According to Reuters, OTP Bank plans to start repurchasing its own shares on the BSE from Tuesday, based on an authorisation received from shareholders on April 28. The OTP Bank’s AGM allowed the bank's management board to buy up to 28m own shares so as to cover the management's bonus programme or to reduce volatility in the share price. The management board is entitled to the acquisition of own shares until April 30, 2007.
In our view, the 28m share repurchase level (10% of the total OTP Bank share capital) is just a technicality, as the option program covers maximum 3m shares available for purchase each year (2006-2010). This in turn equals to 3% of the 4 month trailing average volume. However if OTP was to buy the 28m of shares, it would equal to a quarter of the total shares traded over last 4 months (some 112m). We view this as marginally positive for the stock price.