Spain's Banco Santander Central Hispano SA said Monday it is offering $2.4 billion for a 20 percent stake in Philadelphia's Sovereign Bancorp Inc., the nation's third-largest savings and loan.
The Spanish bank's board of directors made the decision during meetings held in London Monday. Further details of the deal were not immediately available, but Santander spokesman Keith Grant said the bank would soon issue a formal statement.
Sovereign is expected to use the investment to take over Independence Community Bank Corp., a New York City thrift with a $2.71 billion market capitalization, according to a report in the Wall Street Journal.
Sovereign Bancorp said it would not comment immediately about the offer from Banco Santander, but it planned to release a statement later. Independence Community Bank spokesman Mike Armstrong could not be reached immediately for comment.
The equity stake would come as Sovereign is facing a challenge from its largest investor, which wants to nominate two of its principals to the bank's board of directors. Relational Investors LLC, which owns 7.3 percent of Sovereign's outstanding common stock, contends the bank's operations and stock price have been disappointing.
Banco Santander, Spain's largest financial institution, has been active in making key acquisitions and investments during the past few years. It most recently acquired Britain's Abbey National for $15.4 billion, and has stakes in other financial firms around the world.
The investment would mark a re-entry for Santander in the U.S. market. The Madrid bank had acquired a stake in First Fidelity Bancorp in 1991, but sold it five years later for some $2.1 billion.
Analysts remain concerned that the timing might not be right for Sovereign to pursue another acquisition - especially with a challenge from hedge fund Relational of San Diego.
Jay Sidhu, Sovereign's chairman, president and chief executive officer, built the company into a northeastern banking powerhouse through a succession of acquisitions the past six years. His most notable was the acquisition of 278 branches of Fleet Financial Corp. in 1999.
Sovereign ranks as the No. 6 bank in the Allentown-Bethlehem-Easton metropolitan statistical area, according to the Federal Deposit Insurance Corp. That area is defined as Carbon, Lehigh and Northampton counties and Warren County, N.J.
As of June 30, Sovereign had 16 Lehigh Valley branches, $606.5 million in deposits and a 5.1 percent market share in the Lehigh Valley. By comparison, No. 1 Wachovia had $2.8 billion deposits and a 23.7 percent market share.
Independence has about 120 branches in New York and New Jersey, and operates SI Bank & Trust after last year's acquisition of Staten Island Bancorp. The company has often been rumored as a prime takeover candidate for banks interested in making a strong entrance into the New York City market, an area already dominated by financial giants such as Citigroup and JPMorgan Chase.
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