S&P: Sovereign Bancorp Rating Unaffected By U.S. Government Control Of Fannie And Freddie

NEW YORK, Sept. 8, 2008--Standard & Poor's Ratings Services said today there are no ratings implications for Sovereign Bancorp (BBB/Stable/--) as a result of the U.S. Treasury's announcement that it will take control of Fannie Mae and Freddie Mac.

(Jospeh P. Campanelli, president and CEO of Sovereign Bancorp and Sovereign Bank, Wyomissing, PA, top right photo)

At the end of the second quarter, Sovereign held approximately $639 million of these companies' preferred securities. Under the Treasury's plan, the dividends associated with these securities will cease, resulting in a decline in the stock's value, presumably to nominal levels.

In a worst-case scenario, a decline in Sovereign's $639 million investments would represent a setback in the company's efforts to strengthen capital levels, but would not reduce levels outside the range of similarly rated institutions.

In addition, the May 20, 2008, capital raise of $1.9 billion, which included $1.4 billion of common equity, bolstered Sovereign's current capital position. Future capital will be enhanced by the Jan. 23, 2008, elimination of common stock dividends.

Media Contact: Jeff Sexton, New York, (1) 212-438-3448, jeff_sexton@standardandpoors.com

Analyst Contacts:
John K Bartko, C.P.A., New York (1) 212-438-7368
Barbara Duberstein, New York (1) 212-438-5656