THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Sovereign Bancorp, Inc. (SOV)

5/1/2006 10K Information

Landscape Maintenance Relationship: Mr. Daniel K. Rothermel. Sovereign Bank paid approximately $4,000 in 2005 to a lawn care service operation owned by Mr. Rothermel for outside grounds maintenance services provided at approximately twenty Bank properties. The services comprised less than one percent of the gross revenue of the ground maintenance operation and were priced at market and contained no preferential terms. These services were terminated at Mr. Rothermel’s request at the end of the 2005 contract period.

Because (i) the dollar amounts of the transactions between Sovereign Bank and Mr. Rothermel or his affiliates was insignificant to both Sovereign Bank and Mr. Rothermel or his affiliates, (ii) such transactions were priced at market and did not contain preferential terms, and (iii) the services were terminated, the Board has determined that this relationship did not impair Mr. Rothermel’s independence.

Lease Rental Relationships: Mr. Cameron C. Troilo. As of December 31, 2005, Sovereign Bank owned and leased approximately 700 facilities throughout its extensive Mid-Atlantic and New England market areas. As of December 31, 2005, Mr. Troilo or his affiliates owned 23 commercial properties, and leased approximately 375,000 square feet of space to approximately 90 tenants, including Sovereign Bank and other banking tenants.

In 2005, Sovereign Bank, as tenant, paid approximately $454,087 of net rent ($611,463 of gross rent less $157,376 of pass-through expenses) with respect to two properties that Sovereign Bank currently leases from Mr. Troilo and one of his affiliates. Sovereign Bank paid Mr. Troilo an average base rent of $19.85 per square foot ($26.74 per square foot including pass-through expenses) for the 20,820 square feet Sovereign uses for a branch facility and office space. Sovereign Bank paid 6th & Bay Group, LLC, an entity in which Mr. Troilo owns a 50% equity interest, an average base rent of $19.12 per square foot ($25.67 per square foot including pass-through expenses) for the 4,268 square feet Sovereign used for office space. Trammell Crow Company, a nationally recognized real estate management firm, has advised Sovereign Bank that its leases with Mr. Troilo are on market terms. In March 2006, Mr. Troilo received a bona fide offer from another bank to lease 4,000 square feet to such other bank for annual rental payments that would be substantially more than the annual rent Sovereign pays to Mr. Troilo for such space. Mr. Troilo has also offered to terminate all leases with Sovereign Bank in exchange for a one-time payment of $500,000, which Sovereign Bank has declined to accept. Both 2005 gross and 2005 net rental payments by Sovereign Bank to Mr. Troilo constituted less than five percent of Mr. Troilo’s 2005 gross income.

The Board determined that these lease relationships did not impair Mr. Troilo’s independence because, among other things: • the rental payments did not represent a material portion of Mr. Troilo’s income;

• the rental payments were at prevailing market rates or better; and

• the leases contain rates and terms which would enable Mr. Troilo, who is in the business of developing and leasing properties, to replace Sovereign and its rental stream at any time without loss, so that such leases were not important to Mr. Troilo.

Civic Relationship: Mr. P. Michael Ehlerman. Mr. Ehlerman serves as non-executive Chairman of the Board of Directors of the Berks County Convention Center Authority (“BCCCA”), a Pennsylvania municipal authority formed by a Pennsylvania County to build, own and operate a sports arena and to renovate, own and operate a performing arts center. The remainder of the board consists of appointees of city and county elected public officials and other designees from the private sector. Mr. Ehlerman does not spend a substantial amount of time in his capacity as Chairman, receives no compensation and has no other material financial interest, either direct or indirect, in BCCCA.

Sovereign Bank has extended to BCCCA a $100,000 commercial line of credit on market terms and conditions and, after outbidding other large regional financial institutions, made an additional loan, in 1999, in the amount of $12.2 million. In addition, Sovereign Bank has exposure of approximately $5.3 million related to interest rate swap transactions involving BCCCA debt. As of December 31, 2005, BCCCA had no outstanding loans under the line of credit and $12.2 million outstanding under its separate loan from Sovereign Bank. BCCCA paid Sovereign Bank approximately $400,000 in interest and fees during 2005. These loans are not non-accrual, past due, restructured or potential problem loans and are secured by, among other things, hotel occupancy tax revenues. As of March 31, 2006, BCCCA maintained a deposit account balance with Sovereign Bank in excess of $2.5 million.

The Board determined that the BCCCA relationship does not impair Mr. Ehlerman’s independence because of the facts set forth above, with emphasis on the following:

• Mr. Ehlerman has no direct or indirect material financial interest in BCCCA and is not an executive officer of BCCCA;

• the $12.2 million loan was made as a result of a competitive process and the remaining banking relationship with BCCCA is on market rates and terms and create no direct or indirect financial benefit to Mr. Ehlerman; and

• the loans and deposits are not non-accrual, past-due, restructured or potential problem loans and are well collateralized.

6/6/2006 8K Information

On October 24, 2005, Sovereign Bancorp, Inc., a Pennsylvania corporation (“ Sovereign ”), and Banco Santander Central Hispano, S.A., a sociedad anónima (“ Santander ”), entered into an Investment Agreement, dated as of October 24, 2005 (the “ Investment Agreement ”), a copy of which was filed as Exhibit 10.1 to such Current Report on Form 8-K. On November 22, 2005, Sovereign and Santander approved certain amendments to the Investment Agreement as set forth in an Amendment to Investment Agreement, made as of November 22, 2005 (the “ First Amendment ”), a copy of which was filed as Exhibit 10.2 to such Current Report on Form 8-K. On May 31, 2006, in connection with closing the transactions contemplated by the Investment Agreement, Sovereign and Santander further amended the Investment Agreement, pursuant to a Second Amendment to Investment Agreement, dated as of May 31, 2006 (the “ Second Amendment ”). The Second Amendment provides that, in connection with the exercise by Santander of its gross up rights under Section 2.04 of the Investment Agreement, Santander will have the option of purchasing additional shares to maintain its ownership interest in open market transactions instead of purchasing shares directly from Sovereign if the treasury share exception to NYSE Rule 312.03 shall have been altered or eliminated, or proposed to be altered or eliminated, on a basis which could reasonably apply to the purchase of shares pursuant Santander’s gross up rights. Mr. Inciarte is Executive Vice President of Santander.

3/22/2005 Proxy Information

Mr. Cameron C. Troilo previously served as Vice Chairman of Yardley Savings & Loan Association, which was acquired by Sovereign Bank, which Sovereign Bancorp, Inc. is the parent company of, in 1989.

3/22/2004 Proxy Information

Cameron C. Troilo previously served as Vice Chairman of Yardley Savings & Loan Association, which was acquired by Sovereign Bank in 1989.

Indemnification

The Bylaws of Sovereign provide for (i) indemnification of directors, officers, employees and agents of Sovereign and its subsidiaries and (ii) the elimination of a director’s liability for monetary damages, each to the fullest extent permitted by Pennsylvania law. Pennsylvania law provides that a Pennsylvania corporation may indemnify directors, officers, employees and agents of the corporation against liabilities they may incur in such capacities for any action taken or any failure to act, whether or not the corporation would have the power to indemnify the person under any provision of law, unless such action or failure to act is determined by a court to have constituted recklessness or willful misconduct. Pennsylvania law also permits the adoption of a Bylaw amendment, approved by shareholders, providing for the elimination of a director’s liability for monetary damages for any action taken or any failure to take any action unless (i) the director has breached or failed to perform the duties of his office and (ii) the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness.

Directors and officers of Sovereign are also insured against certain liabilities for their actions, as such, by an insurance policy obtained by Sovereign. The premium for 2003 allocable to directors and officers was $1,225,058.

On December 21, 1993, Sovereign Bank entered into an Indemnification Agreement (the “Indemnification Agreement”) with Mr. Sidhu. The Indemnification Agreement provides that Sovereign Bank will indemnify Mr. Sidhu to the fullest extent permitted by applicable law and Regulation for all expenses, judgments, fines and penalties incurred in connection with, and amounts paid in settlement of, any claim relating to, among other things, the fact that Mr. Sidhu is or was a director or officer of Sovereign or Sovereign Bank (an “Indemnifiable Claim”). Sovereign Bank will also advance expenses upon Mr. Sidhu’s request in connection with any Indemnifiable Claim.

Sovereign Bank’s indemnification obligations are subject to the condition that a Reviewing Party (as defined in the Indemnification Agreement) shall not have determined that Mr. Sidhu would not be permitted to be indemnified under applicable law. To the extent that it is subsequently determined that Mr. Sidhu is not entitled to indemnification, he is required to reimburse Sovereign Bank for any amounts previously paid.

Upon a Change in Control (as defined in the Indemnification Agreement) of Sovereign or Sovereign Bank, all determinations regarding Sovereign Bank’s indemnification obligations under the Indemnification Agreement will be made by Independent Legal Counsel (as defined in the Indemnification Agreement). Upon a Potential Change in Control (as defined in the Indemnification Agreement) of Sovereign or Sovereign Bank, Sovereign Bank will, upon written request by Mr. Sidhu, create and fund a trust for the benefit of Mr. Sidhu in order to ensure satisfaction of Sovereign Bank’s indemnification obligations under the Indemnification Agreement.

Under applicable federal banking laws, Mr. Sidhu (and any other director or officer) is not permitted to be indemnified either by Sovereign or any insurance policy obtained by Sovereign against any civil money penalty imposed by any federal banking agency as a result of any final order or settlement involving a violation of banking laws by such person.

Indebtedness of Management

Sovereign Bancorp, Inc. has no loans outstanding to directors, officers or employees of Sovereign.

Sovereign Bank offers commercial loans, consumer loans and residential mortgage loans to directors and employees of Sovereign and its subsidiaries only as permitted by applicable federal banking laws. Under applicable law, Sovereign employees with at least one year of continuous service are eligible to receive preferential terms with respect to interest rates and loan fees on consumer loans and residential mortgage loans. Specifically, interest rates offered to such persons on consumer loans and residential mortgage loans were up to 1% lower than rates offered to nonaffiliated persons for similar transactions, and certain loan origination fees were waived. None of these loans were granted to directors or executive officers of Sovereign on terms that were preferential to the terms applicable to employees of Sovereign and Sovereign Bank at the time any such loan was made. All other loans made by Sovereign Bank to directors and executive officers of Sovereign (i) were made in the ordinary course of business, (ii) were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions by Sovereign Bank with non-affiliated parties, except as permitted by applicable federal banking law and as described above, and (iii) did not involve more than the normal risk of collectability or present other unfavorable features, except as otherwise described below.

3/21/2003 Proxy Information

Sovereign Bank offers consumer loans and residential mortgage loans to directors and employees of Sovereign and its subsidiaries only as permitted by applicable federal banking laws. Under applicable law, Sovereign employees with at least one year of continuous service are eligible to receive preferential terms with respect to interest rates and loan fees. Specifically, interest rates offered to such persons were up to 1% lower than rates offered to nonaffiliated persons for similar transactions, and certain loan origination fees were waived. None of these loans were granted to directors or executive officers of Sovereign on terms that were preferential to the terms applicable to employees of Sovereign and Sovereign Bank at the time any such loan was made. All other loans made by Sovereign Bank to directors and executive officers of Sovereign (i) were made in the ordinary course of business, (ii) were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions by Sovereign Bank with non-affiliated parties, except as permitted by applicable federal banking law and as described above, and (iii) did not involve more than the normal risk of collectibility or present other unfavorable features, except as otherwise described below.

Under an executive loan program unanimously approved by non-interested members of the Board of Directors of Sovereign in 1999, Mr. Sidhu, Mr. Marlo, Mr. Thompson, and Mr. Campanelli each had outstanding loans from Sovereign in 2002 with principal amounts that did not exceed $6.9 million, $455,106, $1.1 million and $27,091, respectively. All such loans were repaid in full before December 31, 2002.