Five banks pay back TARP

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.


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