American Express gets nod for USD 3.39 bn from govt

Global payment service provider American Express today said it has received preliminary approval to get about 3.39 billion dollar from the government.

Global payment service provider American Express on Wednesday said it has received preliminary approval to get about 3.39 billion dollar from the 700 billion dollar rescue package declared by the government.

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"United States Department of Treasury has provided preliminary approval for the company to participate in the Treasury's Troubled Asset Relief Program (TARP)," the company said in a statement.

On November 10, the US Federal Reserve had approved the application of credit card major to become a bank holding company and the change in status facilitated American Express to explore various government funding and lending programmes.

In return to the said loan, American Express will issue and sell preferred stock of around USD 3.39 billion and warrants to purchase shares of common stock for up to 15 per cent of that amount to the Treasury.

"The preferred shares would pay dividends at a rate of five per cent annually for the first five years and then nine per cent annually thereafter," the statement added.

Other than American Express the other financial institutions like Goldman Sachs, Morgan Stanley and Citigroup (all bank holding companies) have approached TARP for funding.

Shares of American Express closed at USD 17.96, fell 2.50 per cent or 0.46 cents yesterday on the New York Stock Exchange.