June 9 (Bloomberg) -- Wells Fargo & Co., which opposed the U.S. Treasury’s $25 billion investment in October, hasn’t applied to repay the Troubled Asset Relief Program funds as it concentrates on absorbing Wachovia Corp.

“We want to pay back the government’s investment on behalf of the U.S. taxpayer at the earliest practical date,” Wells Fargo spokeswoman Julia Tunis Bernard said today in an e-mailed statement. “We will work closely with our regulators to determine the appropriate time to repay the TARP funds while maintaining strong capital levels.”

Ten lenders including JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley won Treasury approval today to buy back $68 billion of government shares amid a rally in bank stocks and rising pressure to free the companies from government restrictions. Wells Fargo Chairman Richard Kovacevich said he didn’t want the money initially. Now, the bank is keeping it while integrating Wachovia and working to raise capital.

Wells Fargo faced a $13.7 billion shortfall after the federal government’s stress test results were announced on May 7, and raised $8.6 billion in a share sale the following day. The company expects to “meet our capital requirements,” Bernard said today.

In March, Kovacevich criticized the U.S. for retroactively adding curbs to the TARP program and called the plan for stress- testing the 19 biggest banks “asinine” because lenders routinely perform such tests without publicizing the results.

‘In the Penalty Box’

“Given the level of TARP and given their reluctance to cooperate with regulators as readily as some other companies, Wells could be in the penalty box for a couple of quarters,” said Anthony Polini, an analyst at Raymond James & Associates Inc. in New York, who rates the shares “strong buy.”

Government officials may argue that “they prefer to see all of the required capital raised and will take a good look at the second and maybe third quarter before they make a decision,” Polini said.

In buying Charlotte, North Carolina-based Wachovia for $12.7 billion on Jan. 1, Wells Fargo inherited a $93 billion portfolio of impaired loans, mostly option adjustable-rate mortgages. The combination created the second-largest bank by deposits and the top coast-to-coast branch network with more than 6,600 offices.

Wells Fargo rose 27 cents to $25.66 at 4 p.m. on the New York Stock Exchange. The stock has dropped 13 percent this year.

To contact the reporter on this story: Ari Levy in San Francisco at alevy5@bloomberg.net.

Last Updated: June 9, 2009 16:29 EDT