Sovereign Bancorp, Inc.

RBC Capital Markets Financial Services

Conference

September 25, 2007

2

Forward-Looking Statements

This presentation contains statements of Sovereign Bancorp, Inc.’s (the “Company”) strategies, plans and objectives, estimates of future operating results for Sovereign Bancorp, Inc. as well as estimates of financial condition, operating efficiencies, revenue creation and shareholder value

These statements and estimates constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) which involve significant risks and uncertainties. Actual results may differ materially from the results discussed in these forward-looking statements

Factors that might cause such a difference include, but are not limited to: general economic conditions, changes in interest rates, deposit flows, loan demand, real estate values, and competition; changes in accounting principles, policies, or guidelines; changes in legislation or regulation; and other economic, competitive, governmental, regulatory, and other technological factors affecting the Company’s operations, pricing, products and services

Overview of Sovereign

4

An Exceptional Franchise Serving the Northeastern United States 18th largest bank in

U.S. with $83 billion in assets at June 30,

2007

750 offices& over 2,250 ATM’s

Approx. 11,850 team members

Source: SNL DataSource

5 Largest MSA’s in Northeast U.S.No. of SOV Mkt SOVOffices Share Rank

New York 226 1.98% 10

Philadelphia 86 4.30% 7

Boston 173 6.65% 3

Providence 55 10.58% 3

Hartford 29 4.78% 6

5

$72.5$58.3

$48.3$43.5

$38.1$35.8

$23.3$25.1$16.7$12.6$15.2

$17.1

$5.4$6.2

$(0.0)$1.5

$(0.3)

$1.5$5.3

$5.1$0.1

$10.2

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Organic assets Net change in assets from acquisitions/(sales)

Sovereign’s Growth – A Combination of Organic Growth and Acquisitions

Deposits ($ in billions)

Assets ($ in billions)

$8.6 $7.3 $8.5 $11.5 $12.9$23.7

$25.6$27.4

$28.4

$35.1$41.4

$11.6

$0.1 $2.2 $3.9 $0.5

$(0.3)$1.3 $(0.0)

$4.2

$2.9

$11.0

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Organic deposits Net change in deposits from acquisitions/(sales)

$9.5$8.7

$12.0

$24.5 $23.3$26.9

$27.3$32.6

$38.0

$52.4

$12.3

$15.3$17.7

$21.9$26.6

$33.5$35.5

$39.6$43.5

$54.5$63.7

$89.6

Organic CAGR 5.7%CAGR 19.7%

Organic CAGR 9.4%CAGR 19.3%

Source: Wall Street Research, Company data

6

Sovereign’s Vision and Strategy

VisionTo be recognized by customers and prospects as a customer-centric local community bank with large bank capabilities

StrategyTo acquire and retain customers by: Demonstrating convenience through our locations,

technology and business approach Offering innovative and easy-to-use products and services Providing high-quality customer service that is both

responsive and flexible

7

America’s Neighborhood Banksm

8

Sovereign’s Business Model

Increased emphasis on core commercial and consumer, franchise based businesses; Sovereign does not have any lending units whose principal focus is on sub-prime lending

Core Commercial: Commercial Real Estate Mini Perm Conduit C&I Lending Business Banking

• Branch Business Banking• SBA

Centralized strategy with a de-centralized delivery structure Community Banking delivery model, each with a Market CEO Local decision making by experienced commercial/retail bankers

Core Consumer (within footprint): Home Equity Lending Residential Mortgage Retail Banking

9

Specialty Businesses – Regional and National

Auto Finance Dealer Floor Plan Indirect Auto

Aviation Finance

Multi-Family/CRE

Health Care/Not-For-Profit

Asset Based Lending Business Alliance

Capital Corp.

Franchise Finance

Capital Markets

Cash Management

Equipment Finance/Leasing

Trade Finance

Retail Finance

Sports Lending

10

Strategic Alliances

CVS/Cardtronics Over 1,000 ATMs installed to date

First Data Corp. Sovereign Merchant Services Dedicated sales force in excess of 100

ADP Sovereign Payroll Services Dedicated sales force of approximately 225

American Express – OPEN Customer Rewards Program Official card issuer

11

Re-energize Emphasis on Convenience and Customer Service

Consumer banking emphasizes convenience and customer service

Many markets offer 7-day banking

Appointment banking

24/7/365 domestic call centers and internet availability

Developing comprehensive strategy to serve a variety of ethnic markets including Hispanic/Latino markets

Custom Switching Services

12

-

Objectives for 2007

Execute on four key initiatives to deliver improved quality of earnings, provide greater transparency and understanding of Sovereign’s businesses and strategy, and better position Sovereign for sustainable growth

Progress to date on four initiatives:

Improve productivity and expense management

Improve the capital position and quality of earnings

Improve the customer experience

Improve communications with all stakeholders

+

Improving Productivity and Expense Management

14

Expense Reduction Initiative

Primary focus on: Functional redundancies and operating inefficiencies Products/business lines not meeting profit or

strategic goals Leverage economies of scale with vendor supply

and service contracts Capacity utilization and expenses associated with

facilities Consolidations of departments Optimization of retail delivery channels

While minimizing impact on customer facing activities and organic revenue generation

Identified ~$100 million of expense reductionsIdentified ~$100 million of expense reductions

15

Capital Re-investment in Core Businesses to Continue Sovereign will continue to invest in core commercial and

consumer businesses as well as targeted specialty businesses

Sovereign will continue to make investments to improve the customer experience Comprehensive review of all bank information systems currently

underway Reduction of account opening time More incentives focused on sales and service Revitalization of Community Banking Offices

Sovereign intends to direct greater marketing resources toward deposit products in 2007

Sovereign plans to open/relocate up to 40 new community banking offices over the next 2 years – up to 18 in 2007 and 22 in 2008

Improving Capital Position and Quality of Earnings

17

Commercial Real Estate

18%

C&I20%

Multi-family9%

Residential Mortgages

28%

Home Equity15%

Auto8%

Other Commercial

1%

Other Consumer

1%

Improved Loan Mix – Result of Balance Sheet Restructuring

Period-end balances

December 31, 2006

1Q07 Loan Sales:$3.3 billion correspondent home equity loans$2.5 billion purchased residential mortgages

$1.3 billion multi-family loans

Total Commercial Loans 48.7%Total Consumer Loans 51.3%

Commercial Real Estate

21%

C&I24%Multi-family

7%

Home Equity11%

Auto11%

OtherConsumer

1%

Residential Mortgages

24%Other

Commercial1%

Total Commercial Loans 52.3%Total Consumer Loans 47.7%

June 30, 2007

18

Residential Mortgages – As of June 30, 2007

Total Residential Mortgages

Outstanding Balance $14.4 billion

Weighted Average FICO 736

Weighted Average LTV 53.8%

Fixed RateAdjustable Rate

69%31%

>91% 5%

80% to 90% 6%

51% to 79% 72%

<50% 17%

>741 43%

681 to 740 37%

621 to 680 17%

<620 3%

LTVDistribution

FICODistribution

Alt – A Mortgages

Outstanding Balance $2.9 billion

Weighted Average FICO 722

Weighted Average LTV 66.7%

Fixed RateAdjustable Rate

35%65%

>91% 2%

80% to 90% 8%

51% to 79% 77%

<50% 13%

>741 41%

681 to 740 45%

621 to 680 14%

<620 0%

LTVDistribution

FICODistribution

1

1

1

1

1 Statistics based on original loan amount and are as of time of origination for those loans that data was available.

19

Retained Correspondent HMEQ

Outstanding Balance $567 million

Reserves/Discount $76 million

Balance, net $491 million

Weighted Average FICO 647

Weighted Average CLTV 83%

First LienSecond Lien

68%32%

>91% 33%

80% to 90% 31%

51% to 79% 32%

<50% 4%

>741 23%

681 to 740 18%

621 to 680 20%

<620 39%

Home Equity Lending – As of June 30, 2007Direct Home Equity

Outstanding Balance $5.5 billion

Weighted Average FICO 784

Weighted Average CLTV 58.9%

Fixed Rate LoansLines of Credit

69%31%

First LienSecond Lien

39%61%

>91% 3%

80% to 90% 22%

51% to 79% 44%

<50% 31%

>741 61%

681 to 740 27%

621 to 680 10%

<620 2%

CLTVDistribution

FICODistribution

CLTVDistribution

FICODistribution

1

1 Statistics based on original loan amount and are as of time of origination for those loans that data was available. 2 Statistics based on current FICO for those loans that data was available.

1

2

1

20

Homebuilder Lending $459 million outstanding at June 30, 2007 Geographic Distribution:

Warehouse Lending $625 million outstanding at June 30, 2007 Loans fully collateralized by underlying residential

mortgage collateral

Other Residential Related Exposure

Mid-Atlantic 65.3%

Out of Footprint

25.6%

New England 9.1%

21

6.48% 6.68% 6.74%

5.69% 5.82% 5.73%

6.29% 6.40%

4.54%

4.73% 4.81%3.49%

3.78% 3.73%

4.20% 4.33%

4.54%

4.73% 4.81%

3.25%3.55% 3.50%

3.95% 4.07%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07

Tier 1 Leverage Tangible Equity/Tangible Assets Tangible Common Equity/Tangible Assets

Restoring Capital Levels

Sovereign Bancorp, Inc.

22

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07

0%

5%

10%

15%

20%

25%

30%

35%

40%

Whole

sale

Assets

/Tota

l A

ssets

Wholesale Assets Total Assets Wholesale Assets/Total Assets

Less Reliance on Wholesale Assets

Wholesale assets includes investments and purchased loans

$ in millions

23

Benefits of Restructuring

Repositions Sovereign for sustainable growth in core earnings long-term

Improves risk profile of balance sheet

Improves capital levels

Provides investment capital to support organic growth

Reduces reliance on purchased assets and wholesale funding, improving quality of balance sheet and income statement

Enables management to fully focus attention on building core competencies

Improving The Customer Experience

25

Tactical Plans to Improve Customer Experience Improve quality of service

Migrated back to domestically-based customer service functions Refresher service training for all customer service personnel completed

during second quarter Implemented a new premiere customer service team for Sovereign

Merchant Services customers with volumes exceeding $1M annually in credit card volume

Realign consumer and commercial infrastructure Consolidate commercial and retail online banking for economies of

development and better customer experience – easier to use, more functionality

Rationalize product set Rolled out customer switching services across franchise Upgraded commercial online banking system Introduced “Sovereign Secure Access” functionality to enhance online

transactions Streamlined retail product set by half in first quarter – 10 checking products

to 5 Currently addressing grandfathered accounts to increase balance retention

26

Tactical Plans to Improve Customer Experience

Optimize sales process Focus sales force on core deposit acquisition Implement coordinated, aggressive balance-building campaigns Align advertising, incentives, and communication in support of

core deposit growth goals Optimize effectiveness of the advertising spend by re-allocating

across geographies

Increase online usage Launched program to increase online bill payment usage –

achieved 120% of goal

Expand ATM network Developed partnership with CVS to provide ATM banking services

at over 1,000 locations

Improving Communications with all Stakeholders

28

Improving Communication

Management’s responsibility is to share with all key constituents information that is timely, accurate, consistent and concise

Key constituents include: Team Members Shareholders Analysts Customers

Changes to date – Financial Disclosures: Operating earnings definition Capital ratios streamlined More credit quality detail (C&I, CRE) More deposit detail (wholesale vs. core)

Community leaders Advisory groups Regulators Rating agencies

29

Second Quarter of 2007 Highlights Net income of $148 million or $.29 per diluted share, including

charges, as compared to ($59) million or ($.15) per share a year ago

Operating earnings for EPS purposes of $170 million or $.33 per share as compared to $163 million or $.37 per diluted share a year ago

Strong loan growth in core commercial and consumer portfolios partially offset by a commercial loan securitization of approximately $1 billion

Average deposits declined $808 million during the quarter; of this $1.0 billion was planned runoff in higher cost wholesale deposits as we reduced our reliance on these wholesale deposit sources

30

Second Quarter of 2007 Highlights

Net interest margin expanded 1 basis points from first quarter levels to 2.71%

Consumer and commercial banking fees increased 10% linked quarter, rebounding from seasonal lows typically present in the first quarter of each year

G&A expenses increased $6.6 million or 2% from first quarter levels, increased marketing expenses of $8 million

Credit quality continues to meet our expectations

Capital ratios expanded within expectations, despite adverse change in other comprehensive income

31

Credit Quality Trends

0.36% 0.37% 0.35%0.42%0.43%

2Q06 3Q06 4Q06 1Q07 2Q07

Non-Performing Loans toLoans Held for Investment

0.23% 0.23%0.29%

0.18%0.16%

2Q06 3Q06 4Q06 1Q07 2Q07

Annualized Net Charge-offsto Average Loans

251.0% 240.0% 251.0%217.0%208.0%

2Q06 3Q06 4Q06 1Q07 2Q07

Allowance toNon-Performing Loans

* 4Q06 net charge-offs exclude credit charges related to balance sheet restructuring of $390 million

*

32

0.29%

0.57%

0.20%

0.61%

0.01%

0.55%0.47%

0.58%

0.48%

0.22%

0.01%

0.54%

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

0.70%

Commercial RealEstate

C&I and Other ResidentialMortgages

Home Equity Auto Other ConsumerLoans

6/30/06

6/30/07

0.15% 0.18%

0.00%

0.59%0.52%

0.07%0.20%

0.04%0.13%

0.83%

0.30%

-0.09%

-0.20%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

Commercial RealEstate

C&I and Other ResidentialMortgages

Home Equity Auto Other ConsumerLoans

2Q06

2Q07Annualized Net Charge-offs/

Average Loans

Non-Performing Loans and Net Charge-offsNon-Performing Loans/

Total Loans Held for Investment

33

$46

$70

$93$81

$109

2.12%

2.78%

3.74%3.38%

3.69%

0

20

40

60

80

100

120

6/30/06 9/30/06 12/31/06 3/31/07 6/30/07

To

tal P

ast

Du

e L

oan

s

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

To

tal P

ast

Du

e/O

uts

tan

din

gs

Total Past Due Loan Trends

$212

$362$316

$273 $273

1.23%

2.03%2.18%

1.90% 1.90%

0

50

100

150

200

250

300

350

400

6/30/06 9/30/06 12/31/06 3/31/07 6/30/07

To

tal P

ast

Du

e L

oan

s

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

To

tal P

ast

Du

e/O

uts

tan

din

gs

$248$278

$122 $101$129

1.62%

1.81%

1.17%

0.85%1.03%

0

50

100

150

200

250

300

6/30/06 9/30/06 12/31/06 3/31/07 6/30/07

To

tal P

ast

Du

e L

oan

s

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

2.00%

To

tal P

ast

Du

e/O

uts

tan

din

gs

$100

$192

$102

$153$122

0.34%

0.64%

0.34%

0.51%

0.41%

0

50

100

150

200

250

6/30/06 9/30/06 12/31/06 3/31/07 6/30/07

To

tal P

ast

Du

e L

oan

s

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

0.70%

To

tal P

ast

Du

e/O

uts

tan

din

gs

Total Residential Mortgage Loans Alt A Mortgage Loans

Home Equity and Indirect Auto Consumer Loans

Commercial Loans

$ in millions

34

What To Expect In 2007

Upper-single digit year-over-year growth in core commercial and consumer loan categories

Reductions in correspondent home equity and residential mortgage lending

Mid-single digit year-over-year growth from in-market deposits, offset by declines in wholesale deposits

$80 million decline in G&A expenses from fourth quarter levels offset by investment in core franchise

Improvement in net charge-offs over last year as result of correspondent home equity portfolio sale, partially offset by anticipated weakening of credit

35

What to Expect in 2007

Disciplined and focused approach to increasing the value of our core franchise Increase the rate of household and enterprise acquisition Increase the rate of cross selling and share of wallet

Continued formation of a solid capital position

Company-wide program to improve our sales culture

Continued focus on operational excellence Better, faster and cheaper

Continue to increase communications and transparency Both internally and externally

Appendix

37

Operating Earnings Per Share

This presentation contains financial information determined by methods other than in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”)

Sovereign’s management uses the non-GAAP measures of Operating Earnings in its analysis of the company’s performance. These measures typically adjust net income determined in accordance with GAAP to exclude the effects of special items, including significant gains or losses that are unusual in nature or are associated with acquiring and integrating businesses, and certain non-cash charges

Since certain of these items and their impact on Sovereign’s performance are difficult to predict, management believes presentations of financial measures excluding the impact of these items provide useful supplemental information in evaluating the operating results of Sovereign’s core businesses

These disclosures should not be viewed as a substitute for net income determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures, which may be presented by other companies

38

One Non-GAAP Financial Measure

Sovereign’s management used the non-GAAP measure of Operating Earnings, and that related per share amounts on their analysis of the company: Provides greater financial transparency

Provides useful supplemental information when evaluating Sovereign’s core businesses

Consistent with SEC’s publicly stated desire for fewer non-GAAP disclosures

Operating Earnings represent net income adjusted for after-tax effects of merger-related and integration charges and any other non-recurring charges

39

Reconciliation of Operating Earnings to Reported GAAP Earnings

($ in thousands) Year Ended December 31,

2006 2005 2004 2003 2002Net Income as reported 136,911$ 676,160$ 453,552$ 401,851$ 341,985$ Dividends on preferred stock (7,908) - - - - Net Income available to common shareholders 129,003$ 676,160$ 453,552$ 401,851$ 341,985$

Net Income available to common shareholders 129,003 Contingently convertible trust preferred interest expense, net of tax 25,360 25,427 21,212

Net Income for EPS purposes 154,363$ 0.30$ 701,587$ 1.69$ 474,764$ 1.29 401,851$ 1.32 341,985$ 1.17

Net income for Operating earnings EPS purposes 154,363$ 0.33$ 701,587$ 1.69$ 453,552$ 1.31 401,851$ 1.32 341,985$ 1.17 Merger-related and integration costs 27,574 0.06 8,284 0.02 30,134 0.09 10,316 0.04 Provision for loan loss 200,499 0.43 3,900 0.01 3,900 0.01 Loss on economic hedge 7,402 0.02 Restructuring of balance sheet 197,799 0.42 42,605 0.12 18,838 0.06 Restructuring charges 51,134 0.11 2,589 0.01 Impairment charge for FNMA and FHLMC preferred stock 43,875 0.09 20,891 0.06 Proxy and professional fees 9,319 0.02 3,788 0.01 Non-solicitation expenseOperating earnings for EPS purposes 691,965$ 1.48$ 716,248$ 1.72$ 551,082$ 1.59$ 420,689$ 1.38$ 356,201$ 1.22$

Weighted average diluted shares for GAAP EPS 433,908 415,996 367,811 305,001 292,991 Add back of diluted shares for Operating EPS not factored into GAAP diluted shares due to antidilution 33,840 - (22,823) - - Adjusted weighted average diluted shares for Operating EPS 467,748 415,996 344,988 305,001 292,991

40

June 30 June 302007 2006

Net income/ (loss) as reported 147,452$ (59,056)$

Dividends on preferred stock (3,650) (2,433)

Net income available to common shareholders 143,802 (61,489)

Contingently convertible trust preferred interest expense, net of tax 6,413 - Net income/ (loss) for EPS purposes 150,215$ 0.29$ (61,489)$ (0.15)$

Non GAAP adjustments to adjust antidilutive EPS

Net income available to common shareholders -$ (61,489)$

Trust IV expense, net of tax - 6,335

Antidilutive net income/ (loss) for operating EPS calculation -$ (55,154)$

Reconciliation to Operating earnings EPS

Net income/ (loss) for Operating earnings EPS purposes 150,215$ 0.29$ (55,154)$ (0.12)$

Merger related and integration costs 108 0.00 4,067 0.01

Loss on restructuring, other employee severance and debt repurchase charges 23,360 0.05 154,884 0.35

ESOP expense related to freezing of plan (3,266) (0.01) - -

Provision for credit losses - - 8,125 0.02

Loss on economic hedges - - 7,402 0.02

Impairment on FNMA and FHLMC preferred stock - - 43,875 0.10

Proxy and related professional fees (82) (0.00) - -

Operating earnings for EPS purposes 170,335$ 0.33$ 163,999$ 0.37$

Weighted average diluted shares for GAAP EPS 512,641 412,000 Add back of diluted shares for operating EPS not factored into GAAP diluted shares due to antidilution (1) - 33,599 Adjusted weighted average diluted shares for Operating EPS 512,641 445,599

(1) The conversion of warrants and equity awards and the after-tax add back of Sovereign's contingently convertible trust preferred interest expense was excluded from Sovereign's GAAP diluted earnings per share calculation for the first quarter of 2007 since the result would have been anti-dilutive. However, for operating earning purposes these items are dilutive and as a result they have been added back for operating earnings and operating earnings per share purposes.

Reconciliation of Operating Earnings to Reported GAAP Earnings

($ in thousands)

Quarter Ended

Sovereign Bancorp, Inc.