Sovereign changes its name to Santander
Boston-based bank adopts corporate identity of parent Santander, a global banking giant
Boston-based Sovereign Bank, one of the country’s largest regional banks, is adopting the name of its owner Santander, the banking giant based in Spain.
Banco Santander SA, which bought Sovereign in 2009, plans to replace the Sovereign brand with Santander as early as next year, according to executives briefed on the decision. The move is significant because of Sovereign’s size: The bank has nearly $77 billion in assets and 723 branches in nine states.
The name change is part of a broader strategy for Santander to become a truly global brand. Santander, pronounced “san-tan-DAIR,’’ is the name of a city in Northern Spain where the bank was founded. Santander is a household name in much of Europe and Latin America; the bank has more than 14,600 branches globally, more than the double the size of the largest banks in the United States.
The Santander name is already being featured in Sovereign ads, and on business cards and placards in its branches, alongside the Sovereign name, to help customers become familiar with the new brand. On its website, Sovereign has dropped its longtime symbol, an illustration of an antique lantern, in favor of Santander’s stylized flaming torch.
“That’s a classic marketing strategy,’’ said John Connors, who runs the Waltham advertising firm The Boathouse Group, noting that many consumer product makers make such changes gradually to avoid jarring customers. “There are no sudden movements.’’
Still, US banks typically move more quickly to promote new brands after making an acquisition. Eastern Bank, for instance, changed the signs on Wainwright Bank branches four months after buying the Boston community bank last year. And Bank of America Corp. started integrating FleetBoston right after it bought the New England regional bank in 2004, linking the ATMs and changing the signs within the first year.
But Santander has been waiting to scrap Sovereign’s name until it finishes reorganizing the bank, which ran into significant troubles during the financial crisis. “Otherwise, they felt it would have been just a name change,’’ said one former executive who requested anonymity because he is bound by a confidentiality agreement with the bank. “In effect, it would have been window dressing.’’
Sovereign spokesman Karen McCafferty declined to comment on the name change.
Since taking over Sovereign two years ago, Santander has injected capital into the bank, revamped its operations, reduced its portfolio of troubled loans, and started converting its computer systems. In May, the bank filed an application with federal regulators to change its corporate charter so it can make more commercial loans.
Santander has also tried to promote the company’s stronger financial position to customers. A placard in its branches says “Strength. Stability. Security.’’ in bold red lettering, adding in smaller type that Sovereign is now part of Santander. The bank recently reported that Sovereign earned $183 million in the second quarter, up 39 percent from 2010.
Sovereign, which operates in the Northeast and Mid-Atlantic regions of the United States, has about 8,500 employees across the country, including nearly 2,800 in Massachusetts, where its executive offices are located.
It is the third largest retail bank in the state in terms of deposits, behind Charlotte, N.C.-based Bank of America and Citizens Financial Group Inc., which is based in Providence. Sovereign entered the New England market in 2000 after it acquired 285 branches that were divested by FleetBoston to meet federal antitrust laws after the merger of Fleet Financial Group and BankBoston Corp.
The name change is the Spanish bank’s latest effort to unify its worldwide banking operations under the Santander brand.
Last year, it renamed 1,300 British branches after buying several banks in the United Kingdom. Santander spent nearly $60 million on advertising in Great Britain last year and sponsored Formula 1 race car drivers to help promote the brand, according to Brad Insight, a research firm that tracks the marketing industry.
With major operations in 10 countries, Santander could market itself as an international bank to stand out from other major banks in Massachusetts. “It has a global play,’’ Boathouse Group’s Connors said.
Like other bank stocks, Santander shares have fallen recently amid concern about the European debt crisis and the weakening global economy.
But Santander is widely considered one of the stronger Spanish banks, and it recently said it had no exposure to government debt from any country within the European Union.
Santander’s chairman, Emilio Botín, however, is currently under investigation in Spain, where authorities are looking into whether he or other family members should face criminal charges or tax penalties stemming from a secret Swiss bank account set up by his late father, according to published reports.
There is one other wrinkle with the name change: It could affect the names of some sports arenas, such as Sovereign Bank Stadium, a baseball park in York, Pa., and Sovereign Center in Reading, Pa., which two sports teams call home.
Anthony Johndrow, a partner with Reputation Institute, a corporate reputation consulting firm in New York, said Santander will probably face little resistance to scrapping the Sovereign name because Americans generally have a low opinion of large US banks. “They’re a big bank,’’ Johndrow said. “They’ll just be a big bank with a new name.’’