BBVA has decided to take a significant step in its shareholder remuneration policy with the announcement of the largest share buyback in its historyThe entity will allocate up to 3.960 billion euros to the acquisition of its own shares on the market, an operation that will last for several months and is structured in different stages, with a direct impact on capital and the number of shares in circulation.
This movement is framed within a context of high profit generation and excess capital within the group, as well as in the decision to channel the resources not used in the failed takeover bid for Banco Sabadell back to shareholders. The bank insists that it will remain an attractive investment option thanks to the combination of growth and profitability and a significantly enhanced shareholder return.
An extraordinary program of 3.960 billion, the largest in the entity's history.
The BBVA board of directors has approved a extraordinary share buyback program for a maximum amount of €3.960 billion, a figure that places the operation among the most significant in the European banking sector. The launch is scheduled for December 22, once all relevant regulatory approvals have been obtained, including those from the European Central Bank and market supervisors.
The organization notes that this plan is in addition to the distributions already made in the last quarterOn November 7, it paid out €1.842 billion in cash, the largest interim dividend it has ever paid. Furthermore, on December 10, it successfully completed a €993 million share buyback linked to its regular remuneration for the 2024 financial year.
The new buyback will be executed over several months and in stagesthrough daily purchases of shares on the market. All acquired shares will subsequently be redeemed, which implies a reduction in the number of shares and an increase in the relative stake of the shareholders who remain in the bank.
According to the financial director, Luisa Gómez Bravo, the total amount of 3.960 billion is equivalent to 100 basis points of CET1 capitalThese adjustments will be deducted from the entity's regulatory ratio in December. Even after this adjustment, the pro forma CET1 ratio would be around 12,42%, clearly above BBVA's target range of 11,5% to 12%.
For the bank's top management, this operation demonstrates a firm and continued commitment to repay excess capital generated above the upper end of the target range. The entity emphasizes that its solvency position will remain very strong after the program, thanks to its strong organic earnings generation capacity.
An initial tranche of 1.500 billion starting on December 22nd
The program design anticipates that the buyback will take place in successive sectionsThe first tranche will have a maximum amount of €1.500 billion and will begin on December 22. Purchase orders will be executed on the Spanish Stock Exchange Interconnection System (Continuous Market) and on several European trading platforms, including Cboe Europe, Turquoise Europe, and Aquis Exchange.
BBVA has hired JP Morgan SE as the entity responsible for executing the purchases in the market. The bank estimates that this first tranche will not conclude before March 6 nor extend beyond April 7, 2026. In any case, it will be considered finished when the maximum amount of 1.500 billion has been reached or the maximum number of shares set, 557.316.433 shares, has been acquired.
Once this first phase is completed, the entity plans to continue with new buyback phases until the overall limit of €3.960 billion is reached, if the board so decides. The program's total timeline extends over several months, allowing for adjustments to the pace of purchases based on market conditions and evolving capital ratios.
In terms of size, the plan is roughly equivalent to 3,5% of BBVA's market capitalizationThe figures are based on recent share prices. Although this represents the largest share buyback the group has ever launched, some analysts had considered even more aggressive scenarios, with amounts close to €5.000 billion or €6.000 billion. Despite this, the bank maintains a prudent strategy that allows it to preserve a comfortable capital buffer.
From a technical point of view, the commitment to carry out daily purchases in each stock market session Within the limits set by market abuse regulations, this helps to provide visibility into the flow of demand for the stock. However, the immediate impact on the share price may be mitigated by the fact that the announcement was already partially priced in by investors.
Fit into the strategic plan and use of excess capital
The buyback program is fully part of the BBVA's strategic plan for the period 2025-2028The bank expects to have approximately €36.000 billion of distributable capital available over those years, combining ordinary dividends and additional distributions such as share buybacks. Of that total, around €24.000 billion would correspond to recurring remuneration and approximately €12 billion would come from excess capital above the 12.000% CET1 ratio.
After the failed attempt to acquire Banco Sabadell Through a public takeover bid, the bank announced in October that it would resume a “significant” shareholder payout. The new buyback is interpreted as a way of channeling a significant portion of the funds prepared for that corporate transaction back to the shareholders, although without exhausting all available reserves.
Management insists that BBVA It does not give up on maintaining a comfortable solvency profileAlthough the transaction reduces the CET1 ratio by 100 basis points, the pro forma ratio remains well above the upper limit of its target range, supported by a return on tangible equity (ROTE) of nearly 20% in the first nine months of the year. This capital generation capacity provides room for future share buybacks or dividend increases should attractive investment alternatives not emerge.
In this context, the prevailing view among analysts is that the bank has opted for a gradual and sustainable approachThe program's size is significant in absolute terms and a record for the institution, but modest when compared to the size of its balance sheet and available capital. For many more patient investors focused on free cash flow and total return, the transaction fits within a medium-term value creation strategy.
The organization itself also emphasizes the message to the market regarding the stability of its capital policyThe surplus generated above 12% of CET1 will not accumulate indefinitely, but will be returned through increasing dividends and recurring repurchases, always subject to the approval of the supervisors.
More than 10.000 billion in share buybacks since 2021 and their impact on EPS
The new program doesn't start from scratch. Since BBVA launched its first share buyback plan in 2021The bank has already allocated more than €10.000 billion to these types of operations, not including the amount of the share buyback now announced. This effort has significantly reduced the number of shares outstanding and has had a direct effect on earnings per share.
In recent years, the entity has recorded significant increases in attributable profit: around 31% in 2022, 21% in 2023 and 25% in 2024. However, earnings per share (EPS) advanced even faster, with increases of 48%, 26% and 27%, respectively, driven precisely by the reduction in the number of shares after successive buybacks.
To date, BBVA has completed five buyback programscombining extraordinary operations and plans integrated into ordinary remuneration. Between 2021 and 2022, it executed exceptional share buybacks of €3.160 billion, to which another €1.000 billion was added in 2023. Along with these, the bank has developed three programs linked to recurring remuneration: €422 million charged to 2022, €781 million charged to 2023 and €993 million corresponding to 2024.
Within the Spanish banking sector as a whole, these operations have gained particular prominence in recent years as a way to channel extraordinary profits stemming from the higher interest rate environment. The sector in Spain alone has allocated around €21.000 billion to share buybacks in the last five years, and BBVA is among the most active institutions in this area.
The bank highlights that the combination of increasing dividends and massive buybacks This strengthens total shareholder returns without compromising the ability to invest in the business. The write-off of acquired shares increases the relative weight of each share in the capital, so earnings per share (EPS) and book value per share tend to improve if results remain strong.
Market reaction and investor perception
The stock market's initial reaction to the announcement has been subdued. Despite the program's scope, BBVA shares have barely moved at the openingWith slight intraday fluctuations and a virtually flat price around pre-announcement levels, this tepid movement is partly explained by the market's prior anticipation of a significant share buyback following the conclusion of the takeover bid for Sabadell.
Some investors had even managed more ambitious scenarios, with amounts approaching 6.000 billion eurosTherefore, the final amount may seem somewhat conservative to those who were expecting a more aggressive capital repayment. However, most reports agree that the transaction aligns well with the objective of preserving a substantial solvency buffer in a demanding regulatory environment.
Various analyses suggest that the key factor for the share price will not be so much the exact size of this buyback as the bank's ability to maintain its rate of profit generation and capital in the coming quarters. If the results continue to be positive, the market assumes that the company will have room to consider further share buybacks or dividend increases later on.
So far this year, BBVA's value has accumulated a very notable revaluation in the Stock ExchangeThis reduces the surprise factor of such news. For shareholders with a medium- to long-term investment horizon, the transaction reinforces the thesis of a bank with strong cash generation capacity and a predictable shareholder return policy.
With all these elements on the table, the extraordinary 3.960 billion program is shaping up as a central piece of capital strategyIt allows for the rapid monetization of part of the excess solvency, improves earnings per share, and consolidates the image of an entity that prioritizes returns to its owners without sacrificing a comfortable level of capital in the face of future uncertainties.
