BNP Paribas gains ECB approval for first tranche of share buyback

PARIS (Reuters) - French bank BNP Paribas has received European Central Bank (ECB) approval for the 2.5 billion euro ($2.7 billion) first tranche of its planned 2023 share buyback programme to be launched on April 3, it said on Friday.

The euro zone's largest lender plans to distribute a total of 10 billion euros - about 15% of its current market capitalisation - to shareholders this year, half of it through a cash dividend and the rest through share buybacks.

BNP, the coffers of which were boosted by the $16.3 billion sale of its U.S. retail business in February, plans to follow next week's launch with another 2.5 billion euro buyback in the second half of the year.

Analysts at Jefferies said that decisions by banks to stick with share buybacks and that the ECB is allowing them to do so despite recent sector turmoil sends a positive message.

Italy's UniCredit this week said it had won ECB approval for its own 3.34 billion euro buyback programme and Spain's BBVA this month said it would resume buying back shares for up to 1 billion euros in the next two to three months.

"It signals not only the regulator but also the banks' management teams feel confident enough to go ahead with buybacks despite the more volatile context," Jefferies said in a note.

Jefferies expects first-quarter results to be "a positive catalyst for the sector", predicting further buybacks from HSBC, ING and KBC in early May.

($1 = 0.9187 euros)

(Reporting by Silvia Aloisi; Editing by David Goodman)