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JPMorgan, Amex plan to raise $5.5 bn through share sale

June 02, 2009 17:48 IST

Financial services majors --  JPMorgan Chase and American Express are planning to raise $5.5 billion through sale of shares to repay federal funds received by them last year.

JPMorgan, which got billion under the Troubled Asset Relief Program, intends to raise billion to satisfy a supervisory condition for repayment of the government funds requiring demonstrated access to equity capital markets, a company statement said.

Further, American Express stated it has commenced a public offer to sell $500 million worth of common stock to pay $3.4 billion to the government.

The NYSE-listed firm, JPMorgan statement said, "Upon completion of this capital raise it will have satisfied the criteria for fully redeeming the TARP preferred capital and expects to do so before the end of June."

JPMorgan and Amex are among the country's largest 19 banks which went under government stress test and were among nine lenders the federal regulators said did not need additional capital.

It also expects to maintain its extremely strong capital ratio, even in the event of a more highly stressed environment over the next two years.

JPMorgan believes that redeeming the TARP preferred capital is in the best interest of the country and the company, and that these funds can be used by the government for other critical purposes.

American Express has commenced a public offer of $500 million of its common stock for sale to the public and would also grant the underwriters a 30-day option to purchase an additional $75 million of its common stock.

"We have always viewed the Capital Purchase Program as a temporary program and are pleased to be in position to repurchase the preferred shares issued to the Treasury," American Express chairman and chief executive officer Kenneth I Chenault said.

Amex would use the capital raised through the equity offering for general corporate purposes which may include, subject to regulatory approval, the partial funding of a repurchase of $3.4 billion of preferred shares issued to the US treasury as part of the Capital Purchase Program.

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