the relationship has been equally important, Bernier says. “TD has sold our products into a wide variety of markets that we wouldn’t otherwise have access to. It’s really done wonders for our brand and our reputation globally that TD can distribute our products and get our name out there on a global basis.” 

Bernier also praises the TD team for being proactive and innovative. “One of the great things about the current team is that they come to us with a lot of ideas. They have a strategic vision of where they think our brand would be well received based on relationships they have.”

Swinburne admits that when major banks were withdrawing from the metals space it was difficult not to question whether TD was doing the right thing by staying put. But more recently, the revival of interest in the sector affirms the decision to stay and grow the business. In recent months, banks such as the Canadian Imperial Bank of Commerce, Bank of Montreal and the Royal Bank of Canada have all shown interest in the sector, according to market participants.

“I’m incredibly proud of the bank and our team for sticking with the precious metals business through the tough times, and now I feel the interest from other banks is a bit of validation,” he says. “If we’ve had some role in supporting the precious metals market through a tough time, that means everything to us.”