May 20, 2022
HSBC headquarters in London

HSBC has launched its planned $1 billion share buyback, as it seeks to reward shareholders whilst making use of excess capital.

The London-based banking giant has appointed Merrill Lynch International to conduct the process, which commences immediately and is due to end on August 31st. Merrill Lynch will make trading decisions in relation to the buyback independently of HSBC.

The move could see as many as 2 billion HSBC ordinary shares cancelled and should provide a shot in the arm to average earnings per share.

Whilst sticking to the original plan in this instance, HSBC did say this was likely to be the only buyback program of 2022 after the bank took a larger than expected hit to capital reserves.

Over first quarter of 2022 the bank’s core Tier 1 capital ratio, a core fell to 14.1% from 15.8%, with analysts warning that further drops could be expected through the year. The main drivers of the revised outlook were geopolitical instability and rising inflation.

HSBC is not the only bank rolling out a share buyback program in 2022. Standard Chartered announced a program of its own to buy back shares worth up to $750m, whilst Lloyds and NatWest Group have also announced plans to buy back shares worth as much as £2bn and £750m, respectively.