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
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Posted by: Night Mayor | October 13, 2008 12:31 PM
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