PHILADELPHIA – Sovereign Bancorp Inc. (NYSE: SOV), the parent company of Sovereign Bank, is looking to raise $1 billion to $2 billion in capital from investors led by Spain-based Grupo Santander, the Financial Times reported today.
Santander, which already owns a 24.9-percent stake in the bank, wanted to provide all the fresh capital, a source close to the negotiations told the Times. But that would have required a vote at Sovereign on whether to allow the Spanish company to expand its holdings, a move the bank reportedly hopes to avoid by bringing in other investors as well.
ADVERTISEMENT
ADVERTISEMENT
Neither institution responded to the newspaper’s requests for comment. But Sovereign Chairman Michael Ehlerman reportedly told the bank’s annual meeting yesterday that Santander does not wish to increase or decrease its stake “at this stage.”
Sovereign is one of many institutions reeling from mortgage and other consumer credit losses. The bank eliminated its dividend in January after posting a fourth-quarter loss of $1.6 billion. (READ MORE) It also has stopped making auto loans in the Southeast and Southwest, where losses for it and other companies have been particularly high.
For the first quarter, however, Sovereign posted a profit of $100.14 million, more than twice the year-ago $48.06 million. (READ MORE)
Sovereign Bancorp Inc. (NYSE: SOV), the parent company of Sovereign Bank, is a $90 billion financial institution with nearly 800 community banking offices, more than 2,000 ATMs and about 12,000 employees mostly in the Northeast. For additional information, visit www.sovereignbank.com.
Hattie Bryant invites you to
watch a one- to four-minute video tip each day about best business practices from
the weekly television show, Small Business School.
