S&P: Sovereign Bancorp unchanged

Standard & Poor's said its rating on Sovereign Bancorp (BBB/stable) is not affected by the company's announcement that deterioration in the consumer credit environment and volatility in MBS and credit markets will result in an adverse impact on its third-quarter results.

Sovereign's third quarter will include provision increases of $50 million associated with its correspondent home equity loan portfolio, a business exited in early 2006, another $40 million for indirect auto loan growth and expected asset quality deterioration, $10 million for construction and commercial real estate, $20 million associated with loans to defaulted mortgage companies and $15 million for investment securities marked-to-market, the agency said.

S&P added that it expects profitability to return to normalized levels in the coming quarters.

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