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Banking 03 Sep 2021

BBVA returns to the Euro Stoxx 50 just one year later


BBVA is back in the Euro Stoxx 50, Eurozone's main index. Just one year after its exit, the bank's recent good performance on the stock market has allowed it to return to the index, a milestone -exit and re-enter the following year- which at least in the last decade had never happened before. Normally, it takes longer for companies that exit the index to recover their position and re-enter.

The Euro Stoxx 50 is the most relevant European equity index and one of the most important globally, so an important part of the asset management industry has its funds benchmarked to this index (index-linked or passively managed funds). Changes in composition usually lead to flows of purchases or sales of securities in the stocks that enter and leave the indexes, respectively.

Among the criteria used to include and exclude securities is that of free-float capitalization. Once a year, using the share prices as of August 31, the 50 components of the index and other stocks in the European stock market, which are potential candidates for entry, are determined. If the potential entrants have capitalization equal to or above the 40th company in the Eurostoxx50, they are then considered for inclusion in the index.

BBVA's return to the index was announced on Wednesday by the Euro Stoxx 50, although the effective date of the change will be September 20, at the market opening. Investment banks estimate that the flow of purchases of BBVA shares as a result of its return to the index could be high, around 250 million shares, the equivalent of almost 14 trading days.

It is important to remember that BBVA's share performance over the last year (from August 31, 2020 to August 31, 2021) was +126%, versus +47% for the banking sector, thanks in part to the positive market reception of the decisions taken by the bank over the past year, including the sale of the US subsidiary to PNC intention to buy back¹ up to 10% of the bank's shares; BBVA's performance in the EBA stress tests, where it stood out as one of the most resilient banks in Europe; and its good operating performance.

¹ Any decision to buy back ordinary shares will require authorization from the supervisor and the governing bodies. The final percentage of shares bought back (up to a maximum of 10%) will be determined depending on different factors, including the BBVA share price during the buyback period..

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