The contraction of U.S. banks continues as Banco Santander SA, Spain's largest lender, agreed to buy the 75% of Sovereign Bancorp Inc. that it does not already own for $1.9 billion in stock. The move comes after the U.S.' largest remaining thrift asked its biggest shareholder for an offer.
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Santander will offer shareholders of Reading, Pa.-based Sovereign 0.2924 of a Santander American Depository Shares for each Sovereign share, the two banks said Tuesday.
Madrid-based Santander has emerged from the subprime turmoil as one of Europe's strongest banks and has taken advantage of its financial strength to snap up weakened peers.
Santander bought an initial 24.9% stake in Sovereign in 2005 and 2006 for $2.9 billion.
Sovereign's request to be purchased follows a plunge of almost 80% in its value in the past year. The lender has been buffeted by a loss of confidence in the banking sector and exposure to poor investments in Fannie Mae and Freddie Mac securities and collateralized debt. - Paul Whitfield
