JPMorgan is nearing an agreement with the Federal Deposit Insurance Corp that could result in a tax refund of about $1.4 billion for the bank, according to the Wall Street Journal, citing unnamed sources.

As part of a larger settlement with Washington Mutual's bondholders, JPMorgan can claim $1.4 billion of funds in the FDIC receivership to protect itself against exposure to mortgages that WaMu serviced, the newspaper said.

The report highlights how banks are scrambling to improve their financial strength in the aftermath of the market turmoil. JP Morgan, which provides services including private banking, has already repaid TARP bailout funds.

Washington Mutual is eligible to receive about $5.6 billion in tax refunds as part of a court settlement. WaMu was seized by the FDIC in 2008. It was subsequently sold to JPMorgan for $1.9 billion.