Sovereign Bancorp, the $25 billion-asset Wyomissing, Pa.-based thrift company that plans to buy 268 branches from Fleet Boston Corp., said Tuesday that it would raise more money than it had initially planned to finance the $1.4 billion deal.

It had said it would raise $1.4 billion, but that was increased to $1.75 billion Tuesday. In part, the $350 million difference is to help capitalize the branches, said Mark R. McCollom, vice president of finance at Sovereign.

The thrift also said it will raise only $300 million through issuance of new shares, far below the $700 million called for in its earlier projection. It will raise another $250 million by issuing convertible trust-preferred securities. And Sovereign will depend on a $500 million syndicated loan, plus $700 million of senior debt.

Jay S. Sidhu, president and chief executive officer, told analysts in September that the thrift's interim plan was to finance the deal by issuing $700 million of common equity, at $10 a share, and $700 million of debt. But the company's shares have since plummeted, to $8.9375 at Tuesday's close. Sovereign shares were trading at $17.50 in April and dropped to about $10 after the September announcement.

As a result of the lower stock price, Sovereign cut more than in half the amount to be raised by issuance of new equity.

The $1.75 billion that Sovereign plans to raise includes the $1.4 billion purchase price for the $12 billion of deposits, $8 billion of loans, and 268 branches that are being divested by the newly formed Fleet Boston Corp.

The new strategy "is riskier than what they had originally planned because it raises less equity capital," said Chad Yonker, a thrift analyst at Fox-Pitt, Kelton Inc.

If Sovereign raises more debt, it could negatively affect the company's tangible common equity ratios and jeopardize its current debt ratings, Standard & Poor's said. S&P put Sovereign on its CreditWatch list with negative implications on Monday. Moody's Investor Service issued a similar warning Friday.

If S&P does cut Sovereign's ratings, its debt would be categorized as junk, making issuance much more expensive.

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