Monday, October 13, 2008

Sovereign bank confirms talks with Spanish bank

Sovereign Bancorp, Inc. is in "advanced discussions" of a possible combination with Spanish bank Banco Santander, according to a statement released by Sovereign on Monday.

The Wyomissing, Pa.-based thrift Sovereign (SOV, Fortune 500) confirmed the combination talks, but refused further comment.

The Wall Street Journal reported Monday that Santander (STD) was expected to pay nearly $3.81 a share - Sovereign's closing price on Friday - valuing the company at around $2.53 billion.

Sovereign has $79 billion in assets and Madrid-based Santander is the bank's largest shareholder.

In morning trading, Sovereign fell 1.84% to $3.73 a share. The news comes as bank stocks surged on the global response to the financial crisis, with the Dow Jones industrial average (INDU) surging.

Sovereign is grappling with increasing loan losses. Its second-quarter net chargeoff rate more than tripled from levels a year prior.

Sovereign's parent company tapped former Chittenden Corporation CEO Paul A. Perrault to replace Joseph P. Campanelli, effective Jan 3. CFO Kirk Walters is serving in the interim.

Campanelli served as the bank's president and CEO, following the 2006 resignation announcement of his predecessor, Jay S. Sidhu.

Sovereign Bancorp is the parent company of Sovereign Bank, with 750 branches and about 12,000 employees, with a major presence in the Northeast.

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