As Apple showed last week, there’s nothing like the sniff of extra cash from a buyback to get shareholders sweet on you and so it is with the ANZ Bank which yesterday hinted it could double its current $1.5 billion buyback.
The news saw ANZ shares rise more than 1% to $27.91, the highest they have been since late March, and well above the 52 week low of $26.11 hit in early April.
In fact they shares hit a day’s high of $28.03 yesterday in trading, the highest they have been since March 22.
The bank said it had received first tranche of $1 billion in cash from Zurich Insurance for last year’s agreement to buy ANZ’s insurance operations. ANZ said the proceeds were a component of the OnePath insurance business sale transactions in the form of reinsurance commissions. The $2.85 billion sale to Zurich followed a series of non-core divestments across Asia.
Soon after the OnePath sale last year, ANZ had said it would start buying back up to $1.5 billion of it shares on-market, to begin returning surplus capital. It had also said it would consider further capital management initiatives as it received proceeds of its divestments.
As a result the bank said there was the likelihood of an additional buy-back of shares in the range of $1 billion-$1.5 billion, over and above an ongoing program. The $1 billion will see an increase of about 25 basis points in its APRA Common Equity Tier 1 capital, ANZ added.
ANZ also confirmed that it will be use the current buyback while buying shares in the market to neutralise the dividend reinvestment program for the interim dividend. ANZ said it would appoint a third party to buy the shares from May 18 to May 31.
