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UBS has announced a share buyback plan worth up to $2bn, with up to half of the total amount slated for completion during 2024. According to analysis from the Financial Times, the Swiss bank’s share purchase programme will bring the total amount European banks have pledged to return to investors this year to over $130bn.
Although its newly unveiled two-year buyback programme is smaller than its previous schemes ($4.5bn in 2021 and $6bn in 2022), UBS said in a statement that it intends to exceed its pre-Credit Suisse acquisition buyback levels by 2026.
According to figures compiled by UBS analysts, the largest listed European banks have pledged €74bn in dividends and €47bn in share repurchases following their 2023 results, representing a 54 per cent increase from the previous year and surpassing every previous year since 2007.
These capital returns have propelled European bank shares to a six-year high, with the Stoxx Europe 600 Banks index climbing 34 per cent over the past year.
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Seven lawsuits filed by investors accusing Goldman Sachs and Morgan Stanley of misconduct contributing to the March 2021 collapse of Archegos Capital Management were dismissed by a US federal judge last Thursday. The two banks, among Archegos’s prime brokers, faced allegations of market manipulation and insider trading.
Archegos’s collapse stemmed from owner and founder Bill Hwang’s use of total return swaps to amass substantial out-sized stakes in companies including ViacomCBS, Discovery and Baidu, totalling an estimated $160bn.
The investors alleged that the banks’ possession of insider information enabled them to offload stocks, as they were aware that Hwang would also be selling due to his inability to meet margin calls. The investors claimed the combined sell-off resulted in substantial losses for them, while Goldman and Morgan Stanley managed to avoid billions in losses of their own.
Judge Jed Rakoff’s decision will prohibit the re-filing of the lawsuits against Goldman and Morgan Stanley. Meanwhile, Hwang and former Archegos CFO Patrick Halligan face a trial in May. They have pleaded not guilty to charges including securities fraud and racketeering conspiracy.
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S&P Global upgraded JPMorgan Chase’s rating outlook from “stable” to “positive” on Monday, citing the strength of its growing lending-to-trading business, which has outperformed its peers.
Despite a slight dip in fourth-quarter profits, JPMorgan closed 2023 with its highest-ever annual pre-tax profit of $61.6bn and projected higher-than-expected interest income for 2024.
Its stock has risen by 17 per cent so far this year, outpacing the S&P 500 Banks Index’s 14.4 per cent rise during the same period.
“JPMorgan has been able to post peer-leading industry profitability and returns, and grow its tangible book value by more than 9 per cent annually since 2004, well ahead of peers,” S&P said.
The bank is scheduled to release its first-quarter results next week, along with Bank of America, Wells Fargo and Citi. JPMorgan’s positive outlook stands in contrast to smaller US regional banks, whose prospects were downgraded by S&P last month due to their exposure to the country’s troubled commercial real estate sector.
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HSBC announced on Friday that it has completed the C$13.5bn ($9.9bn) sale of its Canadian unit, HSBC Bank Canada, to Royal Bank of Canada. In a statement, HSBC said it stands to gain $4.9bn in the first quarter of 2024 from the transaction.
Commenting on the acquisition, RBC CEO Dave McKay said: “Today marks one of the most exciting times of our 155-year history and a pivotal milestone in our long-term growth story as we welcome 4,500 employees and 780,000 clients from HSBC Canada.”
Despite receiving approval in December of last year, the merger encountered opposition from environmental and anti-monopoly groups, as well as Conservative Party of Canada politicians, who expressed concerns about the banking sector’s increasing concentration and potential consumer fee hikes.
A banking sector deal of this scale had not been attempted in Canada since 1998, when the country’s regulators blocked a proposed merger between RBC and Bank of Montreal.
