UPDATE 1-Sovereign Bancorp bought by Spain's Santander

NEW YORK, Jan 30 (Reuters) - The Spanish bank Banco Santander SA (SAN.MC) completed its takeover on Friday of Sovereign Bancorp Inc SOV.N by acquiring the portion of the largest U.S. savings and loan that it did not already own.

Sovereign shareholders approved the takeover on Wednesday, two says after Santander shareholders approved a capital increase to finance it. The all-stock transaction was valued at $1.9 billion when it was announced Oct. 13.

Shareholders of Philadelphia-based Sovereign are receiving 0.3206 of a Santander American depositary share (STD.N) for each of their shares. They also had a choice to receive ordinary Santander shares.

Following the merger, Hudson City Bancorp Inc (HCBK.O) of Paramus, New Jersey, becomes the largest U.S. thrift.

Santander in 2006 spent $2.4 billion for a nearly 20 percent stake in Sovereign. It later boosted its stake to just under 25 percent.

Sovereign operates about 750 branches in eight Northeast and mid-Atlantic U.S. states, and ended September with about $77.3 billion of assets.

The lender is being replaced in the Standard & Poor's 500 .SPX by Health Care REIT Inc (HCN.N), S&P said last week. (Reporting by Jonathan Stempel, editing by Matthew Lewis)