UniCredit kicks off first tranche of share buyback for 2.34 billion euros

MILAN (Reuters) - UniCredit will kick off on Monday the first tranche of a share repurchase programme which received supervisory approval last week, a key part of Chief Executive Andrea Orcel's plans to boost the bank's share price.

UniCredit said it had hired BNP Paribas to buy back up to 2.34 billion euros ($2.53 billion) worth of shares, equivalent to 12% of the bank's capital, with completion expected by the end of June.

The European Central Bank last week gave UniCredit a green light to buy back 3.34 billion euros of its own shares, following a 2.58 billion euro buyback completed last year.

UniCredit trades at a discount to its book value, and Orcel has repeatedly said his goal is to lift the share price to trade in line with the book value.

The gap between the two is set to narrow on a per share basis once the repurchased shares are cancelled, due to the fact that they are being bought at a discount.

Buybacks also increase earnings per share since there are fewer shares in circulation.

UniCredit's shares were trading almost 2% higher by 0721 GMT, comfortably outperforming a 0.7% rise in Italy's banking index.

($1 = 0.9247 euros)

(Reporting by Valentina Za; Editing by Kirsten Donovan)