Westpac has changed the terms of its share buyback, extending the closing date and changing the discount range.

On 1 November, the bank announced that it would return A$3.5 billion of excess capital to shareholders by way of an off-market share buyback. 

The buyback would reduce the bank’s common equity tier 1 capital ratio by 80 bps, which would be partially offset by a top-up of 29 bps from the sales of the New Zealand life insurance business, auto finance and the local life insurance arm.

On Friday, the bank announced that following the recent fall in its share price “the rationale of the buyback is even more compelling”. 

“Specifically, the lower share price may provide Westpac with the opportunity to buy back more share than was originally contemplated.”

The stock price has fallen from $25.67 on 29 November to its Friday close of $20.85 – a fall of 18.8 per cent.

The buyback tender discount range has been changed to 0 to 10 per cent from 8 to 14 per cent “to improve the potential return of the buyback for eligible shareholders.”

This change is in recognition of the prospect that the falling share price would reduce the value of franking credits to be distributed as part of the buyback.

The closing date has been extended to 11 February.

The bank said it was committed to buying back $3.5 billion of shares and if the off-market buyback fell short it would commence an on-market buyback for the balance.