Bank bosses in fight to pay back funding
AMERICA’S strongest banks will be allowed to begin paying back their Troubled Asset Relief Programme (TARP) funding in the next few weeks, ramping up the pressure on the chief executives of those who will be told to wait.
President Obama’s administration has indicated that around five or six institutions will be the first to repay the taxpayers’ investment, sparking a scramble among some of Wall Street’s biggest institutions to be included in the group.
Goldman Sachs, JPMorgan Chase and American Express are all almost certain to be included after regulators’ stress tests determined that they did not need to raise new capital in case of further economic woe.
State Street hopes to join the group after saying that it would raise $2bn (£1.3bn) through a share offering at $39 as it bids to repay the $2bn loan it was given last year.
The bank joins the ranks of Capital One, Bank of New York Mellon, US Bancorp and BB&T in raising cash to repay their loans, after being told they did not need more capital.
Morgan Stanley is also pressing to be included after raising equity and debt and declaring itself sufficiently well-capitalised to withstand further economic strife.
The revelation of which banks are in a strong enough position to shake off government control will ramp up the pressure on the bosses of those banks which are not included.
Citigroup chief executive Vikram Pandit is favourite to lose his job, after the bank’s disastrous 2008, according to odds from Boylesports.
His counterpart at Bank of America, Kenneth Lewis, is also under pressure from disgruntled investors, despite a report from Citigroup analysts that the bank has raised between $3bn-$4bn in the last few days through a share sale.
The Treasury, which estimates that banks will pay back about $25bn between them over the next year, decided to allow a group of banks to repay the funds at the same time to avoid a “rush for the exit” by lenders who wanted to be at the front of the queue.
ODDS ON US BANK BOSSES STANDING DOWN*
Vikram Pandit
Citigroup 5/2
Remuneration $2.9m in 2008
TARP bailout $50bn
2008 loss -$18.8bn
Jamie Dimon
JPMorgan Chase 5/1
Remuneration $8.5m in 2008
TARP bailout $25bn
2008 profit $5.6bn
John Mack
Morgan Stanley 3/1
Remuneration $1.2m in 2008
TARP bailout $10bn
2008 profit $1.6bn
Richard Davis
US Bancorp 10/1
Remuneration $4m in 2008
TARP bailout $6.6bn
2008 profit $2.9bn
Kenneth Lewis
Bank of America 4/1
Remuneration $12.5m in 2008
TARP bailout $45bn
2008 profit $4bn
Lloyd C Blankfein
Goldman Sachs 5/1
Remuneration $26m in 2008
TARP bailout $10bn
2008 profit $2bn
John Stumpf
Wells Fargo 4/1
Remuneration $1.4m in 2008
TARP bailout $25bn
2008 profit $2.8bn
Ronald Logue
State Street 1/3
Remuneration $5.4m in 2008
TARP bailout $2bn
2008 profit $1.62bn