Obligation Lloyds Bank PLC 12% ( XS0474660676 ) en USD

Lloyds Bank PLC

100 % ⇌

Royaume-uni

XS0474660676 ( en USD )

12% par an ( paiement semestriel )

Perpétuelle

Prospectus brochure de l'obligation Lloyds Bank PLC XS0474660676 en USD 12%, échéance Perpétuelle

100 000 USD

1 862 568 000 USD

G4715MNG3

16/06/2025 ( Dans 48 jours )

Lloyds Banking Group plc est une banque de détail et commerciale britannique, l'un des plus grands prêteurs du Royaume-Uni, offrant une gamme de services financiers incluant les comptes bancaires personnels et commerciaux, les prêts hypothécaires, les investissements et les assurances.

L'Obligation émise par Lloyds Bank PLC ( Royaume-uni ) , en USD, avec le code ISIN XS0474660676, paye un coupon de 12% par an.
Le paiement des coupons est semestriel et la maturité de l'Obligation est le Perpétuelle

PROSPECTUS

Lloyds TSB Bank plc
(incorporated in England with limited liability under the Companies Act 1862 and the Companies Act 1985 with
registered number 2065)
U.S.$2,000,000,000 12.00 per cent. Fixed-to-Floating Rate Perpetual Capital Securities

This Prospectus relates to the U.S.$2,000,000,000 12.00 per cent. Fixed-to-Floating Rate Perpetual Capital Securities (the
"Capital Securities") issued by Lloyds TSB Bank plc (the "Issuer"). The terms and conditions of the Capital Securities (the
"Conditions") are set out more fully in "Terms and Conditions of the Capital Securities".
Interest on the Capital Securities accrues from (and including) 16 December 2009 to (but excluding) 16 December 2024 (the
"First Reset Date") at the rate of 12.00 per cent. per annum, and is payable semi-annually in arrear on 16 June and 16 December
in each year. Thereafter, the Capital Securities will bear interest at a rate, reset quarterly, of 11.756 per cent. per annum above
the then prevailing London interbank offered rate for three-month U.S. dollar deposits, payable quarterly in arrear on the
Coupon Payment Dates falling in March, June, September and December in each year, all as more particularly described in
Condition 5.
Coupon Payments (as defined in the Conditions) may be deferred as described in Condition 4 and are subject to the condition to
payment set out in Condition 2. Payments in respect of the Capital Securities will be made without withholding or deduction
for, or on account of, taxes of the United Kingdom, unless such deduction is required by law. In the event that any such
withholding or deduction is made, the Capital Securities will be subject to grossing up by the Issuer, subject to certain
exceptions as are more fully described under Condition 10.
Subject to the requirements of Condition 7(a), the Capital Securities are redeemable (at the option of the Issuer) in whole but not
in part at their principal amount, together with any Payments which are Outstanding thereon (each as defined in the Conditions)
on the First Reset Date or any Coupon Payment Date (as defined in the Conditions) thereafter.
In addition, upon the occurrence of a Tax Event or a Regulatory Event (each as defined in the Conditions), the Capital Securities
may (i) be substituted for, or have their terms varied so that they become, alternative Qualifying Tier 1 Securities or Qualifying
Upper Tier 2 Securities (each as defined in the Conditions), or (ii) be redeemed at their principal amount together with any
Payments which are Outstanding thereon and otherwise as more particularly described in Condition 7. The Capital Securities
are unsecured securities of the Issuer and are subordinated to the claims of all Senior Creditors (as defined in the Conditions)
and rank pari passu without preference among themselves (all as more particularly described in Conditions 2 and 3).
Applications have been made to the Financial Services Authority ("FSA") in its capacity as competent authority under the
Financial Services and Markets Act 2000 (the "UK Listing Authority") for the Capital Securities to be admitted to the official
list of the UK Listing Authority (the "Official List") and to the London Stock Exchange plc (the "London Stock Exchange") for
such Capital Securities to be admitted to trading on the London Stock Exchange's Regulated Market (the "Market"). References
in this Prospectus to Capital Securities being "listed" (and all related references) shall mean that such Capital Securities have
been admitted to trading on the Market and have been admitted to the Official List. The Market is a regulated market for the
purposes of Directive 2004/39/EC of the European Parliament and of the Council on markets in financial instruments.
You should read the whole of this Prospectus and the documents incorporated herein by reference. In particular, your
attention is drawn to the risk factors described in the Risk Factors set out in the section entitled "Risk Factors" of this
Prospectus, which you should read in full.
The Capital Securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended, (the
"Securities Act") or under any securities laws of any State or other jurisdiction of the United States and the Capital
Securities are being offered and will be issued only to (i) "qualified institutional buyers," as that term is defined in Rule
144A under the Securities Act, in a private transaction in reliance upon an exemption from the registration
requirements of the Securities Act for transactions by an issuer not involving a public offering or (ii) to persons other
than "U.S. persons" as that term is defined in Rule 902 under the Securities Act, in offshore transactions in reliance
upon Regulation S.
The Capital Securities have been assigned on issue a rating of "Ba1" by from Moody's Investors Service Limited, "BB" by
Standard & Poor's Rating Services, a Division of the McGraw-Hill Companies, Inc. and "BB+" by Fitch Ratings Ltd. A credit
rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any
time by the assigning rating agency.

17 December 2009

This Prospectus comprises a prospectus for the purposes of the Prospectus Directive and for the purpose of
giving information with regard to the Issuer and the Issuer and its subsidiaries (the "Lloyds TSB Bank
Group") and the Capital Securities which, according to the particular nature of the Issuer and the Capital
Securities, is necessary to enable investors to make an informed assessment of the assets and liabilities,
financial position, profit and losses and prospects of the Issuer.
The Issuer (the "Responsible Person") accepts responsibility for the information contained in this Prospectus.
To the best of the knowledge and belief of the Issuer (which has taken all reasonable care to ensure that such
is the case), the information contained in this Prospectus is in accordance with the facts and does not omit
anything likely to affect the import of such information.
The Capital Securities are in registered form and in the denominations of U.S.$100,000 plus integral multiples
of U.S.$1,000 in excess thereof up to and including U.S.$199,000. The Capital Securities sold in the United
States to qualified institutional buyers within the meaning of Rule 144A under the Securities Act ("Rule
144A") pursuant to an exemption from the registration requirements of the Securities Act for transactions not
involving a public offering are represented by one or more global certificates in registered form (each, a
"Restricted Global Certificate") and registered in the name of a nominee of, and deposited with a custodian
for, The Depository Trust Company ("DTC") on the Issue Date (as defined in the Conditions). The Capital
Securities sold to persons that are not U.S. persons in an "offshore transaction" within the meaning of
Regulation S under the Securities Act ("Regulation S") are represented by a global certificate in registered
form (the "Unrestricted Global Certificate", and together with the Restricted Global Certificate, the "Global
Certificates") and registered in the name of a nominee of, and deposited with, a common depositary for
Euroclear Bank S.A./N.V. ("Euroclear") and Clearstream Banking, société anonyme ("Clearstream,
Luxembourg", together with Euroclear, the "Clearing Systems") on the Issue Date.
The Capital Securities have been issued as a private placement and although the Capital Securities are listed
on the official list of the UK Listing Authority and traded on the Market, the Capital Securities will have no
established trading market when issued and it is possible that one may not develop.
This Prospectus is to be read in conjunction with all documents which are deemed to be incorporated herein
by reference (see "Documents Incorporated by Reference" below).
No person is, or has been, authorised to give any information or to make any representation other than as
contained in this Prospectus in its entirety in connection with the issue or offering of the Capital Securities
and, if given or made, such information or representation must not be relied upon as having been authorised
by the Issuer. The delivery of this Prospectus shall not, under any circumstances, create any implication that
there has been no change in the affairs of the Issuer or Lloyds TSB Bank Group since the date hereof or the
date upon which this Prospectus has been most recently amended or supplemented.
This Prospectus (i) is not intended to provide the basis of any credit or other evaluation and (ii) should not be
considered as a recommendation or constituting an invitation or offer by the Issuer that any recipient of this
Prospectus should purchase any Capital Securities. Each investor should make its own independent
investigation of the financial condition and affairs, and its own appraisal of the credit-worthiness, of the Issuer
and should satisfy itself that it understands all the risk associated with making investments in the Capital
Securities. If an investor is any doubt whatsoever as to the risks involved in investing in the Capital
Securities, he or she should consult his or her professional advisors.
Investors should inform themselves as to the legal requirements and tax consequences within the countries of
their residence and domicile for the acquisition, holding or disposal of Capital Securities and any foreign
exchange restrictions that might be relevant to them.
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This Prospectus does not constitute or form part of, and should not be construed as, an offer for sale or
subscription of, or a solicitation of any offer to buy or subscribe for, the Capital Securities in any jurisdiction
in which such offer or solicitation would be unlawful. The distribution of this Prospectus may nonetheless be
restricted by law in certain jurisdictions. For a description of certain restrictions on the sale of the Capital
Securities, see "Book Entry, Transfer Restrictions and Summary of Provisions Relating to the Capital
Securities while in Global Form". Persons into whose possession this Prospectus comes are required by the
Issuer to inform themselves about, and to observe, any such restrictions. This Prospectus does not constitute
an offering in any circumstances in which such offering is unlawful. The Issuer will not incur any liability for
its own failure or the failure of any other person or persons to comply with the provisions of any such
restrictions. No one has taken any action that would permit a public offering of the Capital Securities.
In this Prospectus, unless otherwise specified or the context otherwise requires, references to (i) "£" and
"pounds sterling" are to the lawful currency for the time being of the United Kingdom of Great Britain and
Northern Ireland (the "United Kingdom" or "UK"); and (ii) "U.S. dollars" and to "U.S.$" are to the lawful
currency of the United States, its territories and possessions, any state of the United States of America and the
District of Columbia (the "United States" or "U.S.").
NOTICE TO U.S. INVESTORS
The Capital Securities have not been and will not be registered under the Securities Act, or with any securities
regulatory authority of any state or jurisdiction in the United States, and may not be offered, sold, pledged or
otherwise transferred except pursuant to an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act and in compliance with any applicable state securities laws.
Each subsequent purchaser of the securities offered hereby will be deemed by its acceptance of those Capital
Securities to have made certain acknowledgements, representations and agreements intended to restrict the
resale or other transfer of those Capital Securities as set forth in the Capital Securities or described in this
Prospectus and, in connection therewith, may be required to provide confirmation of its compliance with such
resale or other transfer restrictions in certain cases. See `Book Entry, Transfer Restrictions and Summary of
Provisions Relating to the Capital Securities while in Global Form Transfer Restrictions" of this
Prospectus.
FORWARD-LOOKING STATEMENTS
This Prospectus and the information incorporated by reference in this Prospectus include certain
"forward-looking statements" with respect to the business, strategy and plans of the Issuer or Lloyds TSB
Bank Group and its current goals and expectations relating to its future financial condition and performance.
Statements that are not historical facts, including statements about the Issuer, Lloyds TSB Bank Group's or
Lloyds Banking Group's (as defined below) or their respective directors' and or management's beliefs and
expectations are forward-looking statements. Words such as "believes", "anticipates", "estimates", "expects",
"intends", "plans", "aims", "potential", "will", "would", "could", "considered", "likely", "estimate" and
variations of these words and similar future or conditional expressions, are intended to identify
forward-looking statements but are not the exclusive means of identifying such statements. By their nature,
forward-looking statements involve risk and uncertainty because they relate to events and depend upon future
circumstances that may or may not occur, many of which are beyond the Issuer's control and all of which are
based on the Issuer's current beliefs and expectations about future events.
Examples of such forward-looking statements include, but are not limited to, projections or expectations of
profit attributable to shareholders, provisions, economic profit, dividends, capital structure or any other
A11523819/0.4/17 Dec 2009
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financial items or ratios; statements of plans, objectives or goals of the Issuer or its management; statements
about the future trends in interest rates, foreign exchange rates, stock market levels and demographic trends
and any impact on the Issuer, Lloyds TSB Bank Group or the Parent (as defined below) and its subsidiary
undertakings (the "Lloyds Banking Group"); statements concerning any future UK or other economic
environment or performance; statements about strategic goals, competition, regulation, disposals and
consolidation or technological developments in the financial services industry; and statements of assumptions
underlying such statements.
Factors that could cause actual results to differ materially from the plans, objectives, expectations, estimates
and intentions expressed in such forward-looking statements made by the Issuer or on the Issuer's behalf
include, but are not limited to, general economic conditions in the UK and internationally; inflation, deflation,
interest rates, policies of the Bank of England and other G-8 central banks, exchange rate, market and
monetary fluctuations; changing demographic developments including mortality and changing customer
behaviour including consumer spending, saving and borrowing habits, borrower credit quality, technological
changes, natural and other disasters, adverse weather and similar contingencies outside the Issuer's control;
inadequate or failed internal or external processes, people and systems; terrorist acts, other acts of war,
geopolitical, pandemic or other such events; changes in laws, regulations, taxation, government policies or
accounting standards or practices, exposure to regulatory scrutiny, legal proceedings or complaints, changes
in competition and pricing environments; the inability to hedge certain risks economically; the adequacy of
loss reserves; the ability to secure new customers and develop more business from existing customers; the
ability to achieve value-creating mergers and/or acquisitions at the appropriate time and prices and the success
of the Issuer in managing the risks of the foregoing.
The forward-looking statements made in this Prospectus are made as of the date hereof, and the Issuer
undertakes no obligation to update any of the forward-looking statements.
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DOCUMENTS INCORPORATED BY REFERENCE
This Prospectus should be read and construed in conjunction with the following documents:
Lloyds Banking Group plc (the "Parent") financial information:
·
the interim management statement (the "Interim Management Statement") of the Parent for the three
months ended 30 September 2009 published on 3 November 2009 save for the sixth paragraph under
"Key highlights";
·
the condensed statutory consolidated interim financial statements of the Parent for the six months
ended 30 June 2009, together with the independent review report thereon, as set out on pages 87 to 115
and 117 to 118, respectively, of the Parent's 2009 Interim Results News Release (the "Parent's 2009
Interim Statutory Results").
Lloyds TSB Bank plc financial statements:
·
the condensed statutory consolidated interim financial statements of the Issuer for the six months
ended 30 June 2009, together with the independent review report thereon, as set out on pages 4 to 25
and 27 to 28, respectively, of the Issuer's Interim Management Report for the half year ended 30 June
2009 (the "Issuer's 2009 Interim Statutory Results");
·
the audited consolidated annual financial statements of the Issuer for the financial year ended 31
December 2008, together with the audit report thereon, as set out on pages 11 to 107 and 9 to 10,
respectively, of the Issuer's Annual Report and Accounts 2008; and
·
the audited consolidated annual financial statements of the Issuer for the financial year ended 31
December 2007, together with the audit report thereon, as set out on pages 10 to 100 and 8 to 9,
respectively, of the Issuer's Annual Report and Accounts 2007.
HBOS Group plc financial statements:
·
the last sentence of the first paragraph under the section entitled "Overview of Results" on page 3 of
the HBOS 2008 Annual Report.
Other documents incorporated by reference:
·
The following sections of the prospectus published by the Parent and the Issuer dated 11 November
2009 relating to the U.S.$35,000,000,000 programme for the issue of senior and subordinated medium
term notes (the "US MTN Prospectus"):
(a)
"Risk Factors" as set out on pages 19 to 43, save for risk factors 1.3, 1.4, 1.8, 1.28 and 1.29;
(b)
"Lloyds Banking Group" as set out on pages 93 to 116, save for the sections entitled "Legal
Proceedings", "Current terms and conditions" and "Historic terms and conditions" as set out on
pages 105 to 106;
(c)
"Recent Developments - Capital Restructuring Proposals" as set out on pages 117 to 127;
(d)
Part C "Capital Resources and Liquidity" of the section entitled "Capital Resources" as set out
on pages 151 to 158; and
(e)
"Unaudited pro forma net assets statement of the Group as at 30 June 2009" as set out on pages
160 to 162,
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all of which have been previously published and filed with the Financial Services Authority and which shall
be deemed to be incorporated in, and form part of, this Prospectus, save that any statements contained in a
document which is deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for the purpose of this Prospectus to the extent that a statement contained herein modifies or
supersedes such earlier statement (whether expressly, by implication or otherwise). Any statement so
modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus. Any information or documents incorporated by reference in the above listed documents does not
form any part of this Prospectus unless expressly incorporated herein by reference.
The Issuer will provide, without charge, to each person to whom a copy of this Prospectus has been delivered,
upon the oral or written request of such person, a copy of any or all of the documents which are incorporated
in whole or in part by reference herein. Written or oral requests for such documents should be directed to the
attention of the Investor Relations department of the Issuer at 25 Gresham Street, London EC2V 7HN, United
Kingdom, telephone: +44 207 356 1273, e-mail: [email protected]

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TABLE OF CONTENTS
Page
DOCUMENTS INCORPORATED BY REFERENCE...................................................................................... 5
RISK FACTORS ................................................................................................................................................ 8
TERMS AND CONDITIONS OF THE CAPITAL SECURITIES .................................................................. 17
BOOK ENTRY, TRANSFER RESTRICTIONS AND SUMMARY OF PROVISIONS RELATING TO THE
CAPITAL SECURITIES WHILE IN GLOBAL FORM ......................................................................... 46
USE OF PROCEEDS....................................................................................................................................... 54
INFORMATION ON LLOYDS BANKING GROUP ..................................................................................... 55
RECENT DEVELOPMENTS.......................................................................................................................... 57
SELLING RESTRICTIONS ............................................................................................................................ 60
TAXATION ...................................................................................................................................................... 61
GENERAL INFORMATION ........................................................................................................................... 63

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RISK FACTORS
The Issuer believes that the following factors may affect its ability to fulfil its obligations under the Capital
Securities. All of these factors are contingencies which may or may not occur and neither the Issuer nor
Lloyds Banking Group is in a position to express a view on the likelihood of any such contingency occurring.
Factors which the Issuer believes may be material for the purpose of assessing the market risks associated
with the Capital Securities are also described below.
The Issuer believes that the factors described below represent the principal risks inherent in investing in the
Capital Securities, but the inability of the Issuer to pay interest, principal or other amounts on or in
connection with the Capital Securities may occur for other reasons and the Issuer does not represent that the
statements below regarding the risks of holding any Capital Securities are exhaustive. Prospective purchasers
should consider carefully the risks and uncertainties described below, together with all other information
contained in this Prospectus and the information incorporated by reference herein, before making any
investment decision. This section of the Prospectus is divided into two main sections "Risks Relating to the
Issuer and Lloyds Banking Group" and "Risks Relating to the Capital Securities".
1
Risk Factors relating to the Issuer and Lloyds Banking Group
The risk factors relating to the Issuer and Lloyds Banking Group set out on pages 19 to 43 ("Risk relating to
the Issuers") of the US MTN Prospectus are incorporated by reference into this Prospectus, save for risk
factors 1.3, 1.4 and 1.8 (which are replaced in their entirety by the information below) and risk factors 1.28
and 1.29.
1.3
Lloyds Banking Group is subject to European state aid obligations following the approval of its
restructuring plan by the European Commission on 18 November 2009. The implementation of this
restructuring plan may have consequences that are materially adverse to the interests of Lloyds
Banking Group. Moreover, should a third party successfully challenge the European Commission's
decision to approve Lloyds Banking Group's restructuring plan, or should Lloyds Banking Group
require additional state aid in the future, further restructuring measures could be required and these
may be materially adverse to its interests.
As a result of Lloyds Banking Group's placing and open offer in November 2008 and Lloyds Banking
Group's participation in HM Treasury's credit guarantee scheme (the "Credit Guarantee Scheme"),
which was announced on 8 October 2008, Lloyds Banking Group has been required to cooperate with
HM Treasury to submit a restructuring plan to the European Commission setting out Lloyds Banking
Group's plans to restructure and return to a position of viability in which it no longer relies on state
aid.
On 18 November 2009 the European Commission approved Lloyds Banking Group's restructuring
plan. The principal elements of the plan are set out under "Recent Developments" in this Prospectus
and address competition distortions from all elements of state aid that Lloyds Banking Group has
received, including HM Treasury's participation in the placing and compensatory open offer in June
2009 and in the November 2009 rights issue, as well as any commercial benefit received by Lloyds
Banking Group following its announcement in March 2009 of the intention it held at that time to
participate in GAPS. The approval also covers Lloyds Banking Group's ongoing participation in HM
Treasury's Credit Guarantee Scheme at current rates up to June 2010. The Parent has agreed with HM
Treasury in the deed of withdrawal relating to the Parent's withdrawal from GAPS (the "GAPS
Withdrawal Deed") that it will comply with the terms of the European Commission's decision.
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It is possible that a third party could challenge the decision of the College of Commissioners to
approve the restructuring plan in the European Courts. Lloyds Banking Group does not believe that
any such challenge would be likely to succeed, but if it were to succeed the Commission would need to
reconsider its decision, which could result in more extensive remedies being applied including the
disposal of a significantly larger proportion of Lloyds Banking Group's assets and/or a significantly
more stringent divestment timetable or more onerous behavioural restrictions than those contemplated
in the approved restructuring plan.
Lloyds Banking Group will also be subject to a variety of risks as a result of implementing the
approved restructuring plan. There is no assurance that the price that Lloyds Banking Group receives
for any assets sold pursuant to the restructuring plan will be at a level Lloyds Banking Group considers
adequate or which it could obtain in circumstances in which Lloyds Banking Group was not required
to sell such assets in order to implement a state aid restructuring plan or if such sale were not subject to
the restrictions contained in the terms thereof. In particular, should Lloyds Banking Group fail to
complete the disposal of the retail banking business that Lloyds Banking Group is required to divest
within four years, a divestiture trustee would be appointed to conduct the sale, with a mandate to
complete the disposal with no minimum price (including at a negative price). In implementing the
plan, Lloyds Banking Group will lose existing customers, deposits and other assets (both directly
through the sale and potentially through damage to the rest of Lloyds Banking Group's business arising
from implementing the restructuring plan) and the potential for realising additional associated revenues
and margins that it otherwise might have achieved in the absence of such disposals. Such
implementation may also result in disruption to the retained business, impacting on customers and
separation costs which could potentially be substantial.
The effect of implementing the approved restructuring plan may be the emergence of one or more new
viable competitors in the UK banking market or a material strengthening of one or more of Lloyds
Banking Group's competitors in that market. There can be no assurance that Lloyds Banking Group
will be able to continue to compete as effectively (whether against existing or new or strengthened
competitors) and maintain or improve its revenues and margins in the resulting competitive
environment, which could adversely affect Lloyds Banking Group's results of operations and financial
condition and its business generally. If any or all of the risks described in this paragraph, or any other
currently unforeseen risks, materialise, there could be a negative impact, which could be material, on
Lloyds Banking Group's business, operations and competitive position.
Should Lloyds Banking Group require any further state aid that was not covered in the European
Commission's approval decision of 18 November 2009, this may require Lloyds Banking Group to
commit to further restructuring measures. Any such measures could be materially adverse to the
interests of Lloyds Banking Group.
1.4
Future legislative and regulatory changes could force the group to comply with certain operational
restrictions, take steps to raise further capital, or divest assets.
In July 2009, the UK Government issued a White Paper (the "White Paper") which builds on and
responds to the previously published Turner Review (March 2009) and Bank of England Financial
Stability Report (June 2009), both of which contained proposals for reform of the structure and
regulation of the UK banking system. Proposals in the White Paper include: enhanced regulatory
powers for the FSA; introducing pre-funding for the UK's deposit guarantee scheme by 2012;
requiring banks to develop and maintain detailed plans for winding down (or resolution); and more
stringent capital and liquidity requirements for systemically significant firms. The Government's stated
aim in linking capital requirements to the size and complexity of systemically significant firms, is that,
"The capital requirements in place for systemically significant institutions would need to be sufficient
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to change incentives of banks to over-indulge in risky activities throughout the economic cycle. This
should encourage them to reduce or at least better understand the riskier activities they undertake (for
example, proprietary trading) and reduce the moral hazard problem by removing the incentive for
firms to become systemically significant."
A second Turner Review (October 2009) developed some issues highlighted for further discussion in
the March review, specifically how to offset the moral hazard created by the existence of systemically
important banks and the cumulative impact of changes to the capital and liquidity schemes. Key
proposals include: using contingent capital which converts to equity when required; reducing the
interconnectedness of large cross-border banks; restricting retail banks from engaging in proprietary
trading activities; and emphasising the need to prioritise capital conservation and enhancement above
employee bonus payments.
In November 2009 the draft Financial Services Bill was presented to Parliament. This bill consolidates
some of the proposals presented in the White Paper, in addition to enhancing the FSA's disciplinary
and enforcement powers. Specifically, the bill provides the FSA with the powers to require authorised
firms to prepare recovery and resolution plans and act in accordance with the FSA's remuneration
rules. The proposals set out in the White Paper, Turner Review and draft legislation, if implemented,
could have a significant impact on the operations, structure and costs of Lloyds Banking Group.
There is a risk that the regulation or legislation that may be developed over time to implement these
proposals (including the Financial Services Bill) could force Lloyds Banking Group to divest core
assets, withdraw from or not engage in some activities, and/or increase its capital. Such regulations or
legislation, taken with the more regular and detailed reporting obligations which are expected to
accompany regulatory reform, the development and maintenance of a wind down plan, and the move
to pre-funding of the deposit protection scheme in the UK, would result in additional costs for Lloyds
Banking Group, and such costs could be material. Such measures could have a material adverse effect
on Lloyds Banking Group's results of operations, financial condition and prospects.
On 5 October 2009, the FSA published its new liquidity rules which significantly broaden the scope of
the existing liquidity regime and are designed to enhance regulated firms' liquidity risk management
practices. Procedures to comply with the FSA's liquidity proposals are already incorporated within
Lloyds Banking Group's liquidity funding plans. These will result in more stringent requirements,
which may lead to additional costs for Lloyds Banking Group. See Risk Factor 1.14 of the US MTN
Prospectus for a fuller discussion of liquidity risks affecting Lloyds Banking Group.
1.8
Lloyds Banking Group's businesses are subject to substantial regulation, and to regulatory and
governmental oversight. Adverse regulatory developments or changes in government policy could have
a significant material adverse effect on Lloyds Banking Group's operating results, financial condition
and prospects.
Lloyds Banking Group conducts its businesses subject to ongoing regulation and associated regulatory
risks, including the effects of changes in the laws, regulations, policies, voluntary codes of practice and
interpretations in the UK and the other markets where it operates. This is particularly the case in the
current market environment, which is witnessing increased levels of government and regulatory
intervention in the banking sector, which Lloyds Banking Group expects to continue for the
foreseeable future. Future changes in regulation, fiscal or other policies are unpredictable and beyond
the control of Lloyds Banking Group and could materially adversely affect Lloyds Banking Group's
business.

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