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UBS has promised to buy back up to $2 billion in shares, bringing the total European lenders have pledged to return to investors this year to more than $130 billion.
The Swiss bank announced a new share buyback program on Tuesday, after suspending its previous plan a year ago after bailing out former rival Credit Suisse.
UBS shares hit a 16-year high last week and have risen more than 60 percent since it agreed to take over Credit Suisse last March, but the bank is under pressure from investors to improve its valuation against its US counterparts. Shares rose 1 percent Tuesday morning.
The two-year buyback plan is much smaller than the previous two programs — $4.5 billion in 2021 and $6 billion in 2022 — but UBS said it hopes to exceed the level of pre-acquisition repurchases by 2026.
The bank intends to buy back shares worth $1 billion in 2024, but that will not begin until after the completion of the merger of the two parent companies, Credit Suisse and UBS, which is expected to take place in the second quarter.
Late last year, activist investor Cevian Capital bought €1.2 billion of UBS shares, making it one of the bank's largest shareholders. Cevian is betting that UBS will double its value in the next three to five years.
European banks have boosted shareholder returns over the past 18 months after rising interest rates boosted profits. Lenders in the region have been under pressure to raise returns for investors, who have been spooked by dividend bans and windfall taxes in recent years.
Europe's largest listed banks pledged to pay dividends worth 74 billion euros and buy back shares worth 47 billion euros on the back of their 2023 results, an increase of 54 percent on the previous year and much higher than in every year since at least 2007, according to figures compiled by U analysts. PS.
Buybacks have been the biggest source of growth over the past three years, with buybacks worth just a few billion euros annually across the top 50 banks in the period up to 2020.
Capital returns helped lift European bank stocks to their highest level in six years. The Stoxx Europe 600 bank index has risen 34 percent over the past year.
Despite a long drought in deals and lower demand for loans, 2023 was one of the most profitable years for European banks due to higher interest rates.
