BNP Paribas, Société Générale or AXA redeem their actions to destroy them then and thus raise their market valorization.
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On October 29, while BNP Paribas has just published excellent quarterly results, JPMorgan’s analysts specify in a note that the French bank “surprised with a redemption of unexpected shares of 900 million euros”. This operation consists for a company to redeem one’s own titles to destroy them then. This mechanically promotes shareholders: the capital and the number of actions that have decreased, the earnings per share progresses and the scholarship course goes up. This mode of remuneration of shareholders completes the annual payment of a dividend.
In the employees of BNP Paribas, the surprise was able to leave a bitter taste. “The announcement of the acquisition of shares has been very poorly perceived internally,” says Richard Pons, CFDT trade union delegate at BNP Paribas. A few days ago, we had concluded the mandatory annual negotiation [NAO] on salaries with management, without that this element is brought to our knowledge. “Management has granted a salary increase of 0.6% over one year for employees affecting up to 80,000 euros annual, from 1 er April 2022. “If we had known for the 900 million euros, it could have challenged our signature,” says the unionist.
Absence of dividends
All the major French financial institutions, having left the crisis behind them, “returns this year with share buyback programs. Crédit Agricole SA had unveiled earlier in the year devote nearly 560 million euros. Between the last days of October and beginning of November, the SCOR reinsurer announced a program of 200 million euros, Société Générale of 470 million euros and AXA of 1.7 billion euros – which should be followed by a second wave of 500 million euros in 2022.
“These share buybacks compensate for the lack of dividend payments during the health crisis. We must, at a time, reward the shareholders, explains a banker, who wants to keep anonymity. Banks need that investors are at the rendezvous when they need to raise capital. “
In the spring of 2020, the European Central Bank (ECB), which oversees the 117 largest banks in the euro area, and the European Insurance and Pension Authority (EIOPA) had indeed requested financial institutions to Not paying dividends to strengthen their reservations to face the crisis. In early October, the French supervisor, the Prudential Supervisory and Resolution Authority (ACPR), raised these restrictions.
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