By this time next year, Sovereign Bank will have completed its national transformation to Santander Bank, part of the Spanish-owned Banco Santander SA, one of the largest banks in the world.
The name change is part of a broader strategy for Santander to become a truly global brand. Santander has injected capital into the Boston-based bank it purchased two years ago, revamped its operations and reduced its portfolio of troubled loans.
But recent worries about the European Union and the economic health of Spain have left some speculating Santander and, by connection, Sovereign are in trouble.
Over the last five years Santander has spent more than $6 billion purchasing Sovereign and New York-based Independence Community Bank Corp. and S.I. Bank & Trust. Sovereign Bank had been severely affected by losses related to auto loans and stock in Fannie Mae and Freddie Mac. In mid-May, Santander was among 16 Spanish banks that were downgraded three levels by Moody’s Investors Service, which cited a recession and mounting loan losses. Banco Santander’s stock price has fallen by half over the past year amid growing concerns about financial and economic problems in Spain.
But Santander officials say the European turmoil has not affected Sovereign, and the company continues to invest in its U.S. subsidiary, including a recent upgrade of the firm’s computer platform.
The bank has more than 800 employees in Rhode Island and provides millions of dollars in grants to nonprofit organizations in its market. They have also invested more than $8 million in education through its Universities Program.
Raymond W. Fogarty, director of the Chafee Center for International Business at Bryant University, believes events in Spain will have little effect on Sovereign. “In the long haul, every country has its crisis and everyone gets over it.”
He said business plans of this magnitude consider both the short- and long-term solutions. “You have to identify where your opportunities are, especially in the short term,” he said.
“Sovereign is among the strongest U.S. banks with a 13 percent capital ratio,” insisted Kathy Klinger, chief marketing officer & director corporate communications for Santander. “Its strong capitalization supports its continuous growth and investment plan in the Northeastern and mid-Atlantic U.S. footprint.”
And Sovereign spokesperson Jayne Holly Berry-Steel says she has the data to prove it. Sovereign grew its deposit base by 12 percent in 2011, almost double the industry average, and its loan production to small businesses has surged 30 percent since 2010. In May it launched a new proprietary technology platform to act as the foundation from which to continue a wider breadth of products and services to their customers.