Share buy-backs
Nordea’s capital and dividend policy includes both dividends and buy-backs as tools for capital distribution to shareholders. Our aim is to pay out 60-70% of the profit of the financial year to shareholders. In addition, buy-backs are intended to be used for distributing excess capital to our shareholders.
In September 2021, Nordea received approval from the European Central Bank (ECB) for share buy-backs of up to EUR 2 billion – a recognition of Nordea’s strong capital position and strong business performance. Following the completion of the first programme, Nordea’s applications for further share buy-backs of up to EUR 1.0bn and 1.5bn were approved by the ECB in February 2022 and July 2022, respectively. Both of these programmes have also been completed.
On 26 April 2023 Nordea’s Board of Directors decided on a fourth share buy-back programme of up to EUR 1.0bn. The programme commenced on 28 April 2023 and will end no later than 5 March 2024. The European Central Bank’s approval for the buy-backs was announced on 3 March 2023.
Fourth programme (ongoing)
Status as of 22 September 2023
| Total no of shares bought | Completed (EUR) | Total programme (EUR) |
|---|---|---|
| 47,827,042 | 473m | 1,000m |
Completed programmes
| Programme | Total no of shares bought | Completed (EUR) | Total programme (EUR) | Date of completion |
|---|---|---|---|---|
| 1 | 189,634,586 | 1,997m | 2,000m | 16 March 2023 |
| 2 | 107,254,529 | 1,002m | 1,002m | 14 June 2022 |
| 3 | 150,069,276 | 1,500m | 1,500m | 4 March 2022 |
Frequently asked questions about share buy-backs
A share buy-back means that a company purchases its own shares back from its shareholders. It is a way for the company to return capital to shareholders, and thus similar to a dividend.
Nordea’s capital and dividend policy includes both dividends and buy-backs as tools for capital distribution to shareholders. Buy-backs are intended to be used for distributing excess capital to our shareholders. Currently, we have excess capital that also impacts our profitability and being able to distribute excess capital to our shareholders is an important factor in improving our return on equity in particular.
From the perspective of Nordea’s capital and dividend policy, they are used for different reasons. Our aim is to pay out 60-70% of the profit of the financial year to shareholders as dividend. This is different to buy-backs, which are intended to be used for distributing excess capital to our shareholders.
From the perspective of investors, a dividend is a direct payment of cash to shareholders and thus different from a share buy-back, where a company buys back its own stock from shareholders. Effectively, both ultimately reduce the market value of the company by the amount of cash used for dividends or buy-backs. The difference is, that the buy-back reduces the number of outstanding shares and thus increases the proportional rights of a single share. This is different from a dividend, which does not affect the proportional rights of a single share, but instead provides the shareholder with a corresponding cash payment.
In a case where a shareholder prefers a cash payment, they can sell a similar portion of their holding on a trading venue during the buy-backs in order to generate similar cash flow to a dividend, and still retain the same relative level of ownership. Moreover, there are differences in taxes treatment etc, which also cause differences.
We don’t comment on the value of our shares. The reason for undertaking the share buyback is to distribute excess capital to shareholders.
Our dividend policy stipulates a payout ratio of 60-70% of profit of the financial year to shareholders. When it comes to excess capital, the policy is to distribute that to shareholders through buy-backs.