Sovereign Bancorp cutting 1,000 jobs amid downturn

PHILADELPHIA: Sovereign Bank, the banking unit of Sovereign Bancorp Inc, said on Friday it is cutting 1,000 jobs, or 8.3 percent of its work force, in an effort to reduce costs amid the economic downturn.

The regional bank, which currently has about 12,000 employees, said jobs will be cut during the remaining weeks of 2008 and into 2009.

The decision to cut jobs comes as Sovereign Bancorp is selling the remaining stake in itself to Spanish bank Banco Santander SA. Santander is buying the remaining roughly 75 percent stake it does not already own in Sovereign. The deal, announced in October, originally valued the remaining stake in Sovereign for $1.9 billion, or about $3.81 per share. The sale is expected to close during the first quarter.

Many banks have been shedding staff as the economy worsens and banks struggle with mounting losses tied to the declining value of assets and rising loan defaults. Large, national banks such as Citigroup Inc. and Bank of America Corp. have announced massive job cuts amid the ongoing market turmoil.

By next year, Citigroup expects to have shrunk its work force by 75,000, or 20 percent, since its headcount peaked in late 2007. Bank of America has said it will cut between 30,000 and 35,000 jobs.

Shares of Sovereign Bancorp rose 4 cents to close at $2.88.