S&P: Sovereign Bancorp unchanged

Standard & Poor's said that Sovereign Bancorp's announcement that it will take an "other than temporary" charge on FNMA and FHLMC securities of $44 million-along with a plan to restructure its balance sheet by selling $3.5 billion of investment securities, resulting in an after tax loss of about $155 million-in a balance-sheet restructuring action will not have any ratings implications.

Although these actions negatively affect equity levels, an area of long-time focus in terms of our ratings on Sovereign, the impact is modest and Sovereign has a track record of equity replenishment as opportunistic acquisitions have depressed capital levels several times over the years, the agency said.

S&P added that it anticipates that the deleveraging will improve Sovereign's net interest margin, as proceeds from the sale will be used to reduce certain high-cost fundings.

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