Sector Snap: Banks await gov't OK to repay TARP

Financial stocks mostly rose Monday as investors anxiously await details on which banks will be allowed to repay federal bailout funds.

The government is expected to announce this week the first round of banks approved to return federal money received under the Troubled Asset Relief Program, or TARP. Several banks, including JPMorgan Chase & Co., American Express Co., BB&T Corp., U.S. Bancorp, Capital One Financial Corp. and Bank of New York Mellon Corp., have been raising capital in an effort to prove their ability to stand on their own without government support.

Raising funds in the capital markets is one of the criteria the government has imposed on banks wanting to return the funds doled out last fall at the height of the credit crisis.

Banks that received funds under the government's $700 billion financial rescue program want to break free of many of the constraints that are conditions of the loans _ most notably executive pay restrictions.

The market is likely to see those banks approved to return the funds as being in a position of strength as compared with their peers, many of which have been required by the government to raise more capital as a buffer against future losses.

Monday is the last day for those banks to have their capital-raising plans in place.

Last month, the government's stress tests determined that ten of the 19 largest U.S. banks needed to raise an additional $75 billion in capital to protect themselves from a worsening economy. Those banks were given a deadline of June 8 to get a capital-raising plan approved by regulators. The banks have until November to raise the funds.

Many of those banks have since raised additional cash through public stock offerings, but some still have a shortfall to meet.

According to an analysis by Barclays Capital analyst Jason Goldberg, Regions Financial Corp., KeyCorp, Wells Fargo & Co. and SunTrust Banks Inc. are among those that have yet to raise the full amount of their capital shortfalls.

In late morning trading, Regions shares added 6 cents to $4.06; KeyCorp rose 5 cents to $5.48; Wells Fargo gained 54 cents, or 2.2 percent, to $25.26; and SunTrust rose 38 cents, or 2.2 percent, to $17.35.

Other gainers included JPMorgan, which added 88 cents, or 2.6 percent, to $35.43; American Express, which rose 25 cents to $25.20; and U.S. Bancorp, which gained 29 cents to $18.29.