Moody's affirms Sovereign ratings

Moody's Investors Service said it affirmed the ratings of Sovereign Bancorp Inc. (senior at Baa3) and subsidiaries (Sovereign Bank is rated Baa1 for deposits and its senior debt is rated Baa2) following the announcement of its proposed acquisition of Waypoint Financial Corp..

The outlook is stable.

Moody's said that the affirmation of Sovereign Bancorp's ratings was based on the view that Sovereign Bancorp will be able to assimilate both Waypoint Financial's banking franchise and the earlier announced Seacoast Financial acquisition without material client attrition.

Moody's said that the financing of these acquisitions - primarily with equity - has maintained Sovereign Bancorp's leverage at prudent levels. Moody's noted that one of the major challenges in the Waypoint Financial merger will be lowering Waypoint's cost of deposits while maintaining deposit balances.

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