(Source: The Morning Call, Allentown, Pennsylvania)
By Spencer Soper, The Morning Call, Allentown, Pa.
Dec. 11--The federal government on Wednesday approved the sale of Sovereign Bank, the fourth-largest bank in the Lehigh Valley, to Banco Santander, Spain's largest bank.
Sovereign agreed in October to be bought by Santander for $1.9 billion after Sovereign customers withdrew 9 percent of deposits in the third quarter as panic spread about the soundness of banks.
Based in Philadelphia, Sovereign operates 15 branches in Lehigh and Northampton counties and has more than $700 million in local deposits, which represent 6.8 percent of all local deposits.
Sovereign blamed the $4.2 billion in withdrawals on "intense deposit competition as well as general safety and soundness concerns" after IndyMac Bancorp Inc. Pasadena, Calif.-based IndyMac, also a savings and loan, was seized by regulators July 11 after customers pulled more than $1.3 billion of deposits.
The Sovereign deal is the latest is a series of ownership changes in the Valley bank market that has mostly affected its biggest banks.
Wachovia, the Valley's largest bank with 44 branches and 28 percent of deposits in Lehigh and Northampton counties, was purchased by Citigroup in September for $2.1 billion.
Wachovia and Sovereign became prone to takeovers after their stock prices crumbled under losses from real estate loans.
Unrelated to the subprime mortgage meltdown, National Penn Bank increased its stake in the Lehigh Valley in February with its acquisition of KNBT Bancorp in Bethlehem. National Penn now has 39 offices in Lehigh and Northampton counties and 15 percent of local deposits.
Bloomberg News contributed to this story.
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