SPAIN'S Santander bank said it will acquire the remaining stake of Sovereign Bancorp Inc it does not own for US$1.9 billion in stock, as the euro zone's largest bank hunted for bargains in a sector pummeled by the global financial crisis.

Santander's deal, which will gain it a strong foothold in the United States, came as financial institutions rush to merge and governments around the world worked to rescue the ailing financial sector.

Santander said it would pay US$3.81 a share for the 75.65 percent stake in the US bank it does not already hold. The transaction, which swaps 0.2924 shares of Santander American Depositary Share for each share of Sovereign, was expected to close in the first quarter of 2009.

Sovereign, whose share price has declined 78.5 percent in the last year to US$3.68 on Monday, became the largest US savings and loan last month when JP Morgan Chase & Co bought the banking operations of Washington Mutual Inc, then the largest thrift.

"Given the unprecedented uncertainty in the current market environment and the challenges facing Sovereign, we believe this is the right transaction at the right time for Sovereign," Ralph Whitworth, chairman of the capital and finance committee of Sovereign's board, said in a statement.

"This is a very attractive price and ... is strategically positive because it will allow Santander to strengthen its position in the United States and apply its business model to a company it knows," Spanish brokerage Renta 4 said in a note to investors before the deal was finalized.

Sovereign also announced a preliminary third quarter net loss of US$982 million, or US$1.48 per share, including a US$575 million impairment charge on its Fannie Mae and Freddie Mac stock and a loss of US$602 million related to the sale of its entire portfolio of collateralized debt obligations.