Banco Bilbao Vizcaya Argentaria SA (BBVA.US) announced its largest-ever share repurchase program, marking the conclusion of its unsuccessful takeover bid for Banco Sabadell SA.
The Spanish lender stated on Friday that it had received authorization from the European Central Bank to execute a buyback plan worth up to €3.96 billion ($4.6 billion). The program will be implemented in phases over approximately 12 months, confirming earlier reports. The first tranche, valued at €1.5 billion, will commence on Monday.
Analysts had anticipated BBVA would announce a substantial repurchase, with some projections reaching €6 billion. The bank's €19 billion offer for Sabadell collapsed in October last year after being rejected by the majority of the smaller rival's shareholders.
While BBVA shares rose as investors welcomed the end of months-long uncertainty, the failed deal represented a significant setback for CEO Onur Genç and Chairman Carlos Torres, who had worked on the transaction for 18 months. BBVA had previously pledged to pursue a "significant" share buyback instead.
Earlier reports this week indicated the bank was seeking advisors to launch an initial €2 billion repurchase, potentially followed by additional rounds. Genç stated on Friday that BBVA now presents "a very attractive story that will continue, combining growth, profitability and excellent shareholder returns."
In July, BBVA unveiled new strategic targets, including a commitment to generate €49 billion in capital over four years through 2028. The bank plans to return most of this to shareholders.
As of September-end, BBVA's key capital strength metric - the Common Equity Tier 1 (CET1) ratio - stood at 13.4%, well above its target range of 11.5%-12%. The €3.96 billion buyback would reduce this ratio by 100 basis points.
CFO Luisa Gómez Bravo emphasized BBVA remains "committed to returning to shareholders, in a prudent and sustained manner, the excess capital generated above the upper limit of our target range (12%)."
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