CALIFORNIA : BRIEFLY / FINANCIAL SERVICES : Sovereign to Buy Assets From 2 Banks

Sovereign Bancorp agreed to pay $1.4 billion for 278 branches, $12 billion in deposits and about $8 billion in loans from Fleet Financial Group Inc. and BankBoston Corp., turning Sovereign into a major player in New England banking. The asset sale, a condition of the Justice Department’s approval of Fleet’s pending purchase of hometown rival BankBoston, is part of the largest-ever U.S. bank divestiture. The Federal Reserve, meanwhile, gave its approval to the Fleet-BankBoston merger, clearing the way for the creation of the eighth-largest U.S. bank. The Fed appeared to ignore Connecticut Atty. Gen. Richard Blumenthal’s pleas to delay the approval. Blumenthal, who says the merger would stifle competition and community lending in his state, has promised to go to court to block the merger. Philadelphia-based Sovereign, the No. 6 U.S. savings and loan with $25 billion in assets, will nearly double the size of its branch network with the purchase. Sovereign shares rose $1.06 to close at $11 on Nasdaq. Fleet shed $1.75 to close at $37.81, while BankBoston fell $1.44 to close at $44.50, both on the New York Stock Exchange.