The action of Popular Inc. (Nasdaq: BPOP) reached its highest level on Thursday in at least five years after announcing that it will launch a common stock repurchase program for up to $ 500 million.
The conglomerate also announced that it will increase the payment of dividends to its shareholders by 33%, starting in the second quarter of this year.
After the announcement, the bank title was quoted at $ 60.85, but at the end of the trading day on Thursday, the price closed at $ 59.98, appreciating about 2.64% compared to Wednesday.
“We are pleased to announce our capital proposals for the year 2020, which are consistent with our objective of providing better returns to shareholders while maintaining prudent levels of capital, ”He said in written statements, Ignacio Alvarez, chief executive officer of the conglomerate.
According to Álvarez, the capital return plan to investors has been put in place after the Federal Reserve’s governing board – the main regulator of the conglomerate – found no objections to the proposal.
According to Popular, the institution could repurchase shares in the open market or private transactions.
Meanwhile, shareholders would see a 33% increase in the payment of dividends per common share. The decision of the board of directors of the conglomerate increases the dividend per common share from 30 to 40 cents, which will be payable from the second quarter of this year.
Popular disclosed its plans to use the capital it owns in books a month after William C. Martin, chief investment officer at Raging Capital Management, wrote to the conglomerate’s executive leadership to suggest that he activate a share buyback plan of up to $ 1,000 million and double the amount of the dividend.
Such moves, according to the executive, would not affect the bank’s capital position, still placing it among the most “overcapitalized” institutions in North America.
In his letter, Martin – who described Raging as a long-term investor in Popular – also suggested the conglomerate listen with alternative investment bankers to divide the bank’s shareholding in Evertec; separate the operation of Popular at the continental level and even sell the bank to another larger and more diversified banking entity.
Then, Popular indicated that he would evaluate Martin’s suggestions.
Sources in this newspaper say that the financial conglomerate was already talking with the Federal Reserve to implement the plan released yesterday at the time of receiving Martin’s letter.
According to Bloomberg, Popular has about 96.74 million shares outstanding.
Last year, to reduce the amount of outstanding shares immediately, Popular launched an accelerated share repurchase program for $ 250 million.
This program, according to Popular, allowed it, during 2019, to temporarily repurchase about 4.6 million shares. The program, the conglomerate said, concluded on December 12, when following an agreement, Popular would have returned an unspecified number of shares to their owners, paying them an average price of $ 53.58.
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