2:32PM EST IMPORTANT NOTE: Sovereign Bank is currently trading at under $3.00 a share down $5.47. It appears that many nervous depositors are pulling their money out as the bank shows fear of collapse.
YWN is in no way advising people to withdraw their funds, but to act wisely.
NOTE ON MOTZEI ROSH HASHANAH: The stock has rebounded, and is trading at $4.82.
WALL STREET JOURNAL REPORTS: Moody’s Investors Service cut its credit ratings on Sovereign Bancorp because of sizable charges from the bank’s exposure to Fannie Mae and Freddie Mac preferred stock and the loss taken on the sale of its $750 million portfolio of collateralized debt obligations.
Moody’s also warned of further possible downgrades after it lowered Sovereign’s debt and deposit ratings one notch to Baa2, two notches above junk territory, and the long-term deposit rating on Sovereign Bank one notch to Baa1, three notches above junk.
The rating agency said a decrease in its assumed level of support for Sovereign by Spain’s Banco Santander SA, which holds a 24% ownership stake, could result in a one-notch cut of its long-term ratings.
Moody’s also pointed out that Sovereign is exposed to “a number of problematic asset portfolios,” including commercial real estate, home equity and indirect auto loans, that could result in higher credit costs, hurting its capital position. Moody’s said it expects the holding company to use its capital for the thrift, decreasing the parent’s liquidity.
As of June 30, Sovereign owned $622.6 million in Fannie and Freddie’s preferred stock — and the shares could ultimately end up being worthless. The holdings are less than 1% of the company’s total assets but make up an estimated 13% to 15% of tangible capital.
Sovereign’s shares were at $4.12, up 4.3%, in after-hours trading. The stock price fell to a 16-year low of $2.20 on Monday after the House defeated a $700 financial-rescue plan.
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3 Responses
I believe that it’s irresponsible comments like this that are hurting the financial markets.
irresponsible?
i think its irresponsible that people who work for meridian (like you, probably) make irresponsible comments about responsible comments.
did you see the associated press?
read this:
http://www.iht.com/articles/ap/2008/09/29/business/NA-US-Sovereign-Bancorp-Stock.php
NEW YORK: Fresh fears about instability in the banking sector sent shares of Sovereign Bancorp Inc. plummeting more than 60 percent to a record low Monday.
Shares dropped $5.69, or 68 percent, to $2.68 in afternoon trading after bottoming at $2.53, its lowest price in almost 22 years.
The broader markets also sold off sharply as the House defeated an unpopular $700 billion rescue plan for troubled financial companies. The Dow Jones industrial average fell more than 700 points, while demand for safe-haven buying in government debt remained high.
Further stoking jitters about weakness in the financial services sector, the Federal Deposit Insurance Corp. said Monday that Citigroup Inc. will acquire Wachovia’s banking operations. Investors had been worried about Wachovia’s stability as it grappled with mounting losses over souring mortgage debt.
The plunge for Sovereign shares came despite a note from analyst from Janney Montgomery Scott LLC upgrading the company’s rating to “Buy” from “Neutral.”
whats their stock symbol ?