ANZ defies market sentiments on back of buyback plan

Shares of Australia’s fourth largest private sector bank – Australia and New Zealand Banking Group Limited (ASX:ANZ) – have defied the broader market sentiments, as the bank has announced its share buyback plan.

ANZ shares were trading 29 basis points higher on the ASX at AU$27.23 a piece, at the time of filing this copy. This is despite the fact that the broader market was floating in the red due to the dampened global sentiments triggered by the resurging COVID-19 pandemic.

ANZ Bank – which has seen its shares rally over 18% on a year-to-date basis – was the only bank among the big four Aussie banks to be in the green on Tuesday.

The Melbourne-headquartered bank saw a spike in buying after it became the first domestic bank to announce that it would return up to AU$1.5 billion to its shareholders by way of the buyback.

“After reviewing options, we consider an on-market buy-back to be the most prudent, fairest and flexible method to return capital in the current environment,” the bank’s chairman Paul O’Sullivan said in a statement.

The proposed buyback is likely to begin on 3 August 2021 and will go on all the way till July 2022.

According to the company, the buyback is expected to reduce ANZ’s March 2021 CETI ratio by approximately 35 basis points. In March 2021, Level 2 and Level 1 Common Equity Tier 1 (CET1) ratios –key numbers for solvency in the banking system – of the bank stood at 12.4% and 12.2%, respectively – about two percentage points above the regulatory requirements.

“The strength of our balance sheet and ongoing financial performance means we are in a position to return a modest amount of surplus capital to shareholders through a buy-back of shares on-market,” ANZ Chief Executive Officer Shayne Elliott said.

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