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Santander in talks to take over Sovereign

Spain's Banco Santander SA was in advanced talks late Sunday to acquire full control of Sovereign Bancorp Inc, the largest remaining US savings and loan, a source familiar with the matter said.

A deal could be announced as soon as Monday, the source said. Santander is expected to pay about $3.81 a share, which was Sovereign's closing price Friday on the New York Stock Exchange, valuing the company at about $2.53 billion based on shares outstanding as of July 21.

Santander, currently with a 24.9% stake, is already Sovereign's largest shareholder.

Sovereign and Santander declined to comment.

The deal would be the latest in a string of high-profile bank acquisitions amid the credit crisis, which is fast transforming the global financial landscape.

For Sovereign, the deal would come just days after the thrift said Joseph Campanelli stepped down as chief executive after serving in the position for less than two years.

He was replaced by Paul Perrault who was to take over on January 3, while Kirk Walters, Sovereign's chief financial officer, serves as the chief executive in the interim.

Campanelli became chief executive in October 2006, replacing the ousted Jay Sidhu, whom investors had faulted for a low share price and for selling a stake in the Philadelphia lender to Santander.

Sovereign this year raised $1.9 billion of capital, eliminated its dividend, and sold its portfolio of collateralized debt obligations.

The parent of Sovereign Bank has about $79.2 billion of assets, and operates 750 branches in eight northeast and mid-Atlantic states.

It became the largest US savings and loan last month when JPMorgan Chase & Co bought the banking operations of Washington Mutual Inc, then the largest thrift. (Reuters)