New York - JPMorgan Chase & Co and American Express Co
announced plans to sell stock to satisfy a new central bank rule
announced Monday affecting firms who took government bail-out money.
The new Federal Reserve rule forces the firms to raise money from
equity markets before they will be allowed to repay the rescue funds
to the government, Bloomberg financial news service reported.
JPMorgan, the second-largest US bank by deposits, is to sell 5
billion dollars of stock. Amex, the country's largest credit-card
company by purchases, is to raise up to 575 million dollars.
The plans were released in separate statements.
The two companies were among nine firms that got good marks after
the so-called stress test results for the country's 19 largest
financial firms were released last month. They were not among the
companies deemed to need additional new capital to survive continuing
economic distress over the next two years - the standard set by the
US Treasury and Federal Reserve.
But the Federal Reserve added another requirement on Monday,
insisting that even firms performing better had to raise added money
before paying back bail-out money.
'Theyre the government; they can change the rules,' said Paul
Miller, an analyst at FBR Capital Markets in Arlington, Virginia.
And thats the beauty of being the government.'
JPMorgan wants to repay the 25 billion dollars by the end of June.
JPMorgan, Goldman Sachs and Morgan Stanley have applied to refund
a combined 45 billion dollars of bail-out money, which would mark the
biggest reimbursement to taxpayers since the 700-billion-bank bailout
program began in October.
Amex wants to start repurchasing the 3.4 billion dollars of
preferred shares now owned by the US government.
The government is to issue a list of its first group of redemption
approvals in the week starting June 8.
When they released the results of its stress test last month, US
officials said industry giant Bank of America needed the most
injection of capital, a sum of 34 billion dollars, followed by
WellsFargo bank, with 13.7 billion dollars.
USA
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