With the clouds of the financial crisis clearing out slowly but steadily, Canadian banks are moving in to make a killing in the void left by their U.S. counterparts. While U.S. banks are selling off subsidiaries to comply with the required capital rules, Canadian banks have started taking advantage of the situation by riding on a new wave of acquisitions.

In a recent attempt to improve its capital levels, the battered Bank of America (NYSE: BAC) decided to spin off its vast international credit card business. And Canadian giant Toronto-Dominion Bank (NYSE: TD) agreed to grab the opportunity. By buying MBNA Canada's credit card arm for $7.6 billion, TD will have both Visa and MasterCard in its portfolio. It will add 1.8 million active credit card accounts to its base and put it in possession of the $8.5 billion in outstanding balances.

Taking advantage of opportunities
TD has been on the lookout to acquire assets of U.S. firms and has become one of the largest banks in North America by assets. It already has 1,285 retail branches in the U.S., compared to 1,131 in Canada. It strategically bought assets of failed banking institutions such as Riverside National Bank of Florida, First Federal Bank of North Florida, and AmericanFirst Bank from the FDIC. It also acquired Chrysler Financial in April to expand its auto lending business.

B of A's version of the story
Bank of America, on the other hand, is desperately selling its noncore assets to become leaner and meet new capital requirements. The American banking major intends to sell off its international card business in Ireland and the U.K. as well. These sales will not only free up cash but also bring down the capital requirement. Credit card portfolios are considered risky by regulators and, therefore, the bank would have to put up more capital against them. We recently saw the European banking giant HSBC (NYSE: HBC) selling its U.S. credit card arm to Capital One Financial (NYSE: COF) as part of its cost-cutting initiative.

The Foolish bottom line
Canadian banks are trying to capitalize on the woes of troubled U.S. banks by gobbling up assets that they think fit well in their portfolio. Their strong balance sheets enable them to afford such purchases and tap the U.S. market to extract more profits. And Toronto-Dominion seems to be the hungriest of all. TD featured on my list of five banks that have been performing impressively on the earnings front and offering big fat dividends as well. Such smart deals should help sustain its performance, if not enhance it.