"Treasurer redeposits $200m; Cahill reaches accord with Sovereign Bank on guarantee of funds" by Ross Kerber, Globe Staff | October 25, 2008
Massachusetts Treasurer Timothy Cahill said his office has returned to Sovereign Bank the remaining $200 million he yanked out last month over concerns about the bank's health.
Cahill said he made the move this week after Sovereign guaranteed the safety of the deposits, as he has been asking of all banks that do business with the state. He had previously returned $100 million of the $300 million he withdrew from the bank on Sept. 29, when Sovereign's shares were plunging as investors feared it would be the next institution to topple during the crisis sweeping the financial industry.
The treasurer also said he was reassured by Sovereign's pending takeover by Banco Santander, a deep-pocketed Spanish bank that said Oct. 13 it is buying the remaining 75 percent of Sovereign it didn't already own. All told, Sovereign now has about $575 million of state deposits.
Cahill's $300 million withdrawal was part of a huge exodus of customers who pulled $4.2 billion out of Sovereign during its third quarter. Bank executives have said some of that outflow was customers spreading their money among several banks so as to stay below the federal insurance deposit level of $100,000, and that outflows eased after the FDIC this month raised its insurance limit to $250,000 per depositor.
Do you have 100,000 to 250,000 (or more) in the bank? Even when they "help," it serves ONLY the RICH!!
The $300 million in state funds represented money that Sovereign hadn't yet guaranteed under a new policy Cahill instituted requiring banks to collateralize state deposits. Yesterday, his office said major accounts held at other banks were fully collateralized, including about $106 million held by Citizens Bank and $30 million held by Bank of America.
Madrid-based Santander has the largest market capitalization of any bank on the European mainland. Bank officials have so far declined to discuss their intentions for Sovereign, whose 232 branches in Massachusetts and $13 billion in deposits make it the state's third-largest bank.
In a conference call with analysts on Oct. 14 Santander chief financial officer Jose Antonio Alvarez called Sovereign "an attractive entry point" into the Northeastern US market and said it is a bank "with a strong regional presence and there is potential to improve the efficiency and commercial productivity" of the bank.
At another point Alvarez said, "it's probably too early to talk about opening branches" of Sovereign. He also made references to cost-cutting and efficiencies, though neither bank would discuss if this will lead to job losses. --more--"
Uh-oh.
