Sovereign plans to raise fresh capital
8:41 AM Mon, May 12, 2008 | Permalink
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Sovereign Bancorp Inc., the Pennsylvania-based savings and loan that is one of the biggest banks in Rhode Island, plans to raise about $1.5 billion in capital as the company tries to rebound from losses in 2007. The lender will sell $1 billion in common stock and approximately $500 million in fixed-rate subordinated notes to build a “cushion” in case the economy slows more, Sovereign spokesman Ed Shultz said. “We're not taking this action from a position of stress,” Shultz said today. “The board and the company decided to be proactive and prudent.” The new capital will add to the more than $245 billion raised by the world's biggest banks and securities firms after losses tied to mortgage and debt markets. Philadelphia-based Sovereign reported a $1.3 billion loss for 2007. The company reduced some lending as defaults increased, and omitted its quarterly dividend in January. The largest shareholder, Banco Santander SA, is expected to participate in the offering, Shultz said. The Santander, Spain- based bank already owns at least a 24 percent stake in Sovereign and will take part in the offering in proportion with its holdings. 
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