SOME OF the largest US banks will remain in the government’s financial bailout programme for months, as officials do not expect to grant the next wave of exit approvals until near the end of the year, according to a source familiar with the matter.
Banks such as Citigroup and Bank of America have been chafing under the government’s reins and want to exit the Troubled Asset Relief Program (Tarp), which delivered capital infusions to banks along with limits on pay, share repurchases and dividends.
Citigroup has been in preliminary talks with US officials on how to repay part of government funds. The process could take at least a couple of quarters, sources familiar with the situation say.
Regulators want to see that companies have fully taken advantage of the more open credit markets to raise significant capital buffers before they remove the government leash from more of the largest banks.
Ten banks received approvals in June to repay $68 billion (€46.4 billion) in federal bailout funds. Since then, there have been few clues about when the other large banks would be allowed to exit the programme, and whether those approvals would come piecemeal or as another group.
“We will see another wave of repayments,” the source said.
A Treasury spokesman declined to comment. – (Reuters)
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