Sovereign Bancorp To Cut 1,000 Jobs In Cost Cutting Effort

December 19, 2008 3:12 p.m. EST

Philadelphia, PA (AHN) - Sovereign Bancorp Inc. announced Friday it will cut 1,000 jobs, about 8 percent of its workforce as it aims to reduce costs during the economic recession.

The cuts will impact employees at the Sovereign banking unit and will start immediately and continue into the first quarter of 2009.

"Over the last several months, we conducted a thorough review of our projected 2009 budget in an effort to reduce our costs and become a more efficient bank," said CFO Kirk Walters in a press release.

"The decision to reduce our workforce was a very difficult one, especially during the holiday season," said Walters. "There is never a good time to reduce staff, but this step is necessary."

The move comes as the bank readies itself for purchase by Banco Santander, a Spanish bank, in a $1.9 billion all-stock deal. Banco already owns 25 percent of Sovereign and will acquire the remaining 75 percent through the stock deal.

The announcement of job cuts by Sovereign is just the latest of many that have come out of the banking sector. Just last week Bank of America announced a job cut of 35,000 as it works through its acquisition of Merrill Lynch.

Shares of Sovereign are trading 2.1 percent higher to $2.90 in late afternoon trading.