Banco do Brasil SA, Latin America’s largest lender by assets, rose today after saying it will buy back as many as 50 million of its own shares.
The shares advanced 0.5 percent to 22.92 reais at the close of trading in Sao Paulo, after earlier surging as much as 3.2 percent. The Ibovespa Brazilian equity benchmark fell 2.1 percent.
Banco do Brasil said in a regulatory filing today that it will purchase the stock in the next 12 months. The bank said it may cancel the shares it buys back or re-sell them at a later date as it seeks to create value for stockholders.
The buyback “reinforces our view that capital should not represent a concern” for the lender, Deutsche Bank analysts including Mario Pierry wrote in a research note today. “We believe Banco do Brasil offers strong value to shareholders.”
The program is equivalent to 3.5 percent of Banco do Brasil’s current free float, according to Deutsche Bank.
The state-controlled lender has retreated 10 percent this year, the worst performance among banks on the MSCI Brazil Financials/Index. The Ibovespa has dropped 19 percent in 2013.