Banco Santander SA's plans to use a relatively hands-off approach for now with Sovereign Bancorp. reflects one of the many management styles foreign banking companies have adopted over the years for U.S. banking arms.
The Madrid company indicated its Sovereign strategy Tuesday, a day after agreeing to acquire the rest of it for $1.9 billion. A person familiar with the deal said Santander would leave the Boston company's brand and management team untouched while closely monitoring areas of risk.
On Monday, Santander announced a plan to acquire the roughly 75% of Sovereign it does not already own. That day Sovereign announced a third-quarter loss of $1.48 a share, citing hits from the credit crisis.
A hands-off approach would differ from the management style used by another Spanish banking company, Banco Bilbao Vizcaya Argentaria SA, which moved relatively quickly to put its name on Compass Bancshares Inc. after acquiring the Birmingham, Ala., company last year. Compass' bank branches now carry the brand BBVA Compass.
Ken Thomas, the Miami branching consultant who operates the Web site Branchlocation.com, said in an interview Tuesday that when it comes to branding, there is a big difference between the two Spanish companies. BBVA is a short and simple brand that is easy for customers to remember and easy to incorporate into a Web address, Mr. Thomas said, but Santander's brand does not fit that mold, and the company is moving into a part of the United States that, aside from a few big cities, does not have heavy concentrations of Spanish speakers. If Santander were moving into Florida or Texas, which have big Hispanic populations, the name might be more appealing, he said. BBVA Compass has branches in both those states.
Executives at Sovereign and Santander declined interview requests Tuesday. A person briefed on the deal said early plans call for Santander to keep Sovereign's name and management team, including Paul Perrault, the former chief executive of Chittenden Corp., who will become Sovereign's president and CEO on Jan. 3. Kirk Walters, Sovereign's chief financial officer and interim CEO, is expected to stay with the company.
Juan R. Inciarte, executive board member of Santander, said in a press release announcing the deal. "We look forward to working closely with Sovereign's senior management and welcoming the entire Sovereign team to Santander," he said.
Other foreign banking companies have started with a hands-off approach but changed tactics midstream.
Royal Bank of Scotland Group PLC bought Citizens Financial Group of Providence, R.I., in the 1980s and essentially allowed it to operate on its own for many years. But about 18 months ago, Royal Bank brought in new leadership and folded Citizens into a newly named business, RBS America.
Mitsubishi UFJ Financial Group Inc. of Tokyo, which agreed in August to buy the 35% of UnionBanCal Corp. it did not already own, has not announced any plans to change names or given any indication that it would reshuffle top executives at the San Francisco company.
Analysts said Santander's apparent comfort with Sovereign's style and leadership might reflect the need to focus in the short term on integration more than an actual long-term commitment to the Sovereign name or executives. "From a retail perspective, Sovereign does have a very good presence and great name recognition," Collyn Gilbert, an analyst at Stifel Nicolaus & Co. Inc., said Tuesday. "While I would guess that any major rebranding of Sovereign is a ways down the road, it could occur." Mr. Thomas said the Sovereign name is "somewhat tainted, because it's among those caught up in all the news" about turmoil in the banking sector. But for the "foreseeable future" Santander will likely keep the name.
