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JPMorgan to raise $5bn in share sell-off

JPMorgan Chase headed a new round of fundraising activity by US financial firms last night, saying it would sell $5bn (£3bn) in new shares to help repay the $25bn it borrowed from the federal government during last year's credit market panic.

American Express also said last night it would raise $500m of new equity after the Federal Reserve outlined the conditions it was putting on the repayment of money from the government's Wall Street bailout fund. Banks must prove that they can raise new capital both from the private debt markets and from equity investors.

JPMorgan took $25bn in taxpayer money under the Troubled Asset Relief Program, or Tarp, last October, money that came with caps on executive pay and intense political scrutiny. Jamie Dimon, chief executive, has described the capital as "a scarlet letter" and promised to pay it back. "Redeeming the Tarp preferred capital is in the best interests of the country and the company," the company said last night.

The Fed said that banks wanting to pay back Tarp funds would need to persuade regulators they were financially sound enough to fulfil their role lending money to consumers and businesses.