UBS recently unveiled a new share repurchase program totaling up to $2 billion, with $1 billion of that amount expected to be executed this year. The bank’s long-term plan includes repurchasing up to $1 billion of shares in 2024, following the completion of the merger between UBS AG and Credit Suisse AG by the end of the second quarter. UBS aims for share repurchases to surpass pre-acquisition levels by 2026.
The new initiative comes on the heels of the successful completion of UBS’s 2022 share repurchase program, which saw the acquisition of 298.5 million shares, amounting to 8.62% of its stock valued at $5.2 billion. The 2022 program was finalized last month. Share buybacks are a common practice where companies buy back their own shares from the stock market, reducing the number of shares available to investors. This strategy enables companies to distribute excess cash to shareholders, alongside dividends, and is often linked to an increase in stock prices as shares become scarcer.
UBS is currently focused on integrating Credit Suisse’s business, with former chief Sergio Ermotti returning for a second stint as CEO. Ermotti notably earned 14.4 million Swiss francs ($15.9 million) in 2023 following his unexpected comeback. Despite reporting a second consecutive quarterly loss in February due to integration expenses, UBS maintained strong underlying operating profits. The bank’s shares have appreciated by over 6% since the beginning of the year.
Looking ahead, UBS remains committed to its shareholder-friendly policies through effective capital allocation strategies such as share repurchases. The bank’s proactive approach to handling challenges while maintaining financial stability and profitability underscores its resilience in the competitive banking sector. As UBS continues to navigate the complexities of mergers and market dynamics, investors can anticipate further value creation and potential returns from the institution’s strategic initiatives.