Toronto-Dominion Becomes Biggest Bank Short With $3.7 Billion on the Line

Turns out, the biggest short in the banking industry anywhere in the world isn’t in Switzerland or Silicon Valley, but rather, in the relatively tame financial center of Canada.

In recent weeks, short sellers have upped their bearish bets against Toronto-Dominion Bank, and now have roughly $3.7 billion on the line vis-à-vis Canada’s second-largest lender, according to an analysis by S3 Partners. That’s the most among financial institutions globally and puts TD ahead of the likes of France’s BNP Paribas SA and Bank of America Corp.

Part of it has to do with the general skittishness toward the banking sector after three US regional banks failed and Credit Suisse was forced into a shotgun wedding with UBS Group AG. And there are few signs Canadian lenders have any of the liquidity issues that investors have zeroed-in on recently. But analysts also point to worries about TD’s exposure to the country’s housing slowdown, as well as its ties to the US market through its stake in Charles Schwab Corp. and a planned regional bank acquisition.