Sovereign Bank (SOV)

[PMitc34947]

I continue to look for a good bank play and came across SOV. Though their stock has stagnated in the low $20s for the past three years, they acquired Independence Community Bank in NY last year when Spanish banking conglomerate, Grupo Santander purchased 24% of SOV's shares. Under the agreement of purchase, Grupo Santander can purchase the rest of SOV’s shares on the open market in two years (mid 2008) at $40 / share.

At Sov's annual meeting, the not too well liked, President of Sovereign, Jay S. Sidhu, talked about Grupo Santander's involvement with SOV and said he would like to see SOV acquired. He mentioned the agreement the two banks have entered into which stipulates that, with certain exceptions, for five years from the initial investment, Santander will not raise its stake above 24.99% nor sell it to third parties. Two years from the initial investment, Santander can offer to acquire 100% of SOV, according to a procedure set forth in the agreement at $40 /share, or maintain its stake. After five years, Santander may divest the stake. Under the agreement, Santander’s voting rights in SOV will be limited to 19.99%, unless Santander acquires 100% of SOV or SOV's non-Santander shareholders vote to allow Santander to vote all of its shares.

What do people on this board know about SOV's prospects as a buyout target? Do I sink money into SOV for two years thinking it is going to double in price because of Santander's keen interest? Or is this a waste of time to speculate?

[PMitc34947]

Two more financials that look great and wished I was in on many months ago...

FMD - I wonder if First Marblehead is growing toward the end of its great growth cycle that has tripled it value over the last year. Up 203.14% ytd.

GRAN - Bank of Granite just split 1 for 4. Up 13.57% ytd.

Ah well...

[PMitc34947]

Last week news came that the board of directors may can Jay Sidhu and now Banco Santander is reviewing whether they should buyout the rest of Sovereign. Originally they agreed to a buyout of Sovereign at $40.00 a share in mid 2008. But maybe all of this news is hastening the aquisition.

Anybody hear anything about this topic?

[PMitc34947]

The forum messages for SOV at Yahoo Finance are very interesting. They lead me to believe while the likelihood of a buyout is coming, shareholders feel trapped by Santander wanting Sidhu too continue on which will likely depress the buyout price everyone is awaiting.

[PMitc34947]

This article offers a lot of insight into Sovereign's current predicament and four possible banks beyond Santander that might move in on SOV if Santander pulls back...

http://www.philly.com/mld/philly/business/special_packages/cf_biz/15717097.htm

[jacobnbr1]

This bank in mention here has the WORST default rate i have ever seen..

Why?

Because they are specializing in loaning money to to companies that are in a bad industry.. IE' You want a loan for a new dump truck, tow truck, equipment, stuff that looses more value than an automibile cause the equipment is beat harder daily v's traveling to and from work daily as you or i do in our f-150 or whatever..

They are a prefered loaner for the towing industry also known as AAA.
They are a plague, virus, a cancer to the industry cause they dictate the value of the service to the contractors and the contractors do it for dirt cheap money as is why the default rate is so high. standard rate in a metro area for a AAA call is like 10.00 in the rural areas it is like 19.00 per call.

now i aint the sharpest blade in the block but this is too cheap per call to run a truck that cost's new 80k...

Why do i know this you ask- Cause i am a towing company and i used to use sovergn bank and they suck. Their relationship with AAA lacks comunication and i will never borrow from them again.
I can remember paying payments on a truck for 8 months after it was paid in full cause some MORON from AAA did not file the truck was paid in full.

The simple process case works like this-

Call your local AAA travel center and get the director of road service on the phone , Tell him you want to be a contractor but need trucks, He will steer you in the right direction and hand you over to this bank where the bank will say- " Go to this dealer and pick out two trucks and we will get it approved "

The director of AAA will submit estimates of how much volume and revenues you will generate (providing you have employees) and ( will they ask?-NO) they will fund your loan in that simple process. The promise to repay is on AAA's hands. If you don't work, AAA won't pay.

Hope this helps

[PMitc34947]

Yeah, Sovereign is no great bank. This is just a trade on the news of the change of leadership and the eventual acquisition of SOV. Today Jay Sidhu was ousted as CEO and chairman of the board. Vice chairman Joseph Campanelli will become president and CEO. Michael Ehlerman, a Sovereign board member, will replace Sidhu as chairman.

The anticipation of this and other news at SOV bumped the stock up 14% since 10/2.

[PMitc34947]

On Tuesday, a late night board meeting resulted in CEO Jay Sidhu getting the boot. I am sure more changes are on the way at SOV...

http://tools.thestreet.com/tsc/quotes.html?pg=qcn&guid={1072C50E-0651-44C5-9D4C-E125B339F149}&symb=sov&sid=4563&orig=1&timer

And news about how this development might change the market's sentiment toward SOV and possibly hasten a takeover...

http://www.chron.com/disp/story.mpl/ap/fn/4252238.html

[PMitc34947]

The artilce in the 10/30 issue of Barrons offers a lot of insight into the struggle playing itself out at SOV currently.

[PMitc34947]

Apparently, the new CEO at SOV, Joseph Campanelli will not be moving to Philly, but will remain in Boston to run SOV. Article suggests that this action along with a short missive released to the press from management that major cutbacks will be announced in the next thrity days following a comprehensive review of the bank's business and will go into effect promptly thereafter, means the new execuives are looking for a buyer for SOV sooner than the 2008 possible deal with Banco Santander.

[soundlanguage]

Apparently, the new CEO at SOV, Joseph Campanelli will not be moving to Philly, but will remain in Boston to run SOV. Article suggests that this action along with a short missive released to the press from management that major cutbacks will be announced in the next thrity days following a comprehensive review of the bank's business and will go into effect promptly thereafter, means the new execuives are looking for a buyer for SOV sooner than the 2008 possible deal with Banco Santander.

There might be buyout interest gaining as i see this bank more often on every 5 blocks in NYC here. It's odd they'd bother as we already have major competition between 5-7 other banks.

My hunch is this jump into the deep end partially due to seeing how fast they can rake in substancial green off of the small fee's (as Bank of America does leading to record profits). Using this "tactic" could potentially offset losses elsewhere, but it's only a guess. I haven't done serious DD on them as you have.

[PMitc34947]

I sense the 22% advance in the stock price since Sidhu's exit is all about the speculation on the new CEO's, Nov. 16 assement of the bank and how the business will be reorganized. Its not so important right now what he will say, but that he will say something about the new direction of the bank that sets it on a definite path to interest another bank into a buyout.

The Sovereign IR webpage boasts that the bank has 800 branches. I am sure one quick fix might be to sell off some of the underperforming branches in the supercompetitive NYC and Boston markets.

[PMitc34947]

There is some talk on the yahoo message boards for SOV that Wachovia, Wells Fargo and Citibank want to do business in New England. Has anyone read about these different banks intents?

Washington Mutual and Citibank are peppering the Connecticut coast with home loan offices, so perhaps there is a chance one of these banks might merge with SOV to develop their business here.

Any ideas?

[PMitc34947]

It is curious that the twelve month price target is set at $25. Surely the news of the upgrade will bump SOV past that today. At any rate this is great news as I am experimenting with investing in out of favor stocks that have a catalyst to move them into favor.

Also, it was thought that an announcement on the reorganization of SOV would first come in late Nov., then this was bumped to mid December, now this is getting pushed off further which is telling...

<i>LONDON (MarketWatch) -- Citigroup upgraded Sovereign Bancorp, Inc. (SOV :24.58, +0.38, +1.6% ) to hold from sell, saying it expects an announcement in January 2007 of a bigger and more comprehensive cost-cutting program than it had previously contemplated. "With the expectation of higher earnings, and of a new CEO and an eventual sale, we are raising our target from sell to hold, with a new 12-month price target of $25," the broker said.</i>

[PMitc34947]

Sr. Botin should buyout Sovereign Bank now.

Everywhere I look from news reports to wikipidia.com claim Banco Santander will be the logical buyer of SOV. Please do it now Sr. Botin. The dollar has fallen to historically low levels against the Euro so SOV would be a great purchase for you to augment your recent announcements of the opening of new offices in the United States.

Please go ahead with your buyout now.

[PMitc34947]

Here is an interesting development with Royal Bank of Scotland...

http://uk.biz.yahoo.com/13122006/325/rbs-eyes-big-u-s-deal-newspaper.html

Let the bidding begin...

[PMitc34947]

Ok, Soveriegn Bank's business declined 66% this quarter, yet they beat analysts estimates on their operating expenses by .04 and this sent the stock up 3% on Thursday. Now, the annual meeting is May 5th and they have yet to mail out proxy cards. This is starting a rumor mill on SOV's message board at yahoo finance. People feel like they are trying to keep shareholders from voting their shs. I too, am in the boat of those who are without their proxy cards and wonder what is up.

I bought into this co. because it was such a catastrophe and felt that somebody smart would pick up the ball, reform the bank and sell it and I would reap the benefits of the restructing and buyout. Now I continue to wait and wait and wait.

[PMitc34947]

Anyone hold a position in SOV? Would be very interested to hear what you all think is going on here.

[PMitc34947]

Every day there seems to be somebody talking about the eventual buyout of Sovereign Bank... recently somebody talked about how Santander will make a move on Soveign now that Bank of America has bought out Harris Bank.

Another person in another message board thinks that Royal Bank of Scotland will scoop up SOV to extend their marketshare. Why? SOV and Citizens Bank's branches overlap too much.

Does anybody know anything that is coming down the turnpike here? If the tale is in the tape, SOV is going nowhere and everyone thinks it is going nowhere for a longtime.

Any ideas or observations about this bank?
Are there any local banks people are following?

If not Santander, some regional bank should come in quick and sweep this bank up quick so they have a presence on the East Coast. Washington Mutual, Wells Fargo, Comerica and Regions should start considering SOV.

[PMitc34947]

I understand why Sovereign is trading lower recently due to the talk of the slow down in the economy, sub-prime problems in the larger banking industry (but not an area Sovereign has exposure to, but many in the sector do) and the recent reporting that per-share operating earnings were .33 vs. last year, but that was enough to beat targets by a penny.

Two questions:

1. What else is pushing the stock lower?

2. Can somebody help me speculate at what price the stock will go to for SOV to become the target of a buyout?

I am buying more shares at $20.

[madcowdisease]

I'd swap SOV for SNV.