Sovereign Bancorp Inc., the Philadelphia thrift company that has agreed to sell itself to Banco Santander SA, would take a $2 billion writedown and get a new chief executive officer, according to Emilio Botin, Santander's chairman.
Gabriel Jaramillo, a former head of Santander's Brazilian unit, would lead Sovereign, Mr. Botin said today at a meeting of the Spanish company's shareholders. Santander would take "an initial writeoff" of $2 billion from Sovereign, which would make a profit of $750 million by 2011, he said.
Santander shareholders approved the issuance of 177 million shares, equivalent to about 2.2% of share capital, to pay for the acquisition.
Antonio Alvarez, Santander's chief financial officer, said in October that it would reduce Sovereign's risk-weighted assets by $10 billion by the end of 2009, trimming securities investments and "managing down" loan books.
Ignacio Benjumea, Santander's board secretary, said in response to a shareholder question that Sovereign will post profits of less than $100 million for this year and $250 million for next year. He also said results for last year would not include any Sovereign-related writedown.
The deal is expected to close this quarter.