2d bank set to offer small-business job incentives

Sovereign Bancorp plans to create a low-interest loan program designed to help small businesses add jobs in Massachusetts, following the rollout of a similar program by Citizens Bank.

Sovereign executives plan to detail the program tomorrow at a news conference with state Treasurer Timothy P. Cahill, who is creating a task force of business leaders to look for ways to add jobs. Sovereign is one of the participants in the task force.

The move by the treasurer, a Democrat, comes in the wake of last month's acquisition of Boston's Gillette Co. by Procter & Gamble and recent criticism by other Democrats of Republican Governor Mitt Romney's record on bringing jobs to Massachusetts. The state still has about 46,000 fewer jobs than when Romney took office, though it has gained about 22,000 jobs since the labor market hit bottom a year ago, according to data from the federal Bureau of Labor Statistics.

Cahill has assembled top New England executives from three banks, as well as the chief executives of New Balance Athletic Shoe Inc., NStar, and Tufts-New England Medical Center to look at ways that the Treasury Department can promote economic development. But the group could also expand its efforts into issues such as affordable housing. Treasury oversees billions of dollars in the state's business operations, including its pension fund and day-to-day cash management, and also the state Lottery.

Cahill's task force follows Romney's launch earlier this month of a jobs partnership with Citizens Bank, which Citizens estimates will create 2,500 jobs through low-cost loans. The treasurer excluded Citizens and the Romney administration from his task force, though he included New England's three other dominant banks -- Bank of America, Sovereign, and Banknorth Group.

Eileen O'Connor, a spokeswoman for the treasurer's office, said Citizens was not invited because "they already have an initiative," and Romney's administration was kept out because the efforts will focus largely on the Treasury.

In Sovereign's jobs program, which it plans to roll out later this month, the bank will earmark $200 million to make loans to small businesses at the prime rate of 5.5 percent, or the rate that banks charge their best business customers. It is similar to the Citizens program with Romney's administration but, unlike Citizens, Sovereign does not require that companies create a certain number of jobs as a condition of receiving the loans, said Joseph Campanelli, chief executive of Sovereign's New England operations. Both programs waive borrowers' fees.

Sovereign launched a similar program in Pennsylvania and has received more than 100 applications for loans, Campanelli said. Sovereign aims its program at small businesses with less than $10 million in annual revenues. Sovereign, headquartered in Pennsylvania, is Massachusetts's third-largest bank.

Campanelli said Sovereign may, after meeting with the task force, expand its program to include home mortgages. He said he views affordable housing as one of the state' biggest problems. He said Sovereign plans to work with the Romney administration to run its loans program, but that Cahill's office and his task force will help him with ideas on how to shape the program.

Cahill's task force may position the treasurer to take a leadership role on the politically sensitive topic of job loss in Massachusetts. Several top Democrats, including Secretary of State William F. Galvin and Attorney General Thomas F. Reilly, both possible candidates for governor in 2006, have criticized Romney's efforts on jobs. Galvin called it a failure of leadership earlier this month, while Reilly said the governor, a former venture capitalist, did not do much to stop the Gillette takeover.

O'Connor, the Treasury spokeswoman, said Cahill assembled the task force because he is "trying to come up with solutions."

Romney's spokeswoman, Shawn Feddeman, said the administration views the Cahill task force as positive. "We think that jobs is a team effort," she said. "The governor counts on everyone to contribute, from the Legislature, to the treasurer's office, to other constitutional officers."

She also defended Romney's record on jobs, noting that the unemployment rate is below the national average.

Sasha Talcott can be reached at stalcott@globe.com.