UNICAJA: CANCELLATION OF DPS’19 AND SHARE BUYBACK (ANÃLISIS BANCO SABADELL)
UNI sent this morning the following communiqués to the Spanish market watchdog: It cancels the DPS’19 distribution proposal (€ 0.048/sh.; 10% yield) and the share buyback programme (up to 5% of outstanding shares). It also withdraws from the AGM’s agenda that will be held on the 29th of April the request to cancel the shares bought back. According to our estimates, the cancellation of DPS’19 adds 30bps to CET1 (14% in Dec’19), while the suspension of the share buyback programme has a neutral impact, as it had yet not been deducted from capital.
 The bank pledges to call a new AGM before the 31st of October, 2020, to formulate a new DPS’19 distribution proposal and, eventually, to reactivate the share buyback programme.
In conclusion, we are not surprised at the suspension, as in a sense it was forced by the ECB. In the case of UNI, considering the capital and liquidity position it comes from (CET1 ratio of 14% as of Dec 2019; LCR liquidity ratio of 319%), we believe that the suspension was unnecessary, although we understand that the rule will apply to all of the banks under supervision. For this reason, in our view it is likely that, if the COVID-19 crisis does not persists by October 2020, UNI will at least resume its share buyback programme. Bearing this in mind, and despite this being negative news, we do not expect a significant impact on the share price, as has been the case with the rest of banks within our coverage universe.
Unicaja Banco SA is a Spain-based financial institution (the Bank) engaged in the banking sector. The Bank offers services to individual and business customers. Its products and services range includes current and savings accounts, debit and credit cards, consumer and commercial loans, real estate credit, securities brokerage, funds management, leasing, factoring, pension plans, life and non-life insurance, international trade financing, money transfer, as well as treasury, among others. The Bank operates a number of branches in Spain and Morocco. The Bank is controlled by Fundacion Bancaria Unicaja.
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