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2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

Sovereign in Talks With Spanish Bank

Sovereign Bank, a regional lender based outside Philadelphia that is struggling to survive mortgage-related losses, is discussing selling itself to Spanish banking giant Banco Santander, both sides confirmed this morning.

The talks are in an "advanced" stage, Sovereign said. The terms remain unclear, but Santander is unlikely to pay a large premium for Sovereign, whose stock has fallen 67 percent this year. Sovereign shares were trading below $4 this morning.

Santander, the largest bank in Spain, already owns about a quarter of Sovereign. Buying the rest would give Santander a large beachhead in the Northeast, where Sovereign operates about 750 bank branches. Santander had little exposure to the U.S. mortgage market and has emerged as one of the strongest international banks.

Sovereign has lost a lot of money on bad mortgage loans, but it was also badly damaged by the collapse of Fannie Mae and Freddie Mac. Sovereign owned more than $600 million in shares of the two companies, an investment that was wiped out when Fannie Mae and Freddie Mac were seized by the government.

-- Binyamin Appelbaum

By Frank Ahrens  |  October 13, 2008; 11:47 AM ET
Categories:  The Ticker  
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We have learned that U.S. banks and insurance companies can not compete internationally. For some reason, banks outside the U.S. are going to be competitive here. We are having trouble being competitive here. Without competition you aren't competitive anywhere. That appears to be the program. I guess by eliminating competition the financial minds figure that we will improve quality. Now government is going to make us more competitive, so we'll need more government. It just doesn't seem to be working as much as they are working it. They've been working around the clock. The market is heading up as people pump and later they all start dumping what they were pumping and it goes down. We've gone from big bubbles to a bunch of little bubbles popping here and there. The Post was climbing. Keep climbing until the next bubble pops. It's like the sparkling wine economy. The Spanish have been looking at buying the turnpike in Pennsylvania. Maybe Bush is trying to sell the Italians the Brooklyn Bridge.


Posted by: Night Mayor | October 13, 1908 12:31 PM | Report abuse

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