Sidhu: Exit mode

New York, Oct. 11 (Reuters): Sovereign Bancorp’s president and chief executive Jay Sidhu resigned on Wednesday amid pressure from directors and shareholders frustrated by the bank’s performance.

Sidhu’s resignation ends a tumultuous period for him and the bank, which began early in 2005 with opposition by an activist shareholder to Sovereign two-way deal.

Sovereign said its board has appointed Joseph Campanelli to replace Sidhu in both roles. Previously Campanelli was vice-chairman and also chief executive of Sovereign Bank’s New England division. Sidhu will serve as non-executive chairman until December 31.

Seven of Sovereign’s 12 independent directors called for a meeting last week and indicated Sidhu, 55, should be replaced. The meeting took place on Tuesday.

While some shareholders lobbied to keep Sidhu, the pressure for his ouster appears to have won out. The company cited “family health-related reasons” for Sidhu’s resignation.

Campanelli’s appointment could be temporary, as Sovereign said the board formed an executive search committee to seek a successor to Sidhu and would consider Campanelli during the process.

Aggressively expanding through a string of acquisitions, Sidhu turned a small Pennsylvania thrift bank into the nation’s third-largest savings & loan business with $64 billion in assets and 650 branches stretching from Maryland to Boston.

But Sidhu has been under fire for years from investors who complain the bank’s earnings and stock price lagged. As of late last week, Sovereign shares gained 4.6 per cent over the past year, third-worst among the S&P Banks Index.