Banco Macro's share buyback plan seen as smart move given upside potential

Friday, September 16, 2011

Argentine lender Banco Macro's (NYSE: BMA) announcement that it will carry out a stock repurchase plan for up to 200mn pesos (US$47.6mn) given the uncertain global economic environment is a smart move, as its stock has a current upside of more than 70%, Alejandro Quelch, research manager at Capital Markets Argentina in Buenos Aires, told BNamericas.

The bank has set a maximum price of 10 pesos a share for the buyback, just below Thursday's (Sep 15) closing price of 10.3 pesos. Banco Macro' shares have declined 55% so far this year.

"Banco Macro's management is smart, and they see this as an opportunity. Besides, they have done it before in times of crisis [in 2008 and 2009]," Quelch said.

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While the 10 peso a share price is below the 52-week high of 22.5 pesos and is unlikely to provide a boost to the current stock price, the buyback program should help provide some downside protection to the share price, Deutsche Bank (NYSE: DB) said in a report.

The bank's board considers its capital position to be strong, as its regulatory capital exceeds 101% the minimum regulatory requirement. The buyback program is valid for 90 days, Banco Macro said in a press release.

To read the press release, go to this link