After receiving blessing from the Federal Reserve, Capital One Financial (NYSE:COF) revealed plans on Tuesday to buy back $1 billion of its common stock through March 2014.
The share repurchase program is contingent on the closing of Capital One’s previously-announced sale of a $7 billion portfolio of Best Buy (NYSE:BBY) private label and co-branded credit-card accounts to Citigroup (NYSE:C). That transaction is expected to be finalized in the third quarter.
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Capital One said its board of directors authorized the $1 billion buyback plan following approval from the Fed. After it passed the Fed’s stress tests in March, the central bank gave Capital One the green light to raise its quarterly dividend in May to 30 cents a share from 5 cents a share.
The credit-card company is scheduled to report second-quarter results on July 18. In the first quarter, Capital One’s profits shrank by 24%, but still managed to exceed expectations.
Shares of the McLean, Va.-based company were inactive in premarket trading on Tuesday. So far this year Capital One has rallied about 10%, underperforming a 13% gain for the S&P 500.