NEW YORK (Reuters) - American Express Co (AXP.N), received preliminary approval to get $3.39 billion under the government’s $700 billion financial bailout program, the fourth-largest U.S. credit card company in the United States said on Tuesday.
American Express has been under pressure from mounting credit losses as states where it expanded more aggressively in recent years, including California and Florida, started reeling from the U.S. recession.
The company is also setting aside more money to cover those losses and is paying higher financing costs because of tight credit.
American Express became a bank holding company in November in a bid to cut its borrowing costs and gain access to funds available under the U.S. Treasury’s Troubled Asset Relief Program (TARP).
American Express said that in exchange for the TARP funds it would sell preferred stock and warrants to the U.S. Treasury. The preferred shares will pay dividends at a rate of 5 percent annually for the first five years and thereafter 9 percent annually.
American Express shares were down 1.5 percent at $18.14 in early afternoon trading on the New York Stock Exchange.
Reporting by Juan Lagorio