Ameriprise Authorizes Share Buyback

Ameriprise Financial Inc. (AMP - Analyst Report) announced that its board of directors has authorized a new share repurchase program, under which the company will be able to buyback its common shares worth $2 billion through June 28, 2013.

Ameriprise stated that this new share repurchase authorization is an extension of its current program. The current program, announced in May 2010, authorizes the company to repurchase $1.5 billion worth of common stock.

Ameriprise further stated that through the first quarter of 2011, the company bought back $969 million of common stock under the current program. The remaining $531 million is available till the next annual meeting in 2012.

Ameriprise will fund the share buybacks with the help of the future earnings, existing working capital and other financing means. Additionally, the new share buyback program would not require purchase of any minimum number of shares. Further, such programs can be suspended without any prior intimation. Ameriprise also commented that shares would be bought back from open market and block trades or through private negotiations.

Though there is concern over the sluggish market recovery, improvement in retail client activity, as well as a decent growth in Advice & Wealth Management and Asset Management businesses, will drive operating leverage in the upcoming quarters. Further, the authorization of the new share buyback program raises our hopes for enhanced investor confidence.

Ameriprise currently retains a Zacks # 3 Rank, which translates into a short-term ‘Hold’ rating. However, one of the peers of the company BlackRock Inc. (BLK - Snapshot Report) retains a Zacks # 2 Rank, which translates into a short-term ‘Buy’ rating.

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