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JPMorgan, Amex to sell stock to get out of TARP
June 1, 2009 / 9:49 PM / in 8 years

JPMorgan, Amex to sell stock to get out of TARP

<p>People walk past the JPMorgan Chase &amp; Co building in New York March 17, 2008. REUTERS/Chip East</p>

NEW YORK (Reuters) - JPMorgan Chase & Co (JPM.N) and American Express Co (AXP.N) on Monday announced plans to sell $5.5 billion of common stock, hoping to position themselves to quickly repay funds from the government’s bank bailout plan.

JPMorgan will sell $5 billion of stock and American Express will sell $500 million. The JPMorgan offering will be priced by Tuesday morning, a person close to the matter said. The person was granted anonymity because the timing is not public.

Both New York-based companies were among the 19 U.S. lenders to recently undergo the government “stress tests” of their ability to weather a deep recession, and were among the nine that regulators said did not need more capital.

The U.S. Federal Reserve said on Monday the government will announce next week which of the 19 will be allowed to repay the government. One condition for repayment is that they are able to raise money in the public equity markets.

JPMorgan took $25 billion from the Treasury Department’s Troubled Asset Relief Program, and said it expects to repay the sum this month. It said repayment is in “the best interests of the country and the company.”

American Express took $3.4 billion from TARP, and Chief Executive Kenneth Chenault said his company has always viewed TARP as a “temporary” program.

Many banks have criticized TARP for its restrictions, including on compensation, and a perception among investors that recipients are desperate for capital.

Jamie Dimon, JPMorgan’s chief executive, in April called it a “scarlet letter” for a bank to participate.

CONDITIONS

The Fed said that to repay aid, banks must show their ability to sell equity, sell long-term debt not backed by the government, foster lending, maintain sufficient capital, meet their funding needs and obligations, and be a source of “strength” to their subsidiaries. [ID:nN01218884]

Analysts expect regulators to let some of the nine companies found to need no capital to repay TARP soon.

The companies include JPMorgan, American Express, Bank of New York Mellon Corp (BK.N), BB&T Corp (BBT.N), Capital One Financial Corp (COF.N), Goldman Sachs Group Inc (GS.N), State Street Corp (STT.N) and U.S. Bancorp (USB.N). MetLife Inc (MET.N), the ninth company, did not take money from TARP.

Analysts also expect Morgan Stanley (MS.N) and PNC Financial Services Group Inc (PNC.N), found to have small capital holes, to soon be eligible to repay the government.

Goldman was expected on Monday to sell up to $1.9 billion of shares in Industrial and Commercial Bank of China (601398.SS) (1398.HK). It took $10 billion from TARP.

The 10 banks ordered to plug capital shortfalls have until June 8 to win regulatory approval of their capital plans. Bank of America Corp (BAC.N) has said it has plugged close to $26 billion of its $33.9 billion shortfall, while SunTrust Banks Inc (STI.N) on Monday set plans to fill a $2.2 billion hole.

Reporting by Jonathan Stempel; Additional reporting by Tim Ahmann and Mark Felsenthal in Washington, D.C.; Editing by Gary Hill

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