Wells Fargo share buyback offer of $30 billion, rose the stock on Tuesday. The company also said its board of directors approved a previously announced dividend increase, to 35 cents per Wells Fargo share from the previous 30 cents. The sum is payable on Sept. 1 to shareholders of record on Aug. 4.
Wells Fargo shares climbed in late trading Tuesday after announcing plans of share buyback program as much as $30 billion and boosting its dividend.
Wells Fargo stock
Wells Fargo stock advanced 3.2% to $46.97 in extended trading at 5:29 p.m. in New York. Wells Fargo shares had already gained 13% this year, making it one of the best performers among the biggest US banks.
Wells Fargo share rose more than 3% in extended trading on Tuesday.
Wells Fargo share buyback
Wells Fargo share buyback program will consider “current market conditions, potential changes to regulatory capital requirements, and other risk factors,” Wells Fargo said in a statement, which didn’t provide a timeline for the repurchases. The firm increased its quarterly dividend by 17% to 35 cents a share.
A flurry of rate increases by the Federal Reserve since last year has boosted key financial institutions as borrowers face a larger interest burden.
While Wells Fargo share buyback $8 billion of its stock during the first half of the year, the firm previously said it would look to be prudent with its excess capital as regulators weigh proposed changes to capital rules for the biggest U.S. banks. The Federal Reserve, Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. are expected to unveil those plans Thursday.
“While we expect to repurchase more common stock this year, we believe continuing to maintain significant excess capital is prudent until there is more specificity on the new bank capital requirements,” Chief Executive Officer Charlie Scharf said earlier this month.
“Our first priority remains investing in our risk and control infrastructure, but we are also investing in providing updated capabilities to our customers and supporting our employees and communities,” Scharf said Tuesday. “Even with these significant investments, our capital levels are strong and we expect them to remain so, allowing us to return excess capital to our shareholders.”
Views on share buyback program
The central bank is expected to hike rates again Wednesday as it tries to rein in elevated inflation.
Democratic lawmakers have introduced multiple bills that aim to curb share buyback program by major corporations. They say the businesses are passing profits on to wealthier shareholders instead of increasing their employees’ pay.
The largest U.S. banks have announced plans to raise their quarterly dividends after they cleared the Federal Reserve’s annual stress test last month.
“Even with these significant investments, our capital levels are strong and we expect them to remain so, allowing us to return excess capital to our shareholders,” Wells Fargo CEO Charlie Scharf said in a statement accompanying the bank’s announcement.
Share buyback program by other banks
Wells Fargo and all of its top rivals passed the Fed’s annual stress test last month, typically the key hurdle banks must clear to return capital to their investors. But this year’s results didn’t trigger immediate buyback announcements because many banks wanted to wait until the Fed provided more clarity on the new rules.
More recently, however, the Fed said it will give banks ample time to comment on the proposals and that the new requirements might not take effect for several years.
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