Royal Bank says it will soon start repurchasing up to 30 million of its common shares. How will this affect the price of the stock now, and during the repurchase?
TORONTO, Oct. 12, 2012 /CNW/ - Royal Bank of Canada (TSX: RY) (NYSE: RY) today announced its intention, subject to the approval of the Office of the Superintendent of Financial Institutions (OSFI) and the Toronto Stock Exchange, to commence a normal course issuer bid through the facilities of the Toronto Stock Exchange and to repurchase for cancellation up to 30 million of its common shares, representing approximately 2.1 per cent of the bank's outstanding common shares as at September 28, 2012. On September 28, 2012, there were 1,444,700,692 common shares outstanding. The bank intends to file a notice of intention with the Toronto Stock Exchange in this regard.
If it is like most years, it will mean that existing shareholders will be diluted, after all is said and done.
All the big Canadian banks announce a similar repurchase program every year, and are required to announce them if they contemplate making them. But you can look at the annual reports. Most of them are in net issuance over time, in spite of whatever repurchases are undertaken...
Edit add: Here are the common share counts ('000's) for RBC the last few years. There were similar (maybe even identical) share repurchase agreements in place every year, as far as I know... Note, especially, that when the shares got hammered in the 2008-2009 timeframes, the share counts went up, not down...
This is pretty par for the course for most companies that announce share repurchase programs... A few, like BRK.A, mean it when they say it... subject to pricing, of course...
The future is bright for jellyfish, caulerpa taxifolia, dinoflagellates and prokaryotes... rust never sleeps... the dude abides... the stupid, it burns. (http://bit.ly/LXZsXd)