Hungary's OTP Bank has increased its treasury stock by 213,625 ordinary shares purchased at the Budapest Stock Exchange at HUF 5,071 per share on 10th July, the management said on Thursday.
Treasury stock purchase at OTP
The transaction has boosted OTP's treasury stock to 3,723,049 shares. Treasury shares account for only 1.33% of OTP's total capitalization. The shares bought back yesterday accounted for about 12% of the day's trading volume at the Budapest Stock Exchange.
In related news, OTP said it sold 32,882 shares on 10th July as part of its employee compensation plan.
As a combined result of yesterday's transactions, treasury stock currently stands at 3,690,167 shares, of which 2,073,560 are held by various OTP subsidiaries. Treasury shares account for 1.32% of total capitalization.
A series of buybacks in June
This is not the first time OTP has purchased treasury shares recently. Buybacks in June totaled over 1 million shares; yesterday's transactions boosted the total to nearly 1.3 million shares.
What purpose could the purchases serve?
OTP's buybacks could serve a number of different purposes:
1. The management believes the shares are underpriced 2. The repurchases reduce the volume of outstanding shares, thus boosting the earnings per share index. 3. The bank could use the shares for employee remuneration 4. The treasury buybacks could make a takeover attempt more difficult 5. Repurchases could lend support to the share price
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