American taxpayers have made a $1.418bn profit on the $10bn federal loan handed to Goldman Sachs when the financial system was at risk last October.

The investment bank yesterday finalised its exit from the government bailout, saying it would pay $1.1bn to buy back warrants issued to the US Treasury as part of the loan agreement.

Goldman and eight other major banks were told to accept bailout money last October in order to restore confidence in the US banking system, and hundreds of smaller banks followed suit. The government has received dividends on the loans and will also receive cash for the warrants if banks decide to repay the money early.

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Goldman paid back its bailout money last month but it has taken several weeks to negotiate a price for the warrants, which give US taxpayers a stake in any future increase in the Goldman Sachs share price.

In contrast to Goldman, JPMorgan Chase has decided not to continue negotiating with the Treasury and plans instead to have its warrants auctioned on the open market. Jamie Dimon, the JP Morgan chief executive, said the government was asking for too much.

The US Treasury said yesterday that the $1.1bn and $318m in dividends paid by Goldman Sachs meant that taxpayers' emergency investment in the company had earned them an annualised return of 23 per cent.