Sovereign Bank draws on New England's leadership capital

Jon Chesto

For an organization with a Pennsylvania home address, Sovereign Bank sure is starting to look like a Boston company.

Of eight executives who report directly to CEO Joe Campanelli, five have offices in Boston. Only one remains at the bank's longtime headquarters in Wyomissing, Pa., and none of them work out of the holding company's corporate office on Market Street in Philadelphia.

The personnel shift has much to do with Campanelli himself, a well-liked Boston banker who decided to stay here when he was promoted to chief executive after his predecessor, Jay Sidhu, was forced to resign in the fall of 2006.

Campanelli recently made several key appointments to strengthen his executive team in Boston, such as the hiring of Roy Lever to run the bank's retail operations and the promotion of Patrick Sullivan to oversee commercial banking businesses. Most notably, Campanelli tapped New England banker Kirk Walters in February to be Sovereign's new CFO. Walters replaced Mark McCollom, a Pennsylvania guy.

Campanelli's tenure at the top hasn't necessarily been easy. He has presided over job cuts, a languishing stock price and a retrenchment from Sidhu's far-flung auto-lending efforts and ambitious acquisition strategy.

That said, Sovereign has become a household name in this region in a relatively short period of time: Most of us had never seen the bank's iconic lantern logo until it showed up about eight years ago as Sovereign converted branches and ATMs that were divested in the Fleet-BankBoston merger.

This region could really use a big regional bank again. Fleet was our last independent one; its disappearance into Bank of America thinned Boston's corporate ranks, although that merger raised the national profile of Fleet's former asset management business.

Citizens has lost some autonomy to its overseas parent, the Royal Bank of Scotland, as RBS tries to beef up its U.S. operations. The TD Banknorth franchise is now fully owned by a Canadian bank.

The corporate shuffle leaves Bridgeport, Conn., as the home base for the largest retail bank in New England. People's United Bank earned that title by landing a deal last year to buy Chittenden Corp., Walters' alma mater.

To some extent, we already get many of the benefits of a local corporate headquarters, with Campanelli and others playing prominent roles in the community here. We get many of the benefits, just not the credit.

A corporate relocation could bring additional jobs and funding for local charities. It certainly would help restore Boston's place in the retail banking industry.

But such a move might be a tough sell among Sovereign execs. As close as the leadership team is to Boston, the executives must still feel some loyalty to the politicians in Pennsylvania who fought to protect the bank in a shareholder battle more than two years ago.

Sidhu sought help from that state's legislature as he moved to sell a minority stake in Sovereign over shareholder objections to Grupo Santander, a Spanish bank that provided cash for another one of Sidhu's acquisitions and protection from some of the bank's unhappy investors.

Sovereign ultimately won that fight, even if Sidhu ended up as its main casualty.

While Santander doesn't currently own a controlling stake, Campanelli would still need the Spaniards' permission to relocate the headquarters. But it's a heck of a lot easier to fly to Boston than to Wyomissing if they need to visit.

The Santander deal bought Sovereign some time to continue as an independent bank, although the deal's complex ownership restrictions expire in three years. Assuming the financial industry recovers from its current malaise, there's no guarantee that a bank with as lucrative a footprint as Sovereign's can stay autonomous forever. Unfortunately, a sale of the bank could be the one event that does prompt a move of the main office.

For now, the bank's headquarters will stay in a small community about an hour's drive northwest of Philadelphia. At least we know where the people who are calling the shots can be found.

Jon Chesto is the business editor of The Patriot Ledger. He may be reached at jchesto@ledger.com.