AGREEMENT
 
          THIS AGREEMENT ("Agreement") made as of the 1st day of
March, 1997, between SOVEREIGN BANCORP, INC., a Pennsylvania
business corporation ("Sovereign"), SOVEREIGN BANK, a Federal
Savings Bank (the "Bank"), and JAY S. SIDHU, an individual (the
"Executive").
 
                           WITNESSETH
 
          WHEREAS, Sovereign, the Bank and the Executive entered
into an Agreement dated as of January 1, 1991 (the "1991
Agreement"), regarding, among other things, the employment of the
Executive by Sovereign and by the Bank; and
 
          WHEREAS, Sovereign, the Bank and the Executive entered
into an amended and restated Agreement dated as of September 15,
1992 (the "1992 Agreement"), which Agreement terminated the 1991
Agreement; and
 
          WHEREAS, Sovereign, the Bank and the Executive desire
to enter into a new Agreement regarding, among other things, the
employment of the Executive by Sovereign and by the Bank and,
concurrently therewith, to terminate the 1992 Agreement, all as
hereinafter set forth.
 
                           AGREEMENT:
 
          NOW, THEREFORE, the parties hereto, intending to be
legally bound hereby, agree as follows:
 
          1.   Employment.  Sovereign and the Bank each hereby
employ the Executive, and the Executive hereby accepts employment
with Sovereign and the Bank, on the terms and conditions set
forth in this Agreement.
 
          2.   Duties of Employee.  The Executive shall perform
and discharge well and faithfully such duties as an executive
officer of Sovereign and of the Bank as may be assigned to the
Executive from time to time by the respective Boards of Directors
of Sovereign and of the Bank.  The Executive shall be employed as
President and Chief Executive Officer of Sovereign and of the
Bank, and shall hold such other titles as may be given to him
from time to time by the respective Boards of Directors of
Sovereign and of the Bank.  The Executive shall devote his full
time, attention and energies to the business of Sovereign and of
the Bank and shall not, during the Employment Period (as defined
in Section 3 hereof), be employed or involved in any other
business activity, whether or not such activity is pursued for
gain, profit or other pecuniary advantage; provided, however,
that this Section 2 shall not be construed as preventing the
Executive from (a) investing the Executive's personal assets,
(b) acting as a member of the Board of Directors of Sovereign,
the Bank or any other corporation or as a member of the Board of
Trustees of any other organization, or (c) being involved in any
other activity with the prior approval of the Board of Directors
of Sovereign.
 
          3.   Term of Employment.  The Executive's employment
under this Agreement shall be for a period (the "Employment
Period") commencing upon the date of this Agreement and ending at
the end of the term of this Agreement pursuant to Section 17
hereof, unless the Executive's employment is sooner terminated in
accordance with Section 5 hereof or one of the following
provisions:
 
               (a)  The Executive's employment under this
Agreement may be terminated at any time during the Employment
Period for "Cause" (as herein defined), by action of the Boards
of Directors of Sovereign and of the Bank, upon giving notice of
such termination to the Executive at least fifteen (15) days
prior to the date upon which such termination shall take effect. 
As used in this Agreement, "Cause" means any of the following
events:
 
                    (i)  the Executive is convicted of or enters
     a plea of guilty or nolo contendere to a felony, a crime of
     falsehood, or a crime involving fraud or moral turpitude, or
     the actual incarceration of the Executive for a period of
     forty-five (45) consecutive days;
 
                    (ii)  the Executive willfully fails to follow
     the lawful instructions of the Board of Directors of
     Sovereign or of the Board of Directors of the Bank after the
     Executive's receipt of written notice of such instructions,
     other than a failure resulting from the Executive's
     incapacity because of physical or mental illness;
 
                    (iii)  the Office of Thrift Supervision or
     any other government regulatory agency recommends or orders
     in writing that the Bank terminate the employment of the
     Executive with the Bank or relieve him of his duties as such
     relate to the Bank; or
 
                    (iv)  the Executive violates the covenant not
     to compete contained in Section 8 hereof.
 
Notwithstanding the foregoing, the recommendation or order of the
Office of Thrift Supervision or any other government regulatory
agency referred to in Section 3(a)(iii) shall not constitute
"Cause" giving Sovereign the right to terminate this Agreement as
it relates to Sovereign unless:
 
                    (i)  such recommendation or order results
     from an assessment against the Executive of a final
     unappealable civil monetary penalty ("tier 3") under
     Section 8(i)(2)(C) of the Federal Deposit Insurance Act; and
 
                    (ii)  such penalty is based on a knowing or
     reckless (a) violation of law or regulation, (b) unsafe or
     unsound practice, or (c) breach of fiduciary duty; and
 
                    (iii)  in the case of each of (a), (b) and
     (c) above, is either (A) intentionally concealed by the
     Executive from the Board (and is not actually known by the 
     Board) or (B) committed by the Executive after repeated
     warnings by the Board or the Office of Thrift Supervision;
     and
 
                    (iv)  in the case of each of (a), (b) and (c)
     above, results in a substantial loss to Bank.
 
In addition, the Executive's employment under this Agreement
shall not be deemed to have been terminated for "Cause" under
Sections 3(a)(i) or (ii) above if such termination took place
solely as a result of:
 
                    (i)  questionable judgment on the part of the
     Executive;
 
                    (ii)  any act or omission believed by the
     Executive, in good faith, to have been in, or not opposed
     to, the best interests of Sovereign or of the Bank; or
 
                    (iii)  any act or omission in respect of
     which a determination could properly be made that the
     Executive met the applicable standard of conduct prescribed
     for indemnification or reimbursement or payment of expenses
     under the Articles of Incorporation or By-laws of Sovereign
     or the Charter or By-laws of the Bank or the directors' and
     officers' liability insurance of Sovereign or the Bank, in
     each case as in effect at the time of such act or omission.
 
If the Executive's employment is terminated under the provisions
of this Section 3(a), then all rights of the Executive under
Section 4 hereof shall cease as of the effective date of such
termination.
 
               (b)  The Executive's employment under this
Agreement may be terminated at any time during the Employment
Period without "Cause" (as defined in Section 3(a) hereof), by
action of the Boards of Directors of Sovereign and of the Bank,
upon giving notice of such termination to the Executive at least
thirty (30) days prior to the date upon which such termination
shall take effect.  If the Executive's employment is terminated
under the provisions of this Section 3(b), then the Executive
shall be entitled to receive the compensation set forth in
Section 6.
 
               (c)  If the Executive retires or dies, the
Executive's employment under this Agreement shall be deemed
terminated as of the date of the Executive's retirement or death,
and all rights of the Executive under Section 4 hereof shall
cease as of the date of such termination and any benefits payable
to the Executive shall be determined in accordance with the
retirement and insurance programs of Sovereign and of the Bank
then in effect.
 
               (d)  If the Executive is incapacitated by
accident, sickness, or otherwise so as to render the Executive
mentally or physically incapable of performing the services 
required of the Executive under Section 2 of this Agreement for a
continuous period of six (6) months, then, upon the expiration of
such period or at any time thereafter, by action of the Boards of
Directors of Sovereign and of the Bank, the Executive's
employment under this Agreement may be terminated immediately
upon giving the Executive notice to that effect.  If the
Executive's employment is terminated under the provisions of this
Section 3(d), then all rights of the Executive under Section 4
hereof shall cease as of the last business day of the week in
which such termination occurs and the Executive will thereafter
be entitled to the disability benefits provided under Section 7.
 
          4.   Employment Period Compensation.
 
               (a)  Salary.  For services performed by the
Executive under this Agreement, Sovereign and the Bank shall pay
the Executive a salary, in the aggregate, during the Employment
Period, at the rate of $295,000 per year, payable at the same
times as salaries are payable to other executive employees of
Sovereign or of the Bank.  Sovereign and/or the Bank may, from
time to time, increase the Executive's salary, and any and all
such increases shall be deemed to constitute amendments to this
Section 4(a) to reflect the increased amounts, effective as of
the dates established for such increases by the Board of
Directors of Sovereign or of the Bank in the resolutions
authorizing such increases.
 
               (b)  Bonus.  For services performed by the
Executive under this Agreement, Sovereign and the Bank shall pay
the Executive a bonus, in the aggregate, during the Employment
Period, in such amounts and at such times, annually, as is
provided in such executive incentive plan for the Executive as
shall be approved by the Board of Directors of Sovereign and in
effect from time to time.  In addition, Sovereign and/or the Bank
may, from time to time, pay such other bonus or bonuses to the
Executive as Sovereign and/or the Bank, in their sole discretion,
deem appropriate.  The payment of any such bonuses shall not
reduce or otherwise affect any other obligation of Sovereign
and/or the Bank to the Executive provided for in this Agreement.
 
               (c)  Other Benefits.  Sovereign and the Bank will
provide the Executive, during the Employment Period, with
insurance, vacation, pension, and other fringe benefits in the
aggregate not less favorable than those received by other
executive employees of Sovereign or of the Bank.
 
               (d)  Salary Deferral.  The Executive may request
that the payment of any portion of his base salary for any year
be deferred.  Such request must be made in writing to Sovereign
and the Bank before the beginning of such calendar year and must
include the period of deferral requested by the Executive (the
"Deferral Period").  If the Boards of Directors of Sovereign and
of the Bank approve such request, the Executive shall be entitled
to receive, at the end of the Deferral Period, the deferred 
portion of his base salary plus interest, which interest shall be
computed by reference to an annual interest rate determined each
year by the Board of Directors of Sovereign.  Any salary which is
deferred as described herein shall be credited to an account on
the books of Sovereign and of the Bank established in the name of
the Executive.  However, this account shall not be funded, and
neither Sovereign nor the Bank shall be deemed to be a trustee
for the Executive with respect to any deferred salary.  The
liabilities of Sovereign and the Bank to the Executive hereunder
are those of a debtor pursuant to such contractual obligations as
are created by this Agreement.  No liabilities of Sovereign and
the Bank which arise under this Section 4(d) shall be deemed to
be secured by any pledge or other encumbrance on any property of
Sovereign or of the Bank.  Sovereign and the Bank shall not be
required to segregate any funds representing such deferred
salary, and nothing herein shall be construed as providing for
such segregation.
 
           5.  Resignation of the Executive for Good Reason.
 
               (a)  The Executive may resign for "Good Reason"
(as herein defined) at any time during the Employment Period, as
hereinafter set forth.  As used in this Agreement, "Good Reason"
means any of the following:
 
                    (i)  any reduction in title or a material
     adverse change in the Executive's responsibilities or
     authority which are inconsistent with, or the assignment to
     the Executive of duties inconsistent with, the Executive's
     status as President and Chief Executive Officer of Sovereign
     and of the Bank;
 
                    (ii)  any reassignment of the Executive which
     requires the Executive to move his principal residence more
     than one hundred (100) miles from Sovereign's principal
     executive office on the date of this Agreement;
 
                    (iii)  any removal of the Executive from
     office except for any termination of the Executive's
     employment under the provisions of Section 3(a) hereof;
 
                    (iv)  any reduction in the Executive's annual
     base salary as in effect on the date hereof or as the same
     may be increased from time to time;
 
                    (v)  any failure by Sovereign and/or the Bank
     to provide the Executive with benefits at least as favorable
     as those enjoyed by the Executive under any of the pension,
     life insurance, medical, health and accident, disability or
     other employee plans of Sovereign or of the Bank in which
     the Executive participated on the date hereof, or the taking
     of any action that would materially reduce any of such
     benefits, unless such reduction is part of a reduction
     applicable in each case to all employees;
 
                    (vi)  any delivery by Sovereign or the Bank
     to the Executive of the written notice of nonrenewal
     provided for in Section 17 hereof; and
 
                    (vii)  any material breach of this Agreement
     of any nature whatsoever on the part of Sovereign or of the
     Bank.
 
               (b)  At the option of the Executive, exercisable
by the Executive within 90 days after the occurrence of the event
constituting "Good Reason," the Executive may resign from
employment under this Agreement by a notice in writing (the
"Notice of Termination") delivered to Sovereign and the Bank and
the provisions of Section 6 hereof shall thereupon apply.
 
          6.   Rights in Event of Certain Termination of
Employment.  In the event that the Executive resigns from
employment for Good Reason, by delivery of a Notice of
Termination to Sovereign and the Bank, or the Executive's
employment is terminated by Sovereign and/or the Bank without
Cause, Executive shall be entitled to receive the amounts and
benefits set forth in this section.
 
               (a)  The Executive will be paid an amount equal to
five (5) times the sum of (i) the highest annual base salary paid
to him at any time under this Agreement, and (ii) the average of
the annual bonuses paid to him with respect to the three (3)
calendar years immediately preceding the year of termination. 
Such amount will be paid to the Executive in sixty (60) equal
monthly installments (without interest), beginning thirty (30)
days following the date of termination of employment.
 
               (b)  For a period of sixty (60) months following
the date of termination of employment, the Executive shall
receive a continuation of all life, disability, medical insurance
and other normal benefits in effect with respect to Executive at
any time during the two (2) years prior to his termination of
employment, or, if Sovereign or the Bank cannot provide such
benefits because the Executive is no longer an employee, a dollar
amount equal to the cost to the Executive of obtaining such
benefits (or substantially similar benefits).  Notwithstanding
the preceding sentence, however, neither Sovereign nor the Bank
shall be required to continue to provide any specific benefit in
the event the Executive secures substantially similar coverage
through other employment (at the employer's cost).  Executive
agrees to promptly advise Sovereign and the Bank in the event the
provisions of the preceding sentence become operable.
 
               (c)  Upon full payment of the compensation due
under Section 6(a) hereof or upon reaching the earliest age at
which the Executive could retire under plans of Sovereign or of
the Bank then in effect, whichever is later, Sovereign and the
Bank shall pay to the Executive annual benefits for life equal to
the difference between (i) what the Executive would be entitled
to under the qualified and nonqualified retirement plans of
Sovereign and of the Bank (including, without limitation, the
Supplemental Executive Retirement Plan and any other enhanced
retirement plans for executives) then in effect if he had
remained in his position (at the annual salary and bonus
determined under Section 6(a)) until such date as his employment
pursuant to  this Agreement would have otherwise terminated
(after giving due effect to all extensions of the term of this
Agreement occurring, pursuant to Section 17 hereof, on any dates
prior to the date on which Executive became entitled to the
compensation and benefits set forth in Section 6(a) and 6(b)
hereof) and assuming that such benefits were paid in the form of
a straight life annuity, and (ii) what he is in fact entitled to,
calculated on the basis of straight life annuities, based on the
actual date of termination.  Any Social Security offset required
under the plans will be the offset in effect on the date of this
calculation.
 
               (d)  In the event that the amounts and benefits
payable under this section, when added to other amounts and
benefits which may become payable to the Executive by Sovereign
and/or the Bank, are such that he becomes subject to the excise
tax provisions of Section 4999 of the Internal Revenue Code of
1996, as amended (the "Code"), Sovereign and the Bank shall pay
him such additional amount or amounts as will result in his
retention (after the payment of all federal, state and local
excise, employment, and income taxes on such payments and the
value of such benefits) of a net amount equal to the net amount
he would have retained had the initially calculated payments and
benefits been subject only to income and employment taxation. 
For purposes of the preceding sentence, the Executive shall be
deemed to be subject to the highest marginal federal, state and
local tax rates.  All calculations required to be made under this
subsection shall be made by Sovereign's independent certified
public accountants, subject to the right of Executive's
representative to review the same.  All such amounts required to
be paid shall be paid at the time any withholding may be required
under applicable law, and any additional amounts to which the
Executive may be entitled shall be paid or reimbursed no later
than fifteen (15) days following confirmation of such amount by
Sovereign's accountants.  In the event any amounts paid hereunder
are subsequently determined to be in error because estimates were
required or otherwise, the parties agree to reimburse each other
to correct such error, as appropriate, and to pay interest
thereon at the applicable federal rate (as determined under Code
Section 1274A for the period of time such erroneous amount
remained outstanding and unreimbursed).  The parties recognize
that the actual implementation of the provisions of this
subsection are complex and agree to deal with each other in good
faith to resolve any questions or disagreements arising
hereunder.
 
          7.   Disability.  In the event the Executive's
employment is terminated pursuant to Section 3(d), he shall be
entitled to the amounts and benefits set forth in this section.
 
               (a)  The Executive shall be paid an amount equal
to 80% of the sum of annual base salary and bonus determined in
the same manner as provided in Section 6(a), less such disability
benefit amounts as are paid to him under any plan maintained by
Sovereign and the Bank.  The amount determined in the preceding
sentence shall be paid in monthly installments (without interest)
until the earliest to occur of (i) the Executive's return to
employment with Sovereign and the Bank, or any other employer,
(ii) his attainment of age 65, or (iii) his death.  Equitable
adjustment of the monthly amount payable hereunder shall be made
during any period following the Executive's return to work on
less than a full-time basis due to partial recovery.
 
               (b)  The Executive shall continue to receive all
life insurance, medical insurance and other normal benefits in
effect with respect to the Executive at any time during the two
(2) years prior to his termination of employment, until the
earliest event described in Section 7(a); provided, however, that
any such benefit shall be continued to the extent he returns to
work on less than a full-time basis and is therefore not entitled
to coverage under his employer's plan or otherwise ineligible for
such benefit.  In addition, the gross amount described in
Section 7(a) and the related years over which such amount is paid
shall be taken into account for qualified and nonqualified plan
purposes, as compensation and years of service to the extent that
such treatment will result in an increase in his overall
retirement benefits.
 
          8.   Covenant Not to Compete.
 
               (a)  The Executive hereby acknowledges and
recognizes the highly competitive nature of the business of
Sovereign and of the Bank and accordingly agrees that, during and
for the applicable period set forth in Section 8(c) hereof, the
Executive shall not:
 
                    (i)  be engaged, directly or indirectly,
     either for his own account or as agent, consultant,
     employee, partner, officer, director, proprietor, investor
     (except as an investor owning less than 5% of the stock of a
     publicly owned company) or otherwise of, any person, firm,
     corporation, or enterprise engaged, in (1) the banking or
     financial services industry, or (2) any other activity in
     which Sovereign or any of its subsidiaries is engaged during
     the Employment Period, in any county in which, at any time
     during the Employment Period or at the date of termination
     of the Executive's employment, a branch, office or other
     facility of Sovereign or any of its subsidiaries is located,
     or in any county contiguous to such a county, including
     contiguous counties located outside of the Commonwealth of
     Pennsylvania (the "Non-Competition Area"); and
 
                    (ii)  provide financial or other assistance
     to any person, firm, corporation, or enterprise engaged in
     (1) the banking or financial services industry, or (2) any
     other activity in which Sovereign or any of its subsidiaries
     is engaged during the Employment Period, in the
     Non-Competition Area.
 
               (b)  It is expressly understood and agreed that,
although the Executive, Sovereign and the Bank consider the
restrictions contained in Section 8(a) hereof reasonable for the
purpose of preserving for Sovereign and its subsidiaries their
good will and other proprietary rights, if a final judicial
determination is made by a court having jurisdiction that the
time or territory or any other restriction contained in
Section 8(a) hereof is an unreasonable or otherwise unenforceable
restriction against the Executive, the provisions of Section 8(a)
hereof shall not be rendered void but shall be deemed amended to
apply as to such maximum time and territory and to such other
extent as such court may judicially determine or indicate to be
reasonable.
 
               (c)  The provisions of this Section 8 shall be
applicable commencing on the date of this Agreement and ending on
one of the following periods:
 
                    (i)  at the termination of the payments and
     benefits provided under Section 6 or 7, as applicable;
     provided, however, that this clause shall not apply in the
     event Executive's employment occurs following a Change in
     Control; or
 
                    (ii)  in all other cases, the date of
     Executive's termination of employment.
 
               (d)  For purposes of this Agreement, the term
"Change in Control" shall have the same meaning as is ascribed to
such term in the Sovereign Bancorp, Inc. 1993 Stock Option Plan,
as in effect on the date of this Agreement.
 
          9.   Remedies.  Executive acknowledges and agrees that
the remedy at law of Sovereign and of the Bank for a breach or
threatened breach of any of the provisions of Section 8 hereof
would be inadequate and, in recognition of this fact, in the
event of a breach or threatened breach by the Executive of any of
the provisions of Section 8 hereof, it is agreed that, in
addition to the remedy at law, Sovereign and the Bank shall be
entitled to, without posting any bond, and the Executive agrees
not to oppose any request of Sovereign and the Bank for,
equitable relief in the form of specific performance, a temporary
restraining order, a temporary or permanent injunction, or any 
other equitable remedy which may then be available.  Nothing
herein contained shall be construed as prohibiting Sovereign and
the Bank from pursuing any other remedies available to them for
such breach or threatened breach.
 
          10.  Arbitration.  Sovereign, the Bank and Executive
recognize that in the event a dispute should arise between them
concerning the interpretation or implementation of this
Agreement, lengthy and expensive litigation will not afford a
practical resolution of the issues within a reasonable period of
time.  Consequently, each party agrees that all disputes,
disagreements and questions of interpretation concerning this
Agreement are to be submitted for resolution to the American
Arbitration Association ("Association") in Philadelphia,
Pennsylvania.  Sovereign and the Bank, or Executive, may initiate
an arbitration proceeding at any time by giving notice to the
others in accordance with the rules of the Association.  The
Association shall designate a single arbitrator to conduct the
proceeding, but Sovereign and the Bank, and the Executive, may,
as a matter of right, require the substitution of a different
arbitrator chosen by the Association.  Each such right of
substitution may be exercised only once.  The arbitrator shall
not be bound by the rules of evidence and procedure of the courts
of the Commonwealth of Pennsylvania but shall be bound by the
substantive law applicable to this Agreement.  The decision of
the arbitrator, absent fraud, duress, incompetence or gross and
obvious error of fact, shall be final and binding upon the
parties and shall be enforceable in courts of proper
jurisdiction.  Following written notice of a request for
arbitration, Sovereign and the Bank, and the Executive, shall be
entitled to an injunction restraining all further proceedings in
any pending or subsequently filed litigation concerning this
Agreement, except as otherwise provided herein.
 
          11.  Legal Expenses.  Sovereign and/or the Bank shall
pay to the Executive all reasonable legal fees and expenses when
incurred by the Executive in seeking to obtain or enforce any
right or benefit provided by this Agreement.
 
          12.  Notices.  Any notice required or permitted to be
given under this Agreement shall, to be effective hereunder, be
given to both Sovereign and the Bank, in the case of notices
given by the Executive, and shall, to be effective hereunder, be
given by both Sovereign and the Bank, in the case of notices
given to the Executive.  Any such notice shall be deemed properly
given if in writing and if mailed by registered or certified
mail, postage prepaid with return receipt requested, to the
residence of the Executive, in the case of notices to the
Executive, and to the respective principal offices of Sovereign
and of the Bank, in the case of notices to Sovereign and to the
Bank.
 
          13.  Waiver.  No provision of this Agreement may be
modified, waived, or discharged unless such waiver, modification,
or discharge is agreed to in writing and signed by the Executive,
an executive officer of Sovereign, and an executive officer of 
the Bank, each such officer specifically designated by the Boards
of Directors of Sovereign and of the Bank, respectively.  No
waiver by any party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision
of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.
 
          14.  Assignment.  This Agreement shall not be
assignable by any party hereto, except by Sovereign and the Bank
to any successor in interest to the respective businesses of
Sovereign and the Bank.
 
          15.  Entire Agreement.  This Agreement contains the
entire agreement of the parties relating to the subject matter of
this Agreement and, in accordance with the provisions of
Section 23 hereof, supersedes any prior agreement of the parties.
 
          16.  Successors, Binding Agreement.
 
               (a)  Sovereign and the Bank will require any
successor (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the
business and/or assets of Sovereign and/or the Bank to expressly
assume and agree to perform this Agreement in the same manner and
to the same extent that Sovereign and the Bank would be required
to perform it if no such succession had taken place.  Failure by
Sovereign and the Bank to obtain such assumption and agreement
prior to the effectiveness of any such succession shall
constitute a material breach of this Agreement.  As used in this
Agreement, "Sovereign" and the "Bank" shall mean Sovereign and
the Bank as hereinbefore defined and any successor to the
business and/or assets of Sovereign and/or the Bank as aforesaid
which assumes and agrees to perform this Agreement by operation
of law, or otherwise.
 
               (b)  This Agreement shall inure to the benefit of
and be enforceable by the Executive's personal or legal
representatives, executors, administrators, heirs, distributees,
devisees, and legatees.  If the Executive should die while any
amount is payable to the Executive under this Agreement if the
Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee, or
other designee, or, if there is no such designee, to the
Executive's estate.
 
          17.  Termination.
 
               (a)  Unless the Executive's employment is
terminated pursuant to the provisions of Section 3 or Section 5
hereof, the term of this Agreement shall be for a five (5) year
period commencing on March 1, 1997 and ending on February 28,
2002; provided, however, that this Agreement shall be
automatically renewed on March 1, 1998 for the five (5) year
period commencing March 1, 1998 and ending on February 28, 2003,
unless either party shall give written notice of nonrenewal to
the other party on or before December 31, 1997, in which case
this Agreement shall continue in effect through February 28,
2002; and further provided that if this Agreement is renewed on
March 1, 1998 it shall be automatically renewed on March 1 of
each subsequent year (the "Annual Renewal Date") for a period
ending five (5) years from each Annual Renewal Date unless either
party shall give written notice of nonrenewal to the other party
at least sixty (60) days prior to an Annual Renewal Date, in
which case this Agreement shall continue in effect for a term
ending four (4) years from the Annual Renewal Date immediately
following such notice.
 
               (b)  Any termination of the Executive's employment
under this Agreement or of this Agreement shall not affect the
benefit and noncompetition provisions of Sections 6, 7, 8 or 11
hereof, which shall survive any such termination and remain in
full force and effect in accordance with their respective terms.
 
          18.  No Mitigation or Offset.  The Executive shall not
be required to mitigate the amount of any payment provided for in
this Agreement by seeking employment or otherwise; nor shall any
amounts or benefits payable or provided hereunder be reduced in
the event he does secure employment, except as otherwise provided
herein.
 
          19.  Validity.  The invalidity or unenforceability of
any provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.  In addition, if (a) this
Agreement or any provision of this Agreement is determined or
declared by a court or any governmental agency to be invalid or
unenforceable as it relates to the Bank or (b) the Office of
Thrift Supervision or any other government regulatory agency
recommends or orders that the Bank terminate the employment of
the Executive with the Bank or relieve him of his duties as such
relate to the Bank, the Agreement or such provision shall
nevertheless be and remain an obligation of Sovereign enforceable
against it in accordance with its terms, notwithstanding any such
determination or declaration of any such termination of the
Executive's employment with the Bank.
 
          20.  Applicable Law.  This Agreement shall be governed
by and construed in accordance with the domestic laws (but not
the law of conflict of laws) of the Commonwealth of Pennsylvania.
 
          21.  Headings.  The headings of the Sections of this
Agreement are for convenience only and shall not control or
affect the meaning or construction or limit the scope or intent
of any of the provisions of this Agreement.
 
          22.  Guaranty.  Sovereign hereby irrevocably and
unconditionally guarantees to the Executive the full and timely
performance by the Bank of each and every obligation of the Bank
contained in this Agreement.
 
          23.  Effective Date; Termination of Prior Agreement. 
This Agreement shall become effective immediately upon the
execution and delivery of this Agreement by the parties hereto. 
Upon the execution and delivery of this Agreement by the parties
hereto, any prior agreement relating to the subject matter
hereof, including without limitation the 1992 Agreement, shall be
automatically terminated and be of no further force or effect.
 
          IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
 
                             SOVEREIGN BANCORP, INC.
 
                             By/s/ Richard E. Mohn               
                                        Chairman
(SEAL)
                             Attest:/s/ Lawrence M. Thompson, Jr.
                                        Secretary
 
                                      ("Sovereign")
 
                             SOVEREIGN BANK, a Federal Savings
                             Bank
 
(SEAL)                       By/s/ Richard E. Mohn               
                                        Chairman
 
                             Attest:/s/ Lawrence M. Thompson, Jr.
                                        Secretary
 
                                         ("Bank")
 
Witness:
 
/s/ Patricia Zong            /s/ Jay S. Sidhu              (SEAL)
                                        Jay S. Sidhu
 
                                        ("Executive")