The government has said that in order for a bank to repay the money it received under the Troubled Asset Relief Program, it must be able to access public equity markets. Hundreds of banks received funds as part of the program last fall as the government tried to bolster the stagnant credit and lending markets.
Morgan Stanley received $10 billion as part of the $700 billion program.
Banks must receive formal approval to repay the funds after they have satisfied government requirements. Morgan Stanley said it has yet to receive formal approval to repay the cash, but hopes to receive the OK to pay back the loan by the end of June.
Some of the shares being sold as part of the offering will be purchased by existing shareholders China Investment Corp. and Mitsubishi UFJ Financial Group Inc.
Morgan Stanley could issue an additional $110 million in stock to cover over-alottments.
Shares of Morgan Stanley fell 39 cents to $29.50 in premarket trading. Most banks that have completed stock sales in recent weeks saw their share price initially fall after the announcement.
As the equity market has rallied in recent months and credit markets show signs of opening back up, banks have been able to raise cash through stock offerings. Last fall as the credit crisis worsened, financial firms were essentially shut out of raising new capital to help protect against mounting investment and loan losses, forcing them to rely on government loans to help support battered balance sheets.
On Monday, both American Express Co. and JPMorgan Chase & Co. announced similar stock offers ahead of plans to repay the TARP funds. American Express is issuing $500 million in stock, while JPMorgan will raise $5 billion through its offer.
JPMorgan received $25 billion as part of the government program and American Express received about $3.4 billion in funds.
No comments :
Post a Comment