Spanish lender BBVA is looking to distribute over €7bn to shareholders between 2021 and 2022, its chairman Carlos Torres has revealed.
The sum is equivalent to almost 20% of the existing market capitalisation of BBVA.
It includes the €3.5bn share buyback that the bank has announced.
The first tranche of €1.5bn is underway and Torres said that the bank has already executed a substantial part of it.
It also includes the expected dividends for the two years, applying the ‘pay out’ policy of 40-50% of profit as per the bank’s policy.
In November 2021, BBVA launched a voluntary offer to take full control of Turkey-based Garanti BBVA for up to €2.25bn ($2.58bn).
Upon completion of the share buyback and acquisition of Garanti, BBVA expects to have surplus capital of over €2bn.
Torres further stated that the bank is open to making additional distributions to shareholders and plans to invest in growing its franchises.
Commenting on the Garanti deal, Torres said: “Turkey is a strategic country for BBVA, and we see a country with huge long-term potential because of its size (85 million people), its youth, its demographics (average age is 32), its trade partners and its geographical position: It has very strong ties with Europe.
“All this leads to a very high potential growth of 3.5%, which compares with less than 1.5 % in Europe. In addition, banking penetration is very low, so there is additional potential growth.”
In October 2021, BBVA announced plans for a digital retail banking unit in Italy.