Banks Hit the Buyback Button

Share buybacks are playing a bigger role in how some banks are returning capital to shareholders amid 2025’s economic turmoil. 

In the first quarter, major banks significantly increased their buyback activity, with some reporting their biggest repurchase levels in years, according to Barron’s. The uptick came even as recession fears and tariff-related market volatility continued to weigh on the economic outlook. 

Buybacks have been a growing part of banks’ capital return playbook since the mid-2010s, especially as capital levels improved following the financial crisis. After a dip during the pandemic, repurchase activity surged again. In past cycles, buybacks gained steam after uncertainty eased. This time, they’re picking up while the outlook is still cloudy. 

Buyback basics. In a stock buyback, a company uses its own cash to repurchase shares from existing investors, reducing the number of shares outstanding. This often boosts earnings per share and signals confidence in the company’s prospects. As explained by Drexel University’s Gregory Nini, buybacks offer firms “more flexibility” than dividends and generate lower income tax for investors. 

Buybacks aren’t just a tool for the largest institutions. At least one superregional bank has signaled that, under current conditions, repurchases are the most effective way to return capital to shareholders—prioritizing buybacks over M&A in the near term. 

Speaking of M&A. Before the year began, some experts expected a surge in bank dealmaking under President Trump’s administration. But so far, economic uncertainty—including tariff impacts and global market instability—has put many acquisition plans on pause. Instead, some banks are leaning on buybacks as a quicker, lower-risk option. 

The trend is global. The move toward buybacks isn’t limited to the United States. Singapore’s top lenders have also been major buyers of their own stock in 2025, helping stabilize share prices amid global market selloffs. One major international bank recently announced a multibillion-dollar buyback despite sharp share price declines tied to escalating U.S.-China trade tensions— underscoring how institutions are using repurchases to signal confidence even amid uncertainty. 

Some experts like the control buybacks provide banks. Academic research published by ProMarket, a publication of the Stigler Center at The University of Chicago Booth School of Business, argues that buybacks can actually support a financial institution’s stability, since they offer banks more discretion than regular dividends to adjust payouts without alarming regulators or markets. “Banks could announce many repurchases over several years, with the timing of payouts being discretionary and when they are healthy,” the authors wrote. 

Looking for more insights on bank M&A? Check out RMA’s Bank M&A Playbook or its playbook for community banks, both of which offer checklists, frameworks, and data to help financial institutions navigate the merger process—from early discussions to closing.