Magazine article American Banker

Sovereign CEO Calls Suit against Chairman Necessary to Protect Shareholders' Interests

Magazine article American Banker

Sovereign CEO Calls Suit against Chairman Necessary to Protect Shareholders' Interests

Article excerpt

NEW YORK - Sovereign Bancorp's top executive defended the Wyomissing, Pa., holding company's unusual lawsuit against its chairman, saying the legal move was necessary to protect shareholder interests.

Chief executive officer Jay S. Sidhu last week instructed attorneys for Sovereign to bring suit against chairman Frederick J. Jaindl, two other directors, and others.

The suit alleged a range of improprieties, including failure to disclose efforts by that group to take control of the company by expanding the board, and then to seek to arrange for its sale.

Mr. Jaindl, Sovereign's largest shareholder with an 11.4% stake, has disputed the charges, attributing the dispute to a power struggle on the company's board.

Hasn't Decided to Sell

Mr. Sidhu also challenged assertions by Mr. Jaindl that the company had recently received specific overtures from two other large bank companies, which Mr. Jaindl has declined to identify publicly.

While stressing that the board hasn't decided to sell the company, Mr. Sidhu added that the company "is constantly talking to people," including parties that could include prospective suitors.

"We are committed to maximizing shareholder value," he said.

"It's been a smoothly functioning machine, with a strong strategy and good teamwork," said Thomas O'Donnell, savings and loan analyst with Prudential Securities Inc.

"That's why this lawsuit is such a big surprise."

Size Has Tripled Since '91

Under an aggressive strategy of acquiring other regional thrifts, Sovereign has more than tripled in size since 1991, to $4. …

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