When Will This Warren Buffett Stock Start Repurchasing Shares Again?
Citigroup (NYSE: C), which is a relatively new member of Warren Buffett and Berkshire Hathaway's large equities portfolio, recently announced that it is pausing share repurchases like many other large U.S. banks as it prepares for higher regulatory capital requirements. While understandable, the announcement is also likely frustrating for shareholders because Citigroup trades at a huge discount to its tangible book value (TBV), or net worth.
When banks repurchase stock trading below TBV, the math works out to raise TBV. This should be good because bank shares tend to trade relative to TBV. Considering how helpful repurchases would be right now, let's take a look at when Citigroup could be able to buy back stock again.
Banks are able to pay dividends and buy back stock with excess capital over their regulatory requirements. One way for investors to evaluate excess capital is by looking at a bank's common equity tier 1 (CET1) capital ratio, which measures a bank's core capital as a percentage of its risk-weighted assets such as loans.
Source Fool.com
