JPMorgan Chase & Co. took the lead among financial institutions to raise at least $8.7 billion after the Federal Reserve imposed additional capital requirements on banks seeking to repay government aid received.
JPMorgan, the second-largest U.S. bank by assets, sold $5 billion of stock, Morgan Stanley, the sixth-biggest bank, $2.2 billion and American Express Co, the top U.S. credit card company, $500 million after the Federal Reserve on Monday imposed capital-raising requirements on large lenders hoping to repay bailout funds received under the Troubled Asset Relief Program (TARP).
Even the three were among the 19 banks found to have no need for further capital requirements under recently-conducted government stress tests, under the new rules the three giant financial firms need to raise the funds before they are allowed to repay some of the hundreds of billions of dollars they received under TARP.
Of the banks seeking to repay TARP, none have yet received government approval.
JPMorgan Chief Executive Officer Jamie Dimon said on a conference call yesterday he would be “very surprised” if the bank isn’t able to refund the government in full by the end of this month. Morgan Stanley said it also expects its share sale to enable the bank to repay TARP by the end of June.
The Fed on Monday said large banks hoping to repay TARP must show they can access public equity markets, sell long-term debt without government backing, foster lending, maintain sufficient capital, meet their funding obligations, and support their subsidiaries.