JPMorgan Chase makes $1B-plus on Visa IPO

Other banks getting hundreds of million of dollars in Visa offering, giving much-needed boost to their bottom lines.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Tami Luhby, CNNMoney.com senior writer

news.harlow.031908.visahit.cnnmoney.216x164.jpg

NEW YORK (CNNMoney.com) -- Thanks to its stake in Visa's initial public offering this week, JPMorgan Chase & Co. has enough money to pay for its Bear Stearns purchase and still have about a billion dollars left over.

JPMorgan (JPM, Fortune 500) made at least $1.36 billion in Visa (V)'s IPO Wednesday, according to federal filings. JPMorgan is the largest of six principal bank stockholders of the the card processor, who all reaped big bucks from the offering. The debut was so successful that Visa sold additional shares, boosting the banks' takes.

"JPMorgan had a great week," said John Fitzgibbon Jr., founder of IPOScoop.com, an independent IPO rating service. "They walked away with $1 billion in their pocket and that's after buying Bear Stearns."

JPMorgan scooped up embattled Bear Stearns for the bargain basement sum of $342.6 million, based on the bank's closing share price on Thursday.

The Visa windfall couldn't come at a better time for banks, which are struggling to raise much needed funds amid a credit crunch on Wall Street and a faltering economy. It will help boost banks' first-quarter earnings, provide them more reserves for loan losses and improve their capital, an important measure of an institution's financial health.

"It's hard to raise that kind of cash in today's market," said Chip MacDonald, partner in the capital markets group of Jones Day law firm. "It gives them more flexibility."

The IPO should increase banks' first-quarter earnings by about $5.4 billion, Keith Horowitz, analyst at Citi Investment Research, wrote in a research note, according to the Associated Press.

Other banks receiving big windfalls from the IPO include: Bank of America Corp. (BAC, Fortune 500), $675.3 million; Citigroup Inc. (C, Fortune 500), $324 million; U.S. Bancorp (USB, Fortune 500), $298.7 million, and Wells Fargo & Co. (WFC, Fortune 500), $295 million, according to the IPO prospectus filed with the SEC.

National City Corp., which was listed in the prospectus as getting $470.5 million, announced Thursday that it would see a gain of $530 million from redeeming 39% of its stake.

The banks still hold a significant stake in the card processor. Based on Thursday's closing price of $64.35 per share, their ownership was worth $4 billion for JPMorgan, $2 billion for Bank of America, $1.4 billion for National City, $952 million for Citigroup, $878 million for U.S. Bancorp and $866 million for Wells Fargo.

Before its $19.1 billion IPO, which was the world's second largest, Visa was an association owned by its 16,600 member banks. The largest IPO was Industrial & Commercial Bank of China, which raised $21.9 billion in October 2006. To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
Some Converse copycats cost big bucks A few bargain brands got swept up in Chuck Taylor's net, but others cost a pretty penny. More
Urban infrastructure gets a second life Railroad beds become parks, power plants become aquariums and slaughterhouses are now art centers as an industrial past turns people-centric. More
Boomtown moms From working mothers raising their kids in RVs to stay-at-home moms who spend their days organizing events for the Oil Wives club, meet the moms of North Dakota's oil boom. More


Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.