American Express files for permission to repay TARP

NEW YORK (Reuters) - American Express asked on Thursday for permission to repay the $3.4 billion (2.3 billion pounds) in TARP funds it received, after the U.S. government stress test showed the credit card firm is well capitalized.

According to bank regulators' guidance, American Express has to show it can issue long-term debt in the public markets that is not backed by government guarantees in order to repay the TARP funds, the fourth-largest U.S. credit card company said.

American Express became a bank last November as bond markets closed down and lenders outside the banking system began looking to fund themselves with deposits. Being a bank also helped American Express win access to capital from the government's Troubled Asset Relief Program.

"Since then, financial markets have become more stable, and American Express has made substantial progress in adapting to a very difficult economic environment," the company said in a statement.

Stronger financial institutions that were pressed to take TARP money last year, or that chose to, are now looking to pay it back because of the strings tied to the funds, including pay limitations for senior executives.

Last month, the company anticipated it planned to repay the TARP funds if the stress tests revealed American Express did not need to shore up its capital.

American Express shares rose 2.4 percent to $26.62 in after-hours trading after closing down 4.30 percent at $25.97 on the New York Stock Exchange. The stock has risen 40 percent so far in 2009.

(Reporting by Juan Lagorio, Editing by Richard Chang)