PHILADELPHIA -- With Sovereign Bancorp Inc.'s deal to sell a stake to a Spanish banking conglomerate expected to close in two weeks, the Philadelphia thrift said yesterday it will tap its European partner's expertise to target the US Hispanic market.
''We've decided to focus on the emerging markets in the US. Why mess around in China?" said Jay Sidhu, Sovereign's chief executive. ''The Hispanic market and the multicultural market are the fastest-growing emerging markets in the US."
Sidhu, speaking at the Lehman Bros. financial services conference in London, said the parent of Sovereign Bank will count on the experience of Banco Santander Hispano SA in serving Latin American markets.
Sidhu, who's also chairman and president of Sovereign, said the savings bank will focus on capturing a bigger share of the youth market, since its branches are located in areas with many students.
He said convenience is important to the two markets, and Sovereign's agreement to have ATMs in CVS drugstores throughout the Northeast will make the thrift more attractive to Latinos and youth.
Lee Calfo, an analyst with Cohen Bros. & Co. in Philadelphia, said it makes sense for Sovereign to draw on Santander to chase the Hispanic market -- but they shouldn't take a cookie-cutter approach, since Latinos in America aren't a homogenous block.
Calfo also said that Sovereign needs to come up with a strategy that sets the thrift apart, since banks tend to compete on basic financial services.
In October, Sovereign said it would sell a 19.8 percent stake to Santander for $2.4 billion and buy Independence Community Bank Corp. in New York for $3.6 billion.
The plan drew the ire of shareholders who felt the Santander transaction diluted their interest.
The lawsuits ended after the thrift agreed to add two representatives to its board from Sovereign's largest shareholder and harshest critic, Relational Investors LLC of San Diego.
Both deals are expected to close by June 1, pending regulatory approvals.
Shares of Sovereign fell 48 cents, or 2.1 percent, to $22.04 in trading on the New York Stock Exchange.