Sovereign Bancorp had two direct consolidated wholly owned subsidiaries at year-end 2004 of which Sovereign Bank, a federally chartered savings bank, is the only material one. Under the terms of the agreement, Santander will have the opportunity to increase its share to 24.9% in the short term either by buying shares from Sovereign directly or on the open market. It also has an option to negotiate for the acquisition of 100% of Sovereign after two years.
Under the Savings and Loan Holding Company Act, ownership of more than 10% of the capital stock may be deemed to constitute control, subject to certain other control factors being present. The addition of two Santander appointees to Sovereign’s board and the appointment of Sovereign’s CEO to the Grupo Santander board would indicate this is the case.
Sovereign simultaneously announced the agreed 100% acquisition of Independence Community Bank Corp, an S&L holding company, which the Santander deal helped to finance. The acquisition gives Sovereign an entry into the last major market in the north-eastern US in which it did not have a presence. The acquisition of Independence is subject to shareholder approval and both deals are subject to regulatory approval with an expected completion by July 1, 2006. Both Sovereign Bancorp and Bank are regulated by the Office of Thrift Supervision, and Sovereign Bank also by the Federal Deposit Insurance Corporation.
At September 30, 2005 Sovereign Bancorp consolidated figures revealed it had assets of $62.9bn, a gross loan book of $42.6bn, deposits of $37.3bn and pre-tax income for the year to date of $678m. Based on year-end 2004 figures The Banker in its Top 1000 World Banks listing in July 2005 ranked Sovereign Bancorp 143rd in the world and 30th in the US by Tier 1 capital and 171st in the world and 28th in the US by assets. The table below shows the relative figures of the three banks involved in the current acquisition saga for the last completed financial year.
