UBS is embarking on another massive share buyback as part of its efforts to trim down its business, the Swiss banking giant said Tuesday.
Over the next two years, UBS will repurchase up to $2 billion worth of shares or 10% of registered share capital, meaning the shares allocated to shareholders. This corresponds to roughly 64.1 million registered shares or around 1.85% of the registered share capital of the bank.
The shares UBS plans to repurchase will be canceled at one of the bank’s future annual general meetings for the purpose of capital reduction, the Zurich-based bank said.
UBS will begin the buyback on Wednesday through a separate trading line on the SIX Swiss Exchange. Its shares fell 0.5% on Tuesday morning following the announcement.
In its annual report released February, the bank announced plans to buy back $1 billion worth of shares in 2024 alone, with the hope of having share repurchases exceed pre-acquisition levels by 2026. Within that same timeframe, the bank hopes to reduce costs by about $13 billion.
The bank completed a similar buyback last month, bringing in 5.01 billion Swiss francs ($5.52 billion), or 8.62 % of the share capital of UBS, over the course of two years. More than half of the shares that were bought back were used to complete its acquisition of Credit Suisse last July. The rest of those shares are expected to be canceled at next year’s annual shareholder meeting, the bank said.
This is the latest in a recent series of actions the bank has taken to cut costs. The bank announced last week that it was offloading $8 billion in assets to Apollo Global Management to pare down its non-essential offerings. UBS projected a $300 million windfall in the first quarter of 2024 from that sale, while Credit Suisse is estimated to book a $900 million loss.
UBS is still in the process of integrating its competitor, Credit Suisse, which it acquired last year for 3 billion Swiss francs ($3.25 billion) — the largest banking takeover since the 2008 financial crisis, orchestrated by Switzerland’s government over concerns that Credit Suisse’s failure could have ripple effects on the international financial system. UBS’ absorption of Credit Suisse could take between three to five years.