UBS unveiled a new share repurchase program on Tuesday, signaling its intention to buy back up to $2 billion worth of its own shares, with an anticipated $1 billion set aside for this year.
The bank articulated its aim for the repurchases to surpass pre-acquisition levels by 2026, underlining a commitment to bolstering shareholder value through this strategic initiative. This announcement comes on the heels of the completion of its 2022 buyback program, which saw the acquisition of 298.5 million shares.
Detailing the timeline for the new program, UBS indicated that up to $1 billion of the planned repurchases are slated for 2024, with the initiative set to commence following the merger of UBS AG and Credit Suisse AG, anticipated to conclude by the end of the second quarter.
The completion of the 2022 buyback program marked a significant milestone for UBS, with the repurchased shares amounting to 8.62% of its stock, valued at $5.2 billion.
Share buybacks, a common corporate strategy, involve companies purchasing their own shares on the open market, thereby reducing the available shares for investors. This approach serves as a means for companies to enhance shareholder returns alongside dividends, often coinciding with an uptick in stock prices as shares become scarcer.
UBS is navigating the integration of Credit Suisse’s business, a formidable undertaking announced in late March 2023, with former CEO Sergio Ermotti returning to helm the bank for a second term. Despite facing integration costs, UBS reported robust underlying operating profits in February, albeit marking a second consecutive quarterly loss.
Sergio Ermotti’s compensation in 2023 totaled 14.4 million Swiss francs ($15.9 million), reflecting his remuneration following his unexpected return. Despite challenges, UBS shares have climbed over 6% year-to-date, underscoring investor confidence in the bank’s strategic direction.