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Morgan Stanley to raise $2.2 billion to repay TARP

Morgan Stanley plans to raise $2.2 billion in common equity to bring it closer to repaying its TARP loans, the company said on Tuesday.

Selling the shares would help satisfy criteria for repaying the $10 billion it borrowed under the U.S. Treasury's Troubled Asset Relief Program, the bank holding company said.

Some of the shares to be sold will be acquired by Morgan Stanley shareholders China Investment Corp and Mitsubishi UFJ Financial Group Inc, it said.

While Morgan Stanley said approval to pay back TARP funds has not yet been granted, it hopes to make the repayment this month.

Morgan Stanley's announcement comes a day after JPMorgan Chase and American Express Co said they plan to sell common stock to position themselves to repay bailout funds.

The Federal Reserve said on Monday the government would announce next week which of the 19 lenders that underwent “stress tests” would be allowed to repay their loans. One condition for repayment is that the banks are able to raise money in the public equity markets.

Last month, Morgan Stanley - which was required under the stress test to raise $1.8 billion - sold $4.6 billion in stock and $4 billion in debt.

Morgan Stanley is managing the new stock offering. (Reuters)