Four of the 10 eligible big banks announced Wednesday they have have bought back the preferred stock they issued to the Treasury Department under the Troubled Asset Relief Program.
JPMorgan Chase & Co., U.S. Bancorp and BB&T Corp. also announced plans to buy back the related warrants associated with Tarp. Morgan Stanley didn't address the warrants.
Many of the banks that accepted Tarp funds starting last fall have said they want to repay the money as soon as possible in order to avoid strict government regulations, especially those on executive pay. Last week, the government cleared 10 large banks to repurchase the preferred shares they sold to the government as part of the Tarp program.
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. All four companies have also recently sold stock, like other banks, in anticipation of becoming payback-eligible. JPMorgan received $25 billion in Tarp funds.
U.S. Bancorp Chairman and Chief Executive Richard K. Davis said Wednesday the repayment of Tarp funds was a "significant step forward" and returns the company to a position of independence.
BB&T CEO Kelly King noted the bank has experienced very good loan growth during the period under Tarp.
Separately, Standard & Poor's earlier Wednesday downgraded 18 U.S. banks, including U.S. Bancorp and BB&T, saying the industry's future won't be as good as the past. U.S. Bancorp was lowered two notches to A+, while BB&T was cut one notch to A. The ratings outlook for both is now stable.
Financial shares were generally lower by about 2%, with JPMorgan, BB&T and Morgan Stanley off that much. U.S. Bancorp, though was up 2 cents at $17.88.