Sovereign Bancorp, Inc.

Lehman BrothersFourth Annual Conference

New York CitySeptember 14, 2006

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

3

Forward-Looking StatementsIn addition, this presentation and filing contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the financial condition, results of operations and business of Sovereign Bancorp, Inc. and the merger of Independence Community Bank Corp. with and into Sovereign that are subject to various factors which could cause actual results to differ materially from such projections or estimates. Such factors include, but are not limited to, the following: (1) the businesses of Independence Community Bank Corp. may not be combined successfully with Sovereign’s businesses, or such combinations may take longer to accomplish than expected; (2) expected cost savings from the merger cannot be fully realized or realized within the expected timeframes; (3) operating costs, customer loss and business disruption following the merger, including adverse effects on relationships with employees, may be greater than expected; (4) governmental approvals of the merger may not be obtained, or adverse regulatory conditions may be imposed in connection with government approvals of the merger; (5) adverse governmental or regulatory policies may be enacted; (6) the interest rate environment may adversely impact the expected financial benefits of the merger, and compress margins and adversely affect net interest income; (7) the risks associated with continued diversification of assets and adverse changes to credit quality; (8) competitive pressures from other financial service companies in Independence Community Bank Corp.’s and Sovereign’s markets may increase significantly; (9) the risk of an economic slowdown that would adversely affect credit quality and loan originations; (10) other economic, competitive, governmental, regulatory, and technological factors affecting Sovereign's operations, integrations, pricing, products and services; and (11) acts of terrorism or domestic or foreign military conflicts; and acts of God, including natural disasters. Other factors that may cause actual results to differ from forward-looking statements are described in Sovereign’s filings with the Securities and Exchange Commission.

Overview of Sovereign

5

An Exceptional Franchise Serving the Northeastern United States

17th largest bank in U.S. with $89 billion in

assets

785 branches& over

2,000 ATM’s

Approx. 12,000 team members

Source: SNL DataSource

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

New York 222 2.10% 9

Philadelphia 84 3.05% 7

Boston 175 6.58% 3

Providence 56 6.03% 3

Hartford 29 4.58% 6

6

Sovereign’s DemographicsMedian

Household Income1 ($)

Hispanic Population2

(%)Number of

Universities3

Number of Students4

Connecticut $63,462 10.0% 45 170,616

Maryland 61,384 4.7 62 300,269

Massachusetts 63,171 8.3 122 431,224

New Hampshire 59,545 1.6 25 68,523

New Jersey 63,135 14.3 58 361,733

New York 51,187 16.8 307 1,107,270

Pennsylvania 48,534 3.2 262 654,826

Rhode Island 49,924 9.1 13 77,417

Sovereign’s Footprint 59,010 16.05

United States 49,747 14.11 Median Household Income as of 20052 Hispanic Population as of 20043 Number of degree-granting institutions as of 20044 Number of students enrolled in degree-granting institutions as of 20025 Excluding CA, TX and FL 41% of Hispanic population is in Sovereign’s footprint

7

Combined ATM Branding Opportunities

Sovereign ATM sites - 905

CVS Locations - 879

ICBC ATMs sites - 237

NY/NJ CVS - 484

8

Sovereign Has Significantly Transformed Its Business Model Over The Past Decade…

Sovereign 1995Sovereign 1995

Sovereign 1995Sovereign 1995

Peers 2005Peers 2005

Peers 2005Peers 2005

Sovereign 2005Sovereign 2005

Sovereign 2005Sovereign 2005

Residential RE85.5%

Consumer0.9%

C&I0.3%

Commercial RE3.5% HE

9.8%Residential RE

28.4%

Consumer11.2%

C&I21.5%

Commercial RE16.5%

HE22.4%

Residential RE16.7%

Consumer8.2%

C&I32.0%

Commercial RE23.9%

HE18.1%

Other1.1%

Deposit Composition (%)Deposit Composition (%)

Loan Composition (%)Loan Composition (%)

Transaction10.9%

Savings & MMDA32.7%Retail CD

54.2%

Jumbo CD2.2%

Transaction40.0%

Savings & MMDA30.2%

Retail CD14.9%

Jumbo CD14.9%

Transaction 28.5%

Savings & MMDA39.0%

Retail CD16.1%

Jumbo CD11.0%

Foreign5.4%

Loan yield: 7.29%Peer loan yield: 8.89%Spread to peers: (1.60%)

Loan yield: 5.72%Peer loan yield: 5.95%Spread to peers: (0.23%)

Cost of deposits: 4.25%Peer cost of deposits: 3.56%Spread to peers: 0.69%

Cost of deposits: 2.00%Peer cost of deposits: 1.69%Spread to peers: 0.31%

Source: Wall Street Research. Bank peers includes ASO, BBT, CMA, FITB, KEY, MI, MTB, NCC, PNC, RF, STI and UB

9

$4.1$8.6 $7.3 $8.5 $11.5 $12.9

$23.7 $25.6$27.4 $28.4

$35.1

$0.9$0.1 $2.2 $3.9

$0.5$11.6

($0.3) $1.3 ($0.0)$4.2

$2.9

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Organic deposits Net change in deposits from acquisitions/ (sales)Deposits ($ billion)Deposits ($ billion)

…through a Combination of Organic Growth and Acquisitions…

$58.3$48.3$43.5$38.1$35.8

$23.3$25.1$16.7$12.6$15.2$7.2

$5.4$6.2

($0.0)$1.5($0.3)

$10.2$1.5$5.3

$5.1$0.1$0.9

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Organic assets Net change in assets from acquisitions/ (sales)Assets ($ billion)Assets ($ billion)

Organic growth (15.7%) (11.0%) (6.5%) 7.4% (3.4%) 9.6% 1.9% 3.7% 7.8%

Organic growth (17.8%) (5.7%) 14.7% (12.5%) 6.9% 7.2% 10.0% 11.0% 7.0%

Organic CAGR 8.8%CAGR 22.4%

Organic CAGR 13.6%CAGR 22.9%

Source: Wall Street Research.Note: Data as of December 31, 2005; organic asset and deposit data is adjusted for whole company and branch acquisitions and divestitures. 2005YE data not pro forma for pending acquisition of ICBC

$5.0$8.7

$9.5$12.3 $12.0

$24.5 $23.3$26.9 $27.3

$32.6

$38.0

$8.1$15.3

$17.7$21.9

$26.6$33.5

$35.5$39.6

$43.5

$54.5

$63.7

10

Key Operating RatiosKey Operating Ratios

… While Continuing to Improve in Key Operating Ratios

Source: Wall Street Research. Note: Financial data as reported, not pro forma for pending acquisitions. Bank peers includes ASO, BBT, CMA, FITB, KEY, MI, MTB, NCC, PNC, RF, STI and UB; thrift peers include AF, GDW, NYB and WM¹ Interest spread defined as yield on interest-earning assets less cost of interest bearing liabilities² Operating leverage defined as ratio of YOY revenue growth over YOY core cash operating expense growth

Continued improvement in profitability ratios driven by• Greater consumer and commercial loans; conservative asset quality• Non-CD deposit growth• Expense control

High quality earnings; prudent risk management Improving capital ratios

11

Positive Operating Leverage

53.49%52.90%

51.31%

49.00%50.33%

2001 2002 2003 2004 2005

Results in Continued Improvement in Efficiency Ratio

2005 2004 % Change

Total Revenue $2.2bn $1.9bn 18.7%

G&A Expenses $1.1bn $ .9bn 15.5%

Operating Leverage 1.2x

Efficiency ratio equals G&A expenses as a percentage of total revenue, defined as the sum of net interest income and total fees and other income before securities transactions

12

Improving Credit Quality

1.03% 1.00%0.76%

0.43%0.39%

2001 2002 2003 2004 2005

Non-Performing Loans toTotal Loans

0.42%

0.58% 0.55%

0.20%

0.36%

2001 2002 2003 2004 2005

Net Charge-offsto Average Loans

116.0% 116.0%149.0%

231.0%285.0%

2001 2002 2003 2004 2005

Allowance toNon-Performing Assets

13

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

2001 2002 2003 2004 2005

Net

Incom

e

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

Earn

ings p

er

Share

Net Income Operating/Cash Net IncomeGAAP EPS Operating/Cash EPS

Consistent Growth in Operating/Cash Earnings4-year CAGR $ Per ShareGAAP Net Income – 55% 41%Operating/Cash Earnings – 19% 7%

Operating/cash earnings excludes most non-cash, non-operating charges. Please see appendix for reconciliation of net income to operating/cash earnings, as well as related per share amounts.Source: 2005 annual report

14

Improving Operating Metrics

1.09% 1.09%1.14%

1.26%

1.19%

2001 2002 2003 2004 2005

Improved Operating Returnon Average Assets

52.31%

35.62%27.87% 27.71%25.94%

2001 2002 2003 2004 2005

Operating/Cash Return onAverage Tangible Equity

$720$1,141

$1,662

$2,758$2,321

2001 2002 2003 2004 2005

Average Tangible Equity($ in millions)

1509/01/06 closing price of $20.72

Percent Appreciation

3-Year Stock Price Performance

10.5%

25.6%30.1%

21.8%

31.7%

75.0%

100.0%

125.0%

150.0%

Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06

Rel

ativ

e In

dex

ed P

rice

s

Sovereign S&P 500 Banks Index S&P 500 Dow Jones LB Mid-Cap Banks

Above Average Shareholder Value Creation

16

Above Average Shareholder Value Creation

09/01/06 closing price of $20.72

5-Year Stock Price PerformancePercent

Appreciation

50.0%

75.0%

100.0%

125.0%

150.0%

175.0%

200.0%

225.0%

250.0%

Sep-01 Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06

Rel

ativ

e In

dex

ed P

rice

s

Sovereign S&P 500 Banks Index S&P 500 Dow Jones LB Mid-Cap Banks

96.4%

15.7%15.2%

40.4%

27.9%

17

Above Average Shareholder Value Creation

09/01/06 closing price of $20.72

10-Year Stock Price PerformancePercent

Appreciation

50.0%

100.0%

150.0%

200.0%

250.0%

300.0%

350.0%

400.0%

Sep-96 Dec-97 Mar-99 Jun-00 Sep-01 Dec-02 Mar-04 Jun-05 Sep-06

Rel

ativ

e In

dex

ed P

rice

s

Sovereign S&P 500 Banks Index S&P 500 Dow Jones LB Mid-Cap Banks

193.1%

101.1%

104.1%

178.7%

116.6%

The Santander Partnership - Building a Better Bank for

Shareholders, Customers and Community

19

Global Footprint of Santander

20

Benefits of the Santander Transaction

24% shareholder

Access to capital

Santander partnership provides sharing of best practices and operational know-how

Positioned for “full” price possible sale to Santander or another party over 2-5 year period after closing

21

Opportunities to Share Best Practices

Hispanic Market 40% of Hispanics in Sovereign and Independence footprint are Puerto

Ricans, Santander has the second largest bank in Puerto Rico

Auto Finance Santander is the largest non-captive auto finance player in Europe,

financing 1 million cars; Sovereign is a leading auto finance player in the northeastern U.S.

Cash Management Sovereign and Santander are discussing the outsourcing of all Santander’s

U.S. dollar cash management business to Sovereign

Funding/Access to Capital S&P upgraded Sovereign and subsidiaries one notch following closing

Moody’s upgraded Sovereign and subsidiaries two notches following closing

Operational Enhancements and Technology Sharing Santander has world-class banking related technology systems which they

intend to share with Sovereign

Emerging Markets in the Northeast United States

23

Demographic Explosion From Emerging Markets

The Hispanic and Asian-American population growth has significantly outpaced the General Market over the past 3 decades

Compounded Annual Growth Rate in U.S. Population, Hispanic and Asian Americans between Decades

1.1% 0.9%1.2%

0.9%

4.9%4.3%

4.7%

3.1%

8.6%

7.6%

6.0%

2.6%

0%

2%

4%

6%

8%

10%

1980 1990 2000 2010

U.S.

Hispanic

Asian Americans

24

Bankable Hispanics by Top 5 Geographic Segments

1.721.971.98

4.28

6.92

-

1

2

3

4

5

6

7

8

California Texas Florida New York Sov States

Hispanic Bankable Pop: Density per Sq Mi

23

42

44

37

16

18

- 10 20 30 40 50

Texas

Illinois

Sov States

Florida

New York

California

155,519 261,797 53,927 47,214 75,738Sq Mi (Land)

In Millions

Our Footprint is a “Hidden Gem” for Hispanics…

25

Bankable Asians by Top 5 Geographic Segments

0.420.420.81

0.95

2.82

0.0

0.5

1.0

1.5

2.0

2.5

3.0

California Sov States New York Texas Hawaii

155,519 75,738 47,214 261,797 6,423Sq Mi (Land)

Asian Bankable Population Density per Sq Mi

2

15

24

42

78

- 20 40 60 80 100

Texas

Sov States

California

New York

Haw aii

In Millions

…and for Asians as well

26

Pilot Program in Rhode Island is Underway

27

Some Local Efforts Emphasize Our Service Culture

Current Situation and Potential Shareholder

Value Creation

29

Highlights and Challenges in This Environment 19% annualized linked quarter organic deposit growth

18% annualized linked quarter organic loan growth

Only 2.5% annualized linked quarter expense growth

Stable asset quality

Margin compression continues

Restructured balance sheet following Independence acquisition

Independence fully integrated by end of third quarter

30

Major Goals for 2006 – 2007

Positive operating/cash earnings growth in this flat to inverted yield curve environment

Achieve or exceed financial assumptions of Independence acquisition with flawless integration

Embark on strategy for capturing larger share of the Hispanic market

Maintain expense control discipline

Stable asset quality

31

Sovereign is committed to building

above-average short-term and long-term

shareholder value while building a better

bank for our customers, communities

and team members

Appendix

33

Operating and Cash 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 and Cash 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

34

One Non-GAAP Financial Measure

Effective in the fourth quarter of 2004, Sovereign moved to one non-GAAP financial measure – Operating/Cash Earnings 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/Cash Earnings represent net income adjusted for after-tax effects of merger-related and integration charges, any other non-recurring charges and the amortization of intangible assets

35

Reconciliation of Operating/Cash Earnings to GAAP Earnings - Actual

Year Ended December 31,

2005 2004 2003 2002 2001

Net Income/(loss) as reported 701,587$ 453,552$ 401,851$ 341,985$ 116,821$

Merger-related and integration costs 8,284 30,134 10,316

Provision for Loan Loss 3,900 3,900

Restructuring of Balance Sheet 42,605 18,838 6,549

Restructuring Charges 2,589 5,525

Impairment Charge for FNMA and FHLMC Preferred Stock

20,891

Financing-Related Adjustments

Non-solicitation Expense 158,106

Proxy and related professional fees 3,788

Amoritzation of Intangibles 47,984 51,186 50,100 54,121 89,408

Operating/Cash Earnings for EPS purposes 764,232$ 602,268$ 470,789$ 410,322$ 376,409$

Note: Further details are available on our web site at www.sovereignbank.com and in our Annual Reports to Shareholders

($ in thousands, all numbers shown net of tax)

(1) Net Income for EPS purposes

(1)

36

Reconciliation of Operating/Cash EPS to GAAP EPS - Actual

Year Ended December 31,

2005 2004 2003 2002 2001

Diluted Earnings per Share 1.68$ 1.31$ 1.31$ 1.17$ 0.43$

Merger-related and integration costs 0.02$ 0.09$ 0.04$

Provision for Loan Loss 0.01$ 0.01$

Loss on debt extinguishment 0.12$ 0.07$ 0.03$

Restructuring Charges 0.01$ 0.02$

Impairment Charge for FNMA and FHLMC Preferred Stock

0.06$

Financing-Related Adjustments

Non-solicitation Expense 0.59$

Proxy and related professional fees 0.01$

Amoritzation of Intangibles 0.11$ 0.15$ 0.16$ 0.18$ 0.33$

Operating/Cash Earnings per Share 1.83$ 1.74$ 1.54$ 1.40$ 1.40$

Note: Further details are available on our web site at www.sovereignbank.com and in our Annual Reports to Shareholders

Sovereign Bancorp, Inc.