Federal Reserve said that it has approved the application of American Express Company and American Express Travel Related Services for becoming bank holding companies.

The approval process was expedited in the light of the unusual and exigent circumstances affecting the financial markets, the Fed statement said.

The conversion of AMEX Bank to a bank for purposes of the Bank Holding Company Act would enhance its ability to meet the convenience and needs of its communities by permitting the bank to offer a wider array of deposit products, it stated.

The Fed's approval for American Express is similar to the transformation of country's two biggest investment banks, Goldman Sachs Group and Morgan Stanley into bank holding companies in September.

American Express Company, with total consolidated assets of about $127 billion, provides charge and credit payment card products, travel-related services and engages in other activities in the United States and abroad.

After gaining full bank status, American Express might have larger access to Treasury Department's bailout plan for banks and might allow it to lend extensively and also expand its deposit base.

"With Federal Reserve oversight we should gain greater access to the capital on offer under the current and any future government-sponsored programmes," American Express company chairman and CEO Kenneth I Chenault said.

The decision to become a bank holding company would not fundamentally change its core focus on payments industry and not require any significant divestitures, he added.