Fed Backs Santander Stake in 1st Fidelity

The Federal Reserve Board has approved the sale of a 13% stake in First Fidelity Bancorp. to Banco Santander of Spain.

The $221 million transaction, announced earlier this year, would give Santander 9,505,000 newly issued shares at a price of $23.25 each, together with warrants that can be converted into an additional 9,505,000 shares.

The warrants, which Santander could exercise over the next four years at $25.50 per share, could bring its holding to 24%.

Stock Price Declines

First Fidelity's shares traded at $29 late Tuesday, 87.5 cents below Monday's close.

Santander, one of Spain's fastest-growing banks, operates in the United States through a New York branch. It is the second-largest bank in Puerto Rico, with around $4.5 billion in assets and nearly 80 branches.

First Fidelity, based in Lawrenceville, N.J., and Santander have billed the 13% stake as an investment. Santander is barred for four years from selling its stake or acquiring more shares.

First Fidelity said it expects to complete the transaction after a mandatory 30-day wait. The equity would raise its leverage ratio to 5.85% of assets, from 5.13% on Sept. 30, and estimated risk-adjusted Tier I capital to 8.31%, from 7.24%.

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