The Westpac Banking Corp (ASX: WBC) share price has been a very strong performer on Monday morning.
At the time of writing, the banking giant’s shares are up a sizeable 3% to $23.45.
Why is the Westpac share price rising today?
The catalyst for the rise in the Westpac share price this morning is news that it has completed its off-market share buyback.
According to the release, Westpac has bought back $3.5 billion worth of its shares following strong demand from shareholders. This equates to 167.5 million shares or 4.6% of its issued capital.
The bank was able to undertake this buyback at $20.90 per share, which represents a 6% discount to the volume weighted average price over the last five trading sessions.
This buyback price comprises an $11.34 capital component and a $9.56 dividend component. All in all, this means the tax value of the buyback is $24.14 per share, which is a 6% premium to the Westpac share price at Friday’s close.
As a result of this program, Westpac’s CET1 capital ratio will reduce by 79 basis points.
Strong demand
Due to strong demand, Westpac advised that all eligible shares tendered at a 7% discount or greater were accepted in full at the buyback price. However, some shareholders tendering shares at a 6% discount were scaled back and shares offered at a 5% or less discount were not bought back.
Payments for the shares bought back will commence later this week on 18 February 2022 via direct credit.
Westpac’s CFO, Michael Rowland, commented: “We are very pleased to have completed the $3.5 billion Buy-Back, reducing the number of shares outstanding by 4.6% of issued capital. The Buy-Back improves our capital efficiency, returns franking credits and reduces our share count for the benefit of all shareholders. Westpac’s capital position remains strong after completing this BuyBack.”
The post Here’s why the Westpac (ASX:WBC) share price is storming higher today appeared first on The Motley Fool Australia.
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More reading
- What Westpac (ASX:WBC) shareholders need to know about its $3.5bn buyback
- Why IAG, Rio Tinto, Unibail, and Westpac shares are pushing higher
- 2 buy-rated ASX dividend shares with 4%+ yields
- Will Westpac (ASX:WBC) shares give ASX 200 investors a dividend raise in 2022?
- Rising tide? Here’s why ASX 200 bank shares are having such a good run today
Motley Fool contributor James Mickleboro owns Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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