Not entirely happy by the potential dilution to my stake in my company, but certainly happy that if all goes as planned, we will be able to exit TARP by month-end.

Morgan Stanley to Raise $2.2 Billion in Bid to Exit TARP – WSJ.com

Morgan Stanley plans to raise $2.2 billion stock offering, in a deal that is expected to include China Investment Corp. and Mitsubishi UFJ Financial Group Inc., as it prepares to repay taxpayer money it received under the government’s Troubled Asset Relief Program.

The financial-services giant, which last month sold $8 billion in shares and debt, said it expects to repay the $10 billion obtained from the government rescue program by the end of the month. It had also been instructed in May to raise $1.8 billion as the result of government stress tests.

Morgan Stanley shares fell 4.9% premarket to $28.43. The company’s market value as of Monday was about $32 billion, meaning the planned sale would dilute current holders by nearly 7%. Up to 5% more than the planned $2.2 billion in stock could be sold if there is sufficient investor demand, less than the typical 15% overallotment.

The latest stock sale comes hours after J.P. Morgan Chase & Co. and American Express Co. announced unexpected plans to sell shares after the government said large banks must first prove they can raise money from private investors before exiting the federal bailout program.

The new rules — laid out Monday by the Federal Reserve, and affecting the 19 largest bank-holding companies — appear to be more stringent than what has been required of smaller banks.

Morgan Stanley has recorded two consecutive quarterly losses. It completed a joint venture deal on Monday with Citigroup Inc. that gives it control of Smith Barney to help provide a more-stable earnings stream.

Morgan Stanley has been raising capital through a number of avenues, including selling its remaining stake in indexing and analytics business MSCI Inc.