American Express said the Treasury had provided preliminary approval for it to participate in the Treasury's 700-billion-dollar Troubled Asset Relief Program Capital Purchase Program.

"American Express expects to issue and sell to the Treasury preferred stock of approximately 3.39 billion dollars and warrants to purchase shares of common stock for up to 15 percent of that amount," the company said.

The preferred shares will pay dividends at a rate of five percent annually for the first five years and then nine percent annually thereafter, a company statement said.

The United States Federal Reserve approved the company's application to become a bank holding company last month.