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Summit News

Sovereign weighs dollars for "Donuts"

NEW YORK, Nov 7 (Reuters) - Sovereign Bancorp SOV.N Chief Executive Joseph Campanelli on Wednesday said he has talked with Dunkin' Donuts leaders about striking an alliance that would allow the bank to put cash machines in Dunkin' coffee and doughnut shops in the U.S. Northeast.

Joseph Campanelli, President and CEO of Sovereign Bancorp Inc., speaks at the Reuters Finance Summit in New York, November 6, 2007. REUTERS/Shannon Stapleton

“Dunkin is an interesting profile,” Campanelli said at the Reuters Finance Summit in New York.

“We’re looking and talking on how do we work together on those types of things.”

Sovereign later issued a statement to Reuters saying it was not in discussions “with Dunkin Donuts regarding ATMs or any other joint venture,” but declined to elaborate.

Banks like to put cash machines inside retail stores, such as supermarkets or restaurants, which they see as small branch locations -- but without the risk or cost that goes with building full-size branches.

Last year, Philadelphia-based Sovereign about doubled its network of cash machines when it struck a deal to put ATMs inside pharmacies of CVS, the retail division of CVS Caremark Corp CVS.N. The bank, which is the second-largest U.S. savings and loan, has 750 branches and more than 2,300 cash machines throughout the U.S. Northeast.

A prospective deal with Dunkin’ Donuts would be different because store ownership includes franchisee-franchisor relationships.

“It’s a little more complicated,” Campanelli said earlier. “But we have very good relationships on both sides.”

Dunkin’ Brands Inc is based in Canton, Massachusetts, and is owned by a consortium of private equity firms that includes Bain Capital and Carlyle Group. Most Dunkin’ Donuts shops are owned by franchisees.

Campanelli said he compares notes with Dunkin’ Brands Chief Executive Officer Jon Luther and people at Bain.

“We do talk with them about their strategies and where they’re expanding to,” he said.

Dunkin’ Brands was not immediately available for comment.

In the United States, Dunkin’ has more than 5,000 locations in 34 states. The company is synonymous with New England and that fits nicely with Sovereign’s strategy to build deeper ties with its customers.

"Yes, they've got very good site selection," Campanelli said, referring to Dunkin' locations. (For summit blog: summitnotebook.reuters.com/)

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