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EXHIBIT 10.18

SOVEREIGN BANCORP, INC.
NON-EMPLOYEE DIRECTORS BONUS AWARD PROGRAM
(As Amended Effective February 18, 2004)

         1.     Definitions.

                  (a)      "Bank" means Sovereign Bank.

                  (b)      "Board" means the board of directors of the
                  Corporation.

                  (c)      "Change in Control" has the same meaning as is
                  ascribed to such term, as of the Effective Date, in the
                  Sovereign Bancorp, Inc. 2001 Stock Incentive Plan.

                  (d)      "Committee" means the Compensation Committee of the
                  Board or such other committee as may be appointed by the Board
                  to administer this Program. Such term also includes the whole
                  Board to the extent it takes action with respect to
                  administrative or operational matters relating to the Program.

                  (e)      "Common Stock" means the common stock (no par value)
                  of the Corporation.

                  (f)      "Corporation" means Sovereign Bancorp, Inc.

                  (g)      "Effective Date" means June 19, 2002.

                  (h)      "Fair Market Value" of a share of Common Stock on any
                  given date means the closing sale price for such shares on
                  that date as listed on the New York Stock Exchange (or any
                  national securities exchange or quotation system on which the
                  Common Stock is then listed or reported). If a closing sale
                  price for the Common Stock for the given date is not listed or
                  reported, or if there is none, the Fair Market Value shall be
                  equal to the closing sale price on the nearest trading day
                  preceding such date. Notwithstanding the foregoing, if, in the
                  Committee's judgment, there are unusual circumstances or
                  occurrences under which the otherwise determined Fair Market
                  Value of the Common Stock does not represent the actual fair
                  value thereof, then the Fair Market Value of such Common Stock
                  shall be determined by the Committee on the basis of such
                  prices or market quotations as it shall deem appropriate and
                  fairly reflective of the then fair value of such Common Stock.

                  (i)      "Participant" means a non-employee director of the
                  Corporation who is entitled to participate in the Program in
                  accordance with the provisions of Sections 2 and 4 and who has
                  not terminated as a director. Notwithstanding the preceding
                  sentence, a Participant who terminates as a non-employee
                  director of the Corporation after having earned an award, but
                  before its payment, shall remain a Participant until payment
                  is made.

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                  (j)      "Program" means the Sovereign Bancorp, Inc.
                  Non-Employee Directors Bonus Award Program.

         2.     Participation. Each individual who is a non-employee director
         of the Corporation on the Effective Date shall become a Participant in
         the Program on such date. Any individual who becomes a non-employee
         director of the Corporation after December 31, 2003, may become a
         Participant subject to the provisions of Section 4.

         3.     Operative Terms of the Program.

                  (a)      In the event the Corporation's cash earnings,
         determined on a consolidated and fully-diluted basis, for 2004 equal or
         exceed $1.70 per share, each Participant, who remains as a non-employee
         director of the Corporation as of December 31, 2004, shall receive a
         cash award equal to the Fair Market Value of 5,000 shares of Common
         Stock.

                  (b)      In the event the Corporation's cash earnings,
         determined on a consolidated and fully-diluted basis, for 2005 equal or
         exceed $1.95 per share, each Participant, who remains as a non-employee
         director of the Corporation as of December 31, 2005, shall receive a
         cash award equal to the Fair Market Value of 5,000 shares of Common
         Stock.

                  (c)      In the event the Corporation's cash earnings,
         determined on a consolidated and fully-diluted basis, for 2006 equal or
         exceed a per share amount established by the Committee prior to January
         1, 2006, each Participant, who remains as a non-employee director of
         the Corporation as of December 31, 2006, shall receive a cash award
         equal to the Fair Market Value of 5,000 shares of Common Stock.

                  (d)      In the event the Corporation's cash earnings,
         determined on a consolidated and fully-diluted basis, for 2007 equal or
         exceed a per share amount established by the Committee prior to January
         1, 2007, each Participant, who remains as a non-employee director of
         the Corporation as of December 31, 2007, shall receive a cash award
         equal to the Fair Market Value of 5,000 shares of Common Stock.

                  (e)      In addition to the target earnings per share
         objectives described above, an award shall not be considered earned
         with respect to a relevant year, nor shall it be paid, in the event the
         Corporation's "Tier 1 capital" is less than 5.5% as of the close of
         such year or the Bank's asset quality is worse than the average of the
         top 25 banks in the United States (by asset size), which banks have
         commercial loans making up at least 25% of their total loan portfolios.
         Notwithstanding the foregoing, if one or more of the financial
         objectives described in this section 3 are not achieved for a relevant
         year, the Committee, after review of all relevant facts and
         circumstances, may determine that an award (or any portion thereof)
         with respect to a relevant year is considered earned if such
         determination, in the judgment of the Committee, is reasonably
         consistent with the goals of the Program.

                  (f)      All amounts payable pursuant to the preceding
         provisions of this section shall be distributed within 30 days
         following the filing by the Corporation of its Annual Report on Form
         10-K for the relevant year in which an award is earned.

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                  (g)      All financial calculations required in connection
         with this Program shall be performed by, or under the supervision of,
         the Committee; provided, however, that the calculation of cash earnings
         shall, in any event, be consistent with any year-end or other public
         financial release, describing year-end cash earnings, made by the
         Corporation with respect to the relevant year. The determination of the
         value of an award hereunder shall be based upon the Fair Market Value
         of Common Stock as of the date determined by the Committee, provided,
         however, the determination of the value of an award made pursuant to
         Subsection (j) shall be based upon the Fair Market Value of Common
         Stock as of the date of the Change in Control.

                  (h)      Except as otherwise provided herein, no award shall
         be payable to any Participant for a relevant year if he or she fails to
         remain as a director of the Corporation, for any reason, through the
         end of such year.

                  (i)      In the event of the occurrence of a stock split,
         stock dividend, reverse stock split, or similar event with respect to
         the Common Stock following the adoption of this Program and prior to a
         payment of an award earned with respect to any year, the amount payable
         with respect to any earned award shall be appropriately adjusted to
         take into account such occurrence.

                  (j)      Notwithstanding the provisions of this section, an
         award earned hereunder with respect to a relevant year shall not be
         paid unless an award with respect to the same year has been earned
         under the terms of the Sovereign Bancorp, Inc. Senior Officers Bonus
         Award Program.

                  (k)      Notwithstanding the preceding provisions of this
         section, in the event of the occurrence of a Change in Control, all
         potential awards for any current or future fiscal year shall be deemed
         earned as of the date of such Change in Control and shall be payable to
         the Participants, who are serving as directors of the Corporation
         immediately prior thereto, within 30 days after such Change in Control.

         4.     Future Participants. In the case of an individual who becomes
         a non-employee director of the Corporation following December 31, 2003,
         the Committee may provide, in its sole discretion, for his or her
         participation in the Program. In the event the Committee provides for
         the participation of such an individual, it may establish such
         additional or modified conditions on his or her participation as it may
         deem equitable or appropriate under the circumstances.

         5.     Administration. Except as otherwise provided herein, this
         Program shall be interpreted and administered by the Committee. In
         furtherance of such authority, the Committee may prescribe such rules,
         regulations, forms, and procedures as it deems necessary or appropriate
         for the proper administration of the Program.

         6.     Amendment. This Program may be amended at any time and from
         time to time by the Board; provided, however, that no such amendment
         may be made which adversely affects the then rights of a Participant
         under the Program without his or her consent; and provided further,
         that no amendment may be made solely by the Board that requires the

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         additional approval of the Corporation's shareholders for tax,
         securities law, exchange listing requirement, or other purposes.

         7.     Termination. This Program shall terminate upon the earliest to
         occur of the following: (i) the distribution of earned awards (if any)
         for the year 2007, (ii) the determination by the Committee that the
         specified goals for the year 2007 were not met, or (iii) the
         distribution of awards payable by reason of a Change in Control.

         8.     Tax Withholding. Distribution of an award shall be subject to
         satisfaction by the Participant of any tax withholding requirements
         that may apply at the relevant time.

         9.     Number. Words used herein in the singular form shall include
         the plural form, as the context requires, and vice versa.

         10.    Headings. The headings of the several sections of this Program
         document have been inserted for convenience of reference only and shall
         not be used in the construction of the same.

         11.    Applicable Law. Except to the extent pre-empted by federal
         law, this Program document shall be administered, construed and
         enforced in accordance with the domestic internal law of the
         Commonwealth of Pennsylvania.

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