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Tue, Oct 14, 2008 - Page 10 News List

Sovereign Bancorp to get offer from Spanish bank


Sovereign Bancorp Inc, the largest remaining US savings and loan after the collapse of Washington Mutual Inc, may get a bid from Spain’s Banco Santander SA to buy all the shares it doesn’t already own.

Santander, Spain’s biggest lender, is considering a bid near Friday’s closing price of US$3.81, the New York Times and the Wall Street Journal reported, citing people familiar with the matter.

The stock dropped 67 percent this year, leaving Sovereign with a market value of US$2.5 billion. Ed Shultz, a spokesman for Philadelphia-based Sovereign, declined to comment on the reports.

Santander spent US$2.9 billion in 2005 and 2006 to buy about 24.9 percent of Sovereign for an average US$24.83 a share.

The mortgage market’s collapse has saddled the world’s financial companies with at least US$635 billion in losses, and Moody’s Investors Service downgraded Sovereign earlier this month on concern that the lender will book “sizable charges” tied to its own holdings.

Edvaldo Morata, the general manager of Banco Santander’s office in Hong Kong, couldn’t be reached immediately for comment yesterday.

Sovereign operates mostly in the US with 750 community offices and about 12,000 employees, a Sept. 30 statement said. At the time, Sovereign said it was well-capitalized and “fundamentally sound by all financial and operational measures.”

The company became the largest public savings and loan or “thrift” in the US last month when Seattle-based Washington Mutual collapsed and was absorbed by JPMorgan Chase & Co. Fifteen US banks failed this year — the most since 1993 — including one each in Illinois and Michigan shut by regulators on Friday.

Buying the rest of Sovereign would be in line with goals outlined by Santander chief financial officer Jose Antonio Alvarez, who told a London conference this month that his company can “add value by rescuing failing banks at attractive prices.”

Santander agreed to buy Alliance & Leicester Plc and deposits and branches of Bradford & Bingley Plc this year to make it the UK’s third-largest lender by deposits.

Chairman Emilio Botin has made more than US$60 billion of acquisitions, helping Santander become Europe’s second-biggest bank by market value.

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