NEW YORK (Bloomberg) — Morgan Stanley, JPMorgan Chase & Co. and American Express Co. plan to raise at least $7.7 billion after the Federal Reserve imposed additional capital requirements on firms seeking to repay US rescue funds.

Morgan Stanley, the sixth-largest US bank by assets, will sell $2.2 billion of common stock, the New York-based company said yesterday in a statement. JPMorgan, the second-largest US bank, sold $5 billion, and American Express, the top US credit-card company, sold $500 million.

JPMorgan and American Express, which got aid from the Troubled Asset Relief Programme, were among nine of 19 firms subjected to stress tests that were deemed to have no need for more capital. Their stock sales help the companies comply with a rule that they show they can tap equity investors. Morgan Stanley, which last month raised $4.57 billion after regulators said it needed $1.8 billion, has been told to raise more.

"This is just making it more costly to leave TARP, which may discourage some of the lesser players from stretching to try to leave TARP," said Brad Hintz, an analyst at Sanford C. Bernstein & Co. in New York. The government is saying 'we need to make sure that in a dynamic world you can continue to raise capital'."

None of the companies have yet won approval to repay US rescue funds. JPMorgan chief executive officer Jamie Dimon said on a conference call yesterday he would be "very surprised" if the bank isn't able to refund the government in full by the end of this month. Morgan Stanley said it also expects its share sale to enable the bank to repay TARP by the end of June.

JPMorgan sold 142 million shares for $35.25 each today, 2.4 percent less than yesterday's closing price, according to Bloomberg data. American Express sold 19.8 million shares at $25.25, compared with $25.99 at the close on the New York Stock Exchange.

Dimon, 53, who called the TARP money "a scarlet letter" and "the TARP baby" in April, made it clear that he was ready to get out from underneath government control. "Dear Timmy, we are happy to be able to pay back the $25 billion you lent us," Dimon read yesterday from a mock letter to US Treasury Secretary Timothy Geithner at the 31st Annual NYU International Hospitality Industry Investment Conference. "We hope you enjoyed the experience as much as we did."

The government received warrants — the right to buy shares at a set amount — with almost all capital injections made from TARP. The total value of the warrants is about $5 billion, according to Treasury calculations. Dimon said on the call that repaying the US should lift the bank from under government restrictions. He didn't know how the firm would resolve warrants sold to Treasury, and said he hoped to settle them "sooner rather than later". The US should cancel 50 percent "out of fairness", Dimon said. JPMorgan, Goldman Sachs Group Inc. and Morgan Stanley have applied to refund a combined $45 billion of government investments, a step that would mark the biggest reimbursement to taxpayers since the $700 billion bank bailout programme began in October.

American Express will use money raised in its stock sale to partially repurchase $3.4 billion of preferred shares from the government. The company issued the shares to the Treasury's Capital Purchase Programme, which is part of the TARP rescue plan.

The KBW Bank Index has doubled since its March 6 low on signs of recovery in the US economy. Still, Fed officials forecast that unemployment will linger at a rate of just above nine percent through the end of next year, showing little improvement from April's 8.9 percent.