British hedge fund buys 5% stake in Sovereign

Milwaukee Business Journal – An activist British hedge fund has taken a 5 percent stake in Sovereign Bankcorp Inc.,  according to a filing with the Securities and Exchange Commission.

London-based Toscafund Asset Management said its passive stake amounts to 33.5 million shares.

Banco Santander Central Hispano, Spain’s largest bank, owns roughly a quarter of Sovereign’s stock and ultimately can exercise an option to buy the Philadelphia-based bank.

Sovereign has struggled after years of rapid expansion through acquisition. The bank’s stock price has fallen in the last year from roughly $20 and bottomed out at $7 as it suffered negative earnings caused by some problem loans. The stock closed down 1 percent Thursday at $9.52. Under new CEO Joseph Campanelli, Sovereign has focused the last year on reducing the size of its balance sheet risk and zeroing in on its core mid-Atlantic and New England retail markets.

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