Business

Discover repays $1.22 billion to TARP, may buy back warrants

Posted April 21, 2010 11:00 pm

Discover Financial Services returned $1.22 billion to the Troubled Asset Relief Program, becoming the last of the top six U.S. credit-card issuers to repay the bank bailout fund.

The repurchase of preferred shares from the U.S. Treasury Department and the payment of $11.2 million in accrued dividends will reduce second-quarter earnings by 13 cents a share, the Riverwoods-based lender said today in a regulatory filing.

The card company will try to negotiate a buyback of warrants it was required to give the Treasury in exchange for bailout money, the filing said. Under TARP rules, lenders get a chance to repurchase warrants after returning their bailout funds. If the company and the Treasury don't agree on a price, the U.S. can auction the warrants to investors.

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