October 12, 2006
By KENNETH R. GOSSELIN, Courant Staff Writer
Joseph Campanelli, who was born in Hartford and started his banking career in the city, has been tapped as interim president and chief executive officer of Sovereign Bancorp and could be in line to take over the top executive post permanently.
Campanelli, 50, was named to the interim post early Wednesday, replacing Jay Sidhu, who was mired in a 17-month feud with some of the Philadelphia-based company's biggest investors.
In a statement released after midnight Wednesday, the bank's board of directors said they would now form a search committee for a permanent successor and would consider Campanelli among the candidates.
Sovereign has a modest 2 percent share of all deposits in Connecticut, compared with the state's largest bank, Bank of America, which has 22 percent. But Sovereign also has a major presence in Greater Hartford, where most of its 37 branches in the state are located.
A Sovereign spokesman declined a request for an interview with Campanelli on Wednesday. But in a prepared statement, Campanelli said, "We will focus on providing our customers with the service you have come to expect from Sovereign as we move forward."
One key question the bank must now answer is whether it should be put on track to be sold or whether it should shift its focus from acquisitions to raising its profits, which would benefit its sagging stock price.
Any future expansion in Connecticut - Sovereign has remained about the same size since it entered the state in 1999 - would likely have to wait until after a permanent CEO is named and a course plotted for the bank, analysts said.
Analysts said they don't expect much change in the branches even after a permanent successor is named to head the company.
The problem was not, they said, with product and service offerings, but with the string of sometimes risky and overpriced acquisitions that Sidhu pursued.
How much of a shot Campanelli, now vice chairman and head of Sovereign's operations in New England, has at the CEO job remains to be seen.
Kevin Timmons, an analyst at C.L. King & Associates in Albany, described Campanelli as "forthright" and said he certainly knows the company's business. But Campanelli has also had to defend Sidhu's increasingly unpopular decisions, Timmons said.
"The board may elect to make a complete break with the past and bring someone new in," Timmons said.
Campanelli, who now resides in Wellesley, Mass., lived in the North End of Hartford until his family moved to Windsor when he was a second-grader. He landed his first job out of college in the late 1970s at the former Hartford National Bank.
A few years later, just after Hartford National merged with Connecticut National Bank, Campanelli was dispatched to Boston to open a commercial lending office as the bank made its first moves across state lines.
Through a merger, Campanelli found himself working at Shawmut Bank. After Shawmut merged with Fleet in 1995, Campanelli took over responsibility for the indirect auto lending business. Fleet sold that business to Sovereign in 1997.
Campanelli then left Fleet, later acquired by Bank of America, with the unit for Sovereign. His star rose quickly as Campanelli - a guy who worked his way through college framing houses - guided the rapid expansion of Sovereign's commercial banking business.
In 1999, he was named president of Sovereign's operations in New England after Sovereign acquired branches that were divested in the merger of Fleet and BankBoston.
The divestiture gave Sovereign its first branches in New England: 285 outlets spread over Massachusetts, Connecticut, Rhode Island and New Hampshire.
A year ago, Campanelli was named president and chief executive of the New England franchise. He also served as a vice chairman of the parent company.
Sidhu will serve as non-executive chairman until Dec. 31, the bank said in a statement.
Sidhu, 55, lost a struggle that began in May 2005, when Relational Investors LLC, then the bank's largest shareholder, pushed to add its founders to the board, arguing that Sidhu hadn't done enough to boost the share price.
Sidhu responded by selling a 19.8 percent stake to Spain's Santander Central Hispano SA and agreeing to buy Brooklyn's Independence Community Bank Corp., further enraging investors, who said he could have found better deals.
Santander, which now owns 24.9 percent of Sovereign and holds three board seats, has the right to acquire the rest of Sovereign, beginning in June 2008, at a minimum price of $40 a share.
It can offer to buy the rest of the bank before then, should it be invited to do so by Sovereign's board.
Santander also has the right to make a bid in the event of an unsolicited offer by another party.
"We believe that Santander will 'honor' the original $40 price as a means of keeping away other potential bidders, of which there would likely be several, given Sovereign's phenomenal footprint," Laurie Hunsicker, an analyst with Friedman Billings Ramsey & Co., wrote in a note to clients on Wednesday.
Sovereign shares closed at $24.31, up 24 cents, or 1 percent, on the New York Stock Exchange Wednesday.
Reprinted with permission of the Hartford Courant.
To view other stories on this topic, search the Hartford Courant Archives at