Standard Chartered eyes $1.4bn buyback
Standard Chartered looks set to trigger a share buyback scheme, returning more than $US1 billion ($1.4bn) to shareholders.
Standard Chartered is preparing to shower long-suffering shareholders with a bumper cash return of more than $US1 billion ($1.4bn) through its first share buyback program in nearly two decades.
Analysts say that the emerging markets-focused bank, led by American Bill Winters, has triggered plans for the bonanza after paying $US1.1bn to authorities in the US and Britain to settle charges of violating sanctions against Iran.
Banks need approval from the Prudential Regulation Authority before they can dish out dividends or buy back shares — a process that can take 90 days. Standard Chartered would be able to begin buying back shares in July or early August if it sought approval after this month’s settlement.
Taking the shares out of the market should boost the ailing stock price, which has dropped by about a third since Mr Winters took charge in June 2015. The shares closed in London last week at 672p.
The move would mark a sharp reversal in strategy for Standard Chartered, which called on investors for $US5.1bn in 2015 in an attempt to recover from large losses as emerging markets tanked. Mr Winters has been scrambling to revive the bank ever since, culling more than 15,000 jobs.
Buying back shares could signal a new phase for the bank, suggesting that it has enough spare capital to give back more cash to shareholders over time.
One analyst said Standard Chartered could look to buy back up to $US1.4bn worth of shares, which would still leave it with a generous capital buffer in the middle of its targeted range. If the bank were to buy back $US1.3bn to $US1.4bn over the next four years, it would return the amount it raised in the 2015 rights issue.
“The settlement with the US Department of Justice provides clarity,” said Investec analyst Ian Gordon. “Standard Chartered now has strong capital reserves.”
The Sunday Times
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