"A takeout of Sovereign becomes increasingly likely beginning in June 2009," writes Keefe Bruyette & Woods analyst Robert Hughes in a report today.

Banco Santander of Spain owns around 25 percent of Sovereign and has right of first refusal until 2011. A bullish $40 floor on competing bids  expires next June. The floor now looks ridiculous, with the stock trading below $10, near a seven-year low, on weak home mortgage sales.

But Hughes sees signs investors see value in Sovereign at its depressed price and will be willing to compete with Santander once the artificial bid price is removed. Activist Relational Investors has been buying more shares, and now owns more than 9 percent; directors have also been buying the shares, Hughes adds.

Sovereign's ability to raise $1.9 billion in equity and debt this Spring, after Santander refused to commit more, means investors expect the bank will weather the credit crunch and resume "normalized earnings" next year, according to Hughes, whose firm buys and sells bank stocks.