16 January 2009

Notice to the Holders of £150,000,000 7.286% Series A Perpetual Regulatory tier One Securities (the 'Series A PROs') and £150,000,000 7.281% Series B Perpetual Regulatory tier One Securities (the 'Series B PROs' and, together with the Series A PROs, the 'PROs') issued by Bank of Scotland plc (the 'Issuer')

References to 'Conditions' herein are references to the Terms and Conditions of the PROs and words and expressions defined in the Conditions and not otherwise defined herein shall have the same meanings where used herein.

Notice is hereby given to the Holders of the PROs that, as of 16 January 2009, under the terms of a recommended acquisition by Lloyds Banking Group plc ('Lloyds TSB') of the entire issued ordinary share capital of HBOS plc implemented by way of a scheme of arrangement under sections 895 to 899 of the Companies Act 2006 (the 'Acquisition'), Lloyds TSB has become the ultimate holding company in respect of the Group.

Pursuant to Condition 8(d) (Suspension), the Issuer's right to satisfy a Payment by the method contemplated in Condition 6 (Alternative Coupon Satisfaction Mechanism) shall be suspended immediately, such suspension to operate in accordance with the provisions of Condition 8(d) (Suspension).

Enquiries:

Investor Relations:

John Hope

Director Investor Relations

+44 (0)131 243 5508

johnhope@hbosplc.com

Press Office:

Shane O'Riordain

General Manager, Group Communications

+44 (0)131 243 7195

shaneo'riordain@hbosplc.com