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The buybacks serve, in part, as a virtual hedge against shares issued under remuneration and incentive schemes. Whilst shares are both cancelled and issued, there is a net reduction of shares in issue (in the billions).

I like payment in shares (especially to those to whom it is released over 3 years) as it gives them an incentive (you'd like to think!) to raise the share price to increase their own wealth. IMHO

I'm fascinated by the buying algorithm. It's buying on logical data points, rather than emotion. I wonder how it factors in post ex-div days?

HU - I agree, it will pace itself over the long term and nibble rather than feast. Relatively large movements last year had it pause until it recalibrated to some sort of pattern.

Thanks for your work in pulling this together. I make it:-

To achieve a 3.50bn share buy back, the balance of shares need to be bought at an average of 60.597
To achieve a 3.75bn share buy back, the balance of shares need to be bought at an average of 55.145
To achieve a 4.00bn share buy back, the balance of shares need to be bought at an average of 50.593

LTI

Thank you. Helpful, as that was my belief.

If LBG closed its doors tomorrow and sold off all the businesses, would shareholders get their current share price back, with some excess too (ignoring admin/legal costs)? - just an academic question as I too am perplexed by the lack of upward movement .

I think it was fiscal prudence to allocate the £2bn to the pension deficit, and improve the overall financial health of LBG by using the 'excess profits' to cover liabilities before HMG swooped in and potentially took it in some form of 'tax'. Providing for this liability (even though it may well reduce) benefited everyone.

Hopefully, the 'quality problem' moving forward will be what to do with 'excess profits' ongoing and I do hope they at least consider a Special Dividend, as well as maintain fiscal prudence by making provisions for future liabilities, such as bed debt (which can always be released from the Balance Sheet if they don't materialise).

.....or could someone buy it and break it up to get their return that way (maybe a KKResq leveraged buyout)? I am of the opinion that LBG is cheap and could be attractive to a speculator. - I can see it now 'Barbarians at Gresham Street' lol

Gazzleberry,

"I have rarely heard so much drivel."

I fear you have lived a sheltered, or short, life for my drivel to be so rare. Some people have to listen to it every day. Thus, I am humbled to know that I have bought something so scarce into your life. You're welcome.

Random - but as billions of shares get cancelled, and the share price doesn't move, the more 'attractive' LBG becomes as a takeover target (no idea who by!) or investment. So in my 'bear of little brain' head, the share price 'should' instinctively move up to cover this. The less shares in circulation, the lower the number to trigger a significant shareholding - each 1 billion shares is around c1.4% of the company that LBG is buying back? KEEP cancelling billions of shares and the share price has to move up (all things being equal), right? That said, we are talking about numbers in the billions!?!?

I think buybacks are a marathon and not a sprint; especially with so many shares in circulation.

Yes they are a way to 'fudge' an EPS bonus, and I've seen this done in other companies. I've also seen LONG TERM value for shareholders.

Personally, I would like to see a mix, progressive dividends, buybacks and the occasional return of cash to shareholders. One challenge is the tax structure(s) that larger investors have when there is a return of cash.

Buybacks are an efficient use of cash (I agree this can be debated against variables). But we have a long way to go and it is disappointing that the share value hasn't risen as much as one would like it to have. But it's a market, so the price is the price.

So...

To achieve a 3.50bn share buy back, the balance of shares need to be bought at an average of 60.114p
To achieve a 3.75bn share buy back, the balance of shares need to be bought at an average of 53.903p
To achieve a 4.00bn share buy back, the balance of shares need to be bought at an average of 50.524p

Given UBS will still have a window to buy below these averages, the prospect of a significant number of shares being cancelled is excellent.

I wonder how many bonuses have an element of improving EPS in them?

Please do check my arithmetic ;)

I make that an excellent start and calculate that:-

To make a 4.00bn share cancellation, the balance of shares required needs to be bought at an average of c50.5p
To make a 3.75bn share cancellation, the balance of shares required needs to be bought at an average of c54.7p
To make a 3.50bn share cancellation, the balance of shares required needs to be bought at an average of c59.7p

Originally 3.5bn was my top estimate. Now it seems very achievable, and likely a low estimate now (or a lot of shareholders move into profit?)

Do check my math!!

0.25 increase confirmed.

Win-Win

There will also be a bot buying our shares, not a human. The market being more volatile now (than at the beginning of the last buy-back), the bot's algorithm simply calibrates itself accordingly. It appears to have held itself back on a falling market and is timing it's moments. Thus far, it's done well. No conspiracy, just maths.

My expectation/guess remains that if it buys back between 3 to 3.5 bn shares, it's done well. Anything above that is excellent for the buyback programme. Anything below will likely be excellent for those holding shares.

I appreciate Moody's are a ratings agency, but it still reminds me of Economist J K Galbraith's quote that “The only function of economic forecasting is to make astrology look respectable”

Hardup - I totally agree about the scale of institutional investors. But , from a personal experience gained in a FSTE250 company, I'm genuinely surprised by how many of the institutions don't put financial performance first during investor roadshows. For example the ESG agenda is massive right now. They do seem to like returns of cash, but often ask why you can't make a better return by reinvesting it back into your own business.

Gazzlebury: If by "business owners" you mean the shareholders, then they (we) get the opportunity to agree/disagree with the arrangements at the AGM. Shareholder revolts to happen.

"Among the more recent high-profile rebellions was Marks & Spencer (MKS), where investors accounting for nearly 30% of the company voted against a remuneration package which encompassed a £1.6 million bonus for outgoing chief executive Steve Rowe.

Shortly after seeing a 38% revolt against directors’ pay, Alison Brittain stepped down from the top job at Premier Inn owner Whitbread (WTB).

Information services and events firm Informa (INF) endured an even more bruising revolt on 16 June as more than 70% of shareholders voted against the £2.7 million pay package for chief executive Stephen Carter. The disquiet follows the suspension of dividends during the pandemic and a £1 billion discounted fundraise."

Credit: https://www.sharesmagazine.co.uk/article/the-2022-agm-season-is-seeing-shareholder-rebellions-on-pay-gather-pace

BLB

"THE BANK WILL USE THIS STORY TO HOLD BACK MORE PROFITS THAT ARE DUE TO SHAREHOLERS IN FURUTRE EARNINGS REPORTS. WATCH THIS SPACE ANOTHER AXCUSE TO RIP OFF SHAREHOLDERS"

No business can hold provisions on the Balance Sheet forever; they have to be released back into the P&L if not used for their intended purpose.

"Buy at your own risk AND IT IS A RISK. BUY THIS SHARE FOR A 4% divi but it NOSE DIVES 20% in a month IS THAT A WISE INVESTMENT???"

It's unlucky; especially for day traders, and all share dealing is a risk. But savvy investors balance their portfolios and will have also has MUCH lower entry points and made on those 'gains' to offset these 'losses'.

Also, the BOD lose wealth on their shareholding and options too. They also miss part of their bonus if they don't grow the share price, now that their new bonus arrangements are linked to modest share price growth.

Finally, if the LBG went 'pop' (which it wont, as it's trading below NAV and has a strong Balance Sheet), you'll get every penny back at this price. It's share price is well below it's break up value.

It remains a long term hold for me, and I don't care about the peaks and troughs of the ride. For my situation (I respect all people are different), it's a nice little next egg within a balanced portfolio of investments , only part of which is shares.

Just as "A rising tide lifts all boats", a falling tide will (and has!) have the opposite effect. Make the most whilst the boats are low, as the tide will rise again.

so long as you are here for the long term (even though you may not have intended to be) the depressed share price has a benefit for greater buy-back volumes than expected., and we know we have a dividend payment on the horizon too.