US regulators are moving to impose tough conditions on banks that want to repay federal bail-out funds, requiring them to prove that they can issue debt without government insurance.

This new requirement, which was confirmed by a senior US official, could deter some banks from trying to repay funds early. Banks have issued more than $300bn of debt insured by the Federal Deposit Insurance Corporation. Earlier, a second senior US official told the Financial Times that banks wishing to repay government funds may also be required to demonstrate that they can raise equity capital from private investors.