JPMorgan to Raise $5B, Repay Bailout

JPMorgan Chase (JPM) expects to raise $5 billion in common equity and repay the federal government's $25 billion bailout investment by the end of June, the company said Monday.

The New York company was one of nine not required to raise money by the federal government after recent stress tests of the nation's 19 largest financial institutions. It said it was raising the money "to satisfy a supervisory condition" for companies to repay the government's preferred equity investments made through the Troubled Assets Relief Program.

Other companies that were not directed to raise capital, like Goldman Sachs (GS), also have raised money to prove they could access equity capital markets.

JPMorgan said it expects to have Tier 1 capital of approximately $118 billion, or a ratio of 9.3%, and Tangible Common Equity of approximately $93 billion, or 7.3%, at the end of the second quarter, after the capital raise and repayment of the TARP investment.

"JPMorgan Chase believes that redeeming the TARP preferred capital is in the best interests of the country and the company, and that these funds can be used by the government for other critical purposes," JPMorgan said in a press release. "JPMorgan Chase also reaffirms its commitment to continued robust lending to consumers, small businesses, non-profits, municipalities, corporations and others."

JPMorgan shares closed down 2.1% to $36.11 on Monday. In recent after-hours action, the stock was rising fractionally.

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