US - The US$ 200bn Californian Public Employees' Retirement System System (CalPERS) has called upon the Securities and Exchange Commission (SEC) to halt a transaction between Sovereign Bancorp and Banco Santander Central Hispano because shareholders were not allowed to vote on the matter.
Spanish bank Banco Santander is to buy a greater than 20% stake (including treasury shares) in US-based Sovereign Bancorp. According to CalPERS, Sovereign Bancorp reportedly plans to use the proceeds from the sale to purchase Independence Community Bank.
In a letter addressed to SEC secretary Jonathan Katz, CalPERS, a shareholder in both the banks, expressed “disappointment” with Sovereign Bancorp’s board of directors for showing a “clear lack of regard for the rights of shareowners”.
In November, 2005, CalPERS wrote to the New York Stock Exchange (NYSE) imploring it to either to reject the deal or ensure shareowner rights are protected in the proposed transactions.
“We do not agree with the conclusion reached by the NYSE to permit this transaction to proceed without shareowner vote as Banco Santander is buying a greater than 20% stake in Sovereign,” the letter said.
Relational Investors, a US-based money manager and CalPERS partner, contends the three way bank deal circumvents the rights of shareowners to legitimately vote on the transaction.
CalPERS holds 13.8m shares (0.22%) of Banco Santander and 1.4m shares (0.38%) in Sovereign Bancorp.
Meanwhile, CalPERS has begun seeking consultants to help develop strategies and programmes for investments in emerging markets and emerging managers.
Competitive bids should be received by the pension fund no later than 22 February 2006.
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