Today, five banks have announced the repurchase of shares from the government as part of their goal to break away from government control. The total amount of $54.7bn repayment is broken down into the following: JPMorgan repaid $25 billion, while Morgan Stanley and Goldman Sachs Group Inc. each repurchased $10 billion worth of shares. Minneapolis-based U.S. Bancorp returned $6.6 billion while BofA’s fellow North Carolinan BB&T Corp. paid $3.1 billion.
JP Morgan along with BB&T also stated their intention to buy back the warrants that came with the purchase of the preferred shares by the taxpayers.
These buybacks will cause the banks to record a charge on their 2nd quarter earnings.
From the WSJ:
U.S. Bancorp and BB&T said last week they will record small second-quarter charges related to the buyback, $6.6 billion and $3.1 billion, respectively. Morgan Stanley is also expected to record a charge from its $10 billion repurchase, while Goldman put the figure at about 77 cents a share for paying some $425 million in dividends on its $10 billion of preferred shares.
And from Bloomberg:
JPMorgan will incur the highest cost, $1.48 billion, to repay TARP, Dick Bove wrote in a note. Morgan Stanley’s cost will be $1.02 billion, he said… JPMorgan paid $795.1 million in dividends on its preferred stock.
I would be interested to see these banks’ Q2 earnings, which is to come out somtime mid-July, and the effect the charges have on them.