Sovereign swings to $817M loss in 1Q

PHILADELPHIA – Sovereign Bank parent Sovereign Bancorp Inc. swung to nearly a billion dollar loss in the first quarter compared with a year earlier as its losses from bad loans grew.

Sovereign posted a net loss of $817.3 million in the quarter ended March 31, compared with a net profit of $100.1 million in the same period a year earlier, The Boston Globe reported based on recent regulatory filings by the bank.

Sovereign set aside an additional $505 million to cover loan losses, more than triple the $135 million it set aside a year ago, The Globe said, bringing loan-loss provisions to a total of $1.3 billion by the end of the quarter.

Sovereign’s total assets stood at $78.1 billion on March 31, up from $77.7 billion a year ago. Its deposits and other customer accounts grew to $50.5 billion from $48.4 billion a year earlier.

Sovereign, which was acquired in January by Madrid-based Banco Santander SA (NYSE: STD), was the third-largest bank by deposits in Rhode Island as of last June, according to the Federal Deposit Insurance Corporation. But it ranks far behind the state’s top two institutions, Citizens Bank and Bank of America.

Banco Santander’s results were not nearly as dire when it reported last month. Santander posted a profit of 2.1 billion euros ($2.7 billion), down by only 5 percent from a year earlier, when the bank posted net income of 2.2 billion euros ($2.9 billion), according to The Associated Press. Spain’s once high-flying economy has crashed in recent months, and the country now has the highest unemployment rate in Europe.

Sovereign recently announced that it had laid off nearly 9 percent of its work force, including 32 employees in Rhode Island. A spokeswoman told Providence Business News the bank had 867 employees in the state after the layoffs.

Sovereign Bancorp Inc. (NYSE: SOV), the Wyomissing, Pa.-based parent of Sovereign Bank, is a $78 billion U.S. financial institution with 750 community banking offices, more than 2,300 ATMs and about 9,750 employees, mostly in the Northeast. In 2009, it was acquired by Madrid-based Banco Santander SA. For additional information, visit SovereignBank.com.