In a bid to get bigger, Sovereign Bank ( SOV) is giving up some of its sovereignty.

The Philadelphia-based lender said Monday that it sold a $2.4 billion equity stake to Spain's Grupo Santander, one of the world's largest banks. At the same time, Sovereign announced an agreement to buy New York-based Independence Community Bank ( ICBC) in a deal valued at roughly $3.6 billion.

The dual transactions will enable Sovereign, which has branches in New Jersey, to enter the highly competitive New York banking market. Independence has 123 branches in the New York metropolitan area.

"The acquisition of Independence is a logical next step, as it allows us to enter the last large market within our northeastern footprint where we did not previously have a presence," said Sovereign Chairman and CEO Jay Sidhu.

In the cash deal with Independence, Sovereign will pay $42 a share, a 29% premium to the bank's Monday closing price of $32.45.

Independence has $18.5 billion in assets. The combined banks will have more than $80 billion in assets.

Independence President and CEO Alan Fishman will become president and chief operating officer of Sovereign, as well as chairman and chief executive of the metro New York market division.

Meanwhile, Santander initially is buying 90 million Sovereign shares at $27 a share, representing a 20% equity stake in the bank. But over time, the Spanish lender's stake could rise to 24%.

The agreement also holds out the possibility that Santander will acquire all of Sovereign at a minimum price of $40 a share. The deal allows for the banks to talk about a possible transaction after at least two years have elapsed.

Shares of Sovereign were halted for trading all day Monday at $23.37 amid rumors of a pending-deal announcement.

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