UBS to launch new share buyback as Credit Suisse deal continues to pay off

Swiss banking giant UBS has promised to launch a new share buyback programme of up to $2bn (£1.6bn) after suspending its previous plan last year following its acquisition of former rival Credit Suisse.

UBS announced on Tuesday that it would restore its repurchase programme and expected to buy back up to $1bn (£800m) in 2024.

The bank said the repurchase scheme would begin after the completion of the merger of the UBS and Credit Suisse parent companies, which is expected to occur by the end of the second quarter.

UBS announced in February that it would restart buybacks as it continued the costly process of integrating Credit Suisse. This process has so far underpinned two quarterly losses in a row.

The bank completed its 2022 buyback programme last month. It repurchased 298.5m of its shares—or 8.6 per cent of its stock—for $5.2bn (£4.1bn).

“Our ambition is for share repurchases to exceed our pre-acquisition level by 2026,” UBS said on Tuesday.

UBS triggered the biggest banking merger since the financial crisis last March when it agreed to buy domestic rival Credit Suisse. The state-brokered deal came after years of scandal at the latter firm, resulting in mass client outflows and a share slump.

UBS’ shares have soared 64 per cent since its deal to acquire Credit Suisse and rose 1.4 per cent on Tuesday morning in Zurich following its latest announcement.

It has acted swiftly over the last 12 months to ditch Credit Suisse’s unprofitable businesses, cut costs and work towards fully integrating its Swiss banking unit by the end of 2026.

The wider European banking sector has lifted shareholder returns this year as higher interest rates have boosted bottom lines.

Meanwhile, UBS has made chief executive Sergio Ermotti the continent’s best-paid bank boss for overseeing the integration of Credit Suisse. His pay totalled $15.9m (£12.7m) last year.