Banco Santander Central Hispano S.A. of Spain agreed yesterday to buy Sovereign Bancorp Inc. in a $1.9 billion deal, making the Philadelphia-based bank the latest to be caught in the world's financial upheaval.

The proposed stock swap is expected to strengthen Sovereign, which had losses of $1.4 billion in 2007 as it wrestled with problem auto and home-equity loans.

The purchase price of $3.81 per Sovereign share matches the company's closing price Friday on the New York Stock Exchange.

Banco Santander already had a 25 percent stake in Sovereign.

The deal continues a string of Banco Santander acquisitions around the world as the Spanish bank seeks to diversify its revenue geographically.

"Given the unprecedented uncertainty in the current market environment and the challenges facing Sovereign, we believe this is the right transaction at the right time for Sovereign," said Ralph Whitworth, chairman of the Wyomissing, Pa., company's capital and finance committee.

In the Philadelphia area, Sovereign has 82 branches and employs about 2,500 people, including 1,500 in Berks County, its original home.

The two companies would not discuss plans for the regional franchise, but closings seem unlikely because Banco Santander does not have a branch network here.

In other recent deals, Santander has not changed the names of the banks it has acquired.

Nationwide, Sovereign has about 750 branches and 12,000 employees.

Banco Santander executive board member Juan R. Inciarte called Sovereign "a strong commercial-banking franchise in one of the most prosperous and productive regions of the United States, with high growth potential, which will further diversify Banco Santander's geographical reach."

In last night's release, the banks said Sovereign's capital and finance committee, composed of the firm's independent directors, had asked Santander to consider acquiring the portion of Sovereign it did not already own.

Banco Santander said it projected profit of $750 million for Sovereign in 2011.

Sovereign shareholders will receive 0.2924 of a Banco Santander American Depository Share for every share of Sovereign common stock they own.

Banco Santander has been expanding rapidly as it takes advantage of its relatively strong financial position to pick up weaker banks.

On Friday, it completed an acquisition of Great Britain's Alliance & Leicester P.L.C. for a price considered a steal - $2.2 billion. That followed its September purchase of the branch network of the British bank Bradford & Bingley P.L.C. for $1.1 billion.

Banco Santander also recently acquired operations in Brazil as part of an acquisition of ABN Amro Holding NV assets.

Buying the rest of Sovereign makes sense for Santander, some analysts said.

"I figured Santander had to step in and do something to protect their original investment," said Matthew Schultheis, a bank analyst with Boenning & Scattergood Inc., of West Conshohocken.

Richard D. Weiss, a bank analyst at Janney Montgomery Scott L.L.C. in Center City, estimated that at yesterday's proposed price, Banco Santander would lower the average price it had paid for its Sovereign shares to about $7. Santander had paid an average of about $20 per share for the 25 percent stake it bought in 2006.

Sovereign's franchise is considered attractive because of its large presence on the East Coast.

A deal also removes uncertainties lingering over Sovereign.

"It's also been Santander's M.O., if you will, to rescue troubled institutions," said Brian Dolan, chief currency strategist at GAIN Capital, a currency-trading firm in Bedminster, N.J.

Just a few weeks ago, the company's chief financial officer, Jose Antonio Alvarez, said at a Merrill Lynch & Co. Inc. banking conference that his company was "well-positioned" in the new environment.

"There is the possibility to add value by rescuing falling banks at attractive prices," Alvarez said.

The companies expect a deal to close in the first quarter of 2009.

Sovereign seemed to have decided to go it alone after it announced in late September that it was naming former Chittenden Corp. chief executive officer Paul A. Perrault to replace Joseph P. Campanelli as CEO, effective Jan. 3.

Yesterday's news left analysts wondering whether Perrault already had been considering a sale or whether Sovereign's condition had deteriorated further.

Janney's Weiss, however, said he thought the second possibility was unlikely because the firm had been forthcoming about its financial situation.