The Ibex 35 firms boosted their treasury stock again 2016

Ibex35 Treasury stockMadrid Stock Exchange

The increase is less than in 2015. If we incorporate into the calculations share redemptions carried out by the Ibex 35 companies during the year, the amount of treasury stock handled fell by 9% compared with 2015.

For the third consecutive year in 2016, the companies which make up the Ibex 35 index boosted their treasury stock. After comparing the official figures registered with the Stock Market Regulator (CNMV) and those contained in the audited accounts of the Spanish stock market’s big companies, you can see the number of own shares held by the companies at December 31, 2016 was 30% higher than a year earlier (having increased by 44% in 2015).

The 29 firms listed on the Ibex 35 which published their treasury stock figures at end-2016 accounted for a total of 678,127,762 own shares, representing 0.87% of social capital, with a market value of 4.37 billion euros. Despite the fact the treasury stock figures registered at end-2016 were higher than those in December 2015, this is not the case if we add to these figures the share redemptions made by these same listed companies during the year. In the latter case (declared treasury stock plus redemptions) in 2016 the amount was 6.49 billion euros, a figure which is nearly 9% lower than that in 2015.

There were 29 Ibex 35 firms with treasury stock at end-2016. Of these, 16 had increased their level with respect to December 2015, 11 had reduced it and 2 of them registered no change. Those companies which saw the biggest rise in treasury stock included: Banco Popular, no longer listed, which increased treasury stock by over 112 million shares, accounting for 2.83% of its social capital in 2016 (0.29% in 2015); Iberdrola, which boosted its treasury stock to 2.83% of capital and, finally, Mapfre. Its treasury stock went from 0.03% of its capital in 2015 to 1% in 2016. Amongst the companies which reduced their treasury stock the most, we have ACS and Banco Sabadell. The figures on the treasury stock held by the Ibex 35 firms at end-2015 and end-2016 can be found in this link.

Concentration

The treasury stock limit for listed companies in Spain is 10%. Of the 29 firms in the blue chip index holding treasury stock in 2016, only Abertis was close to this limit. Its treasury stock represented 8.25% of capital,with a market value of 1.087 billion euros. Técnicas Reunidas, Banco Popular, Telefónica and Iberdrola ended the year with percentages of between 2% and 4%. In total, the treasury stock of these five companies had a market value of 3.46 billion euros, representing 79% of the total value of the Ibex 35 companies’ treasury stock in 2016. Acerinox had the smallest amount of treasury stock, both in terms of number of shares and the percentage of social capital.

Share redemptions and shareholder remuneration

In 2016, four companies reduced capital via redemptions of their own shares on their balance sheets: ACS, Ferrovial, Iberdrola and Telefónica. During the first quarter of 2017, both Iberdrola and ACS announced further redemptions of their own shares to reduce capital, lodging statements of their intentions with the CNMV.

Other uses for treasury stock

So we can see there are different reasons why companies purchase and sell their own shares. These also include boosting the liquidity of their shares on the market and regulating trading activity.

In 2016, companies like Acciona and Técnicas Reunidas signed liquidity contracts to manage their treasury stock. The existence of these contracts need to be communicated to the corresponding market’s regulator.

Treasury stock is also used to remunerate administrators, top management and employees. In 2016, Amadeus earmarked part of its treasury stock to offer shares to executives and employees, in line with its strategy. It also used its treasury stock as a counterpart in corporate deals.