Sovereign raising $1.5b in additional capital
Sovereign Bancorp. said it plans to raise $1.5 billion in two public stock offerings, becoming the latest bank seeking capital amid tightening credit markets.
A Sovereign spokesman said it expects Spain's Banco Santander SA to buy shares in the offering, but didn't have details and said that "no special treatment is being given to any shareholder.'' Santander already owns about a quarter of Sovereign, a Pennsylvania savings and loan that is one of the largest banks in New England.
Technically Sovereign will $1 billion shares of common stock, while its Sovereign Bank unit will offer $500 million under the terms of the two offerings. The money is being raised as a prudent decision in case the economic downturn proves deeper than expected, said the spokesman, Ed Shultz, but not because the bank lacks sufficient capital. "We're not taking this action from a position of stress, but rather from a position of strength,'' he said.
According to Bloomberg News, the world's banks and securities firms have rased more than $245 billion in capital to cope with losses that have resulted from deteriorated mortgage and credit markets. Sovereign reported a loss of $1.3 billion in 2007, and omitted its quarterly dividend in January.
(By Ross Kerber, Globe staff)