By Elinor Comlay
NEW YORK (Reuters) - Morgan Stanley
Banks have been anxious to return the funds, taken under the $700 billion Troubled Asset Relief Program, to escape pay restrictions that came with accepting the money.
U.S. Bancorp, repaying $6.6 billion, and BB&T, returning $3.1 billion, also said they intend to buy back warrants for their common stock from the U.S. Treasury.
The Treasury said last week that banks repaying bailout funds could also buy back these warrants, which give it the right for up to 10 years to buy common stock in the banks at a predetermined price.
The banks can buy back the warrants at "fair market value," the Treasury said. BB&T is in the process of negotiating the warrant buyback, a spokesman said. U.S. Bancorp did not explain how, when or at what price it would repurchase its warrant. A spokeswoman for Morgan Stanley, which returned $10 billion of TARP funds, declined comment on its plan to repurchase the warrant.
Several other big banks are also expected to make bailout repayments on Wednesday. Goldman Sachs Group
The other big banks that won permission from the government to repay TARP funds are Bank of New York Mellon Corp
As a condition of being allowed to repay, banks had to show they could raise money from the private sector, both by selling stock and issuing debt without the help of government guarantees. The Federal Reserve also had to agree that their capital levels were adequate to allow them to continue lending.
At least 22 smaller banks have been allowed to repay some or all of their taxpayer money, although most must still negotiate terms to buy back or extinguish the government's warrants to buy their common stock.
Bank shares slipped broadly on Wednesday. The KBW Banks index <.BKX> was down 3.4 percent in morning trading.
(Reporting by Elinor Comlay, additional reporting by Steve Eder; editing by John Wallace)
