Lloyds Regulatory News (LLOY)

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION IN RELATION TO THE BANK OF SCOTLAND PLC DEBT SECURITIES DESCRIBED HEREIN AND IS DISCLOSED IN ACCORDANCE WITH THE MARKET ABUSE REGULATION.

NOT FOR DISTRIBUTION IN OR INTO OR TO ANY PERSON LOCATED OR RESIDENT IN THE UNITED STATES OF AMERICA (INCLUDING ITS TERRITORIES AND POSSESSIONS) (THE "UNITED STATES") OR IN ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DISTRIBUTE THIS DOCUMENT.

(SEE "OFFER AND DISTRIBUTION RESTRICTIONS" BELOW)

BANK OF SCOTLAND PLC ANNOUNCES A TENDER OFFER IN RELATION TO CERTAIN STERLING NOTES

26 March 2019

Bank of Scotland plc (the "Offeror") has today launched a tender offer to repurchase its outstanding £500,000,000 9.375 per cent. Subordinated Bonds due 15 May 2021 (ISIN XS0066120915) (the "Notes").

THE OFFER

On the terms of and subject to the conditions contained in a tender offer memorandum dated 26 March 2019 (the "Tender Offer Memorandum"), the Offeror has invited all Holders (subject to the Offer and Distribution Restrictions referred to below) of the Notes to tender their outstanding Notes for purchase by the Offeror for cash (the "Offer").

Capitalised terms not otherwise defined in this announcement have the same meaning as assigned to them in the Tender Offer Memorandum. The Tender Offer Memorandum is available from the Tender Agent (subject to the Offer and Distribution Restrictions referred to below).

Rationale for the Offer

The Offeror is making the Offer in order to provide the Holders with an opportunity to have their Notes repurchased whilst maintaining a prudent approach to the management of the Offeror's capital and liquidity position. Notes purchased by the Offeror pursuant to the Offer will be cancelled and will not be re-issued or re-sold.

Purchase Price

The Purchase Price in respect of the Notes will be announced in the Announcement of Pricing, Acceptance and Results of the Offer on the Price Determination Date and determined in accordance with market convention, and will be the price which reflects a yield to maturity on the Settlement Date equal to the Repurchase Yield.

Subject to the Minimum Denomination, the Purchase Price per Authorised Denomination of the Notes will equal (a) the value per Authorised Denomination of all remaining payments of principal and interest due to be made up to and including the maturity date of the Notes, discounted to the Settlement Date at a discount rate equal to the Repurchase Yield minus (b) the Accrued Interest, and rounded to the nearest £0.01 (with £0.005 being rounded upwards).

The calculation, where applicable, of the Reference Yield, the Repurchase Yield, the Purchase Price and the Accrued Interest for the Notes will be made by the Offeror in its sole and absolute discretion and such calculations will be final and binding on the Holders, absent manifest error.

Acceptance of Offer

If the Offeror decides to accept any valid tenders of Notes made pursuant to the Offer, the Offeror will accept and purchase all valid tenders of Notes made pursuant to the Offer. For the avoidance of doubt, such purchases of validly tendered Notes will not be subject to any pro-ration. Any Notes purchased by the Offeror pursuant to the Offer will be cancelled and will not be re-issued or re-sold.

Holders of Notes who have validly tendered Notes and whose Notes have been accepted for purchase by the Offeror will receive the Purchase Price for the Notes, together with the Accrued Interest Payment (if any).

As soon as practicable after the Price Determination Time, the Offeror will publicly announce (i) the aggregate nominal amount of Notes validly tendered and so accepted and (ii) the Reference Yield, the Repurchase Yield and the Purchase Price.

As the Purchase Price for the Notes is based on the Repurchase Yield (which is calculated as the annualised sum of the Reference Yield and the Fixed Spread), and the Reference Yield is based on the Reference Benchmark, the actual amount of cash that will be received by a Holder pursuant to the Offer will be affected by changes in the Reference Yield at or before the Price Determination Time. In the event of any dispute or controversy regarding the contents of the announcements made on the Price Determination Date, the Offeror's determination shall be conclusive and binding, absent manifest error.

Accrued Interest Payment

An amount equal to accrued and unpaid interest (if any) will also be paid as consideration in respect of all Notes validly tendered and accepted for purchase by the Offeror pursuant to the Offer from, and including, the immediately preceding interest payment date for the Notes to, but excluding, the Settlement Date.

Total Consideration

The total consideration payable to each Holder in respect of Notes validly submitted for tender and accepted for purchase by the Offeror will be an amount in cash equal to (i) the Purchase Price for the Notes, multiplied by each Authorised Denomination in aggregate nominal amount of Notes validly tendered and delivered by such Holder and accepted by the Offeror for purchase (rounded to the nearest £0.01, with £0.005 being rounded upwards) plus (ii) any Accrued Interest Payment payable in respect of the Notes.

INDICATIVE TIMETABLE

The following table is an indicative timetable showing one possible outcome for the timing of the Offer based on the dates in the Tender Offer Memorandum. This timetable is subject to change and dates and times may be extended, re-opened and/or amended by the Offeror in accordance with the terms of the Offer as described in the Tender Offer Memorandum. Accordingly, the actual timetable may differ from the timetable below.

Subject to applicable securities laws and the terms set out within the Tender Offer Memorandum, the Offeror reserves the right, with respect to any or all of the Notes, (i) to waive or modify in whole or in part any and all conditions to the Offer, (ii) to extend the Expiration Deadline, (iii) to modify or terminate the Offer or (iv) to otherwise amend the Offer in any respect. In the event that the Offer is terminated or otherwise not completed, the Purchase Price relating to the Notes will not be paid or become payable, without regard to whether Holders have validly tendered their Notes (in which case such tendered Notes will be unblocked by the relevant Clearing System).

Announcements in connection with the Offer will be made via RNS. Such announcements may also be made (i) on the relevant Reuters International Insider Screen, (ii) by the issue of a press release to a Notifying News Service and (iii) by the delivery of notices to the Clearing Systems for communication to Direct Participants. Copies of all such announcements, press releases and notices can also be obtained from the Tender Agent, the contact details for whom are specified below. Significant delays may be experienced where notices are delivered to the Clearing Systems and Holders are urged to contact the Tender Agent for the relevant announcements relating to the Offer. In addition, Holders may contact the Dealer Manager for information using the contact details specified below.

Holders are advised to check with any bank, securities broker or other Intermediary through which they hold Notes when such Intermediary would require to receive instructions from a Holder in order for that Holder to be able to participate in, or (in the limited circumstances in which revocation is permitted) revoke their instruction to participate in, the Offer before the deadlines specified above. The deadlines set by any such Intermediary and each Clearing System for the submission of Tender Instructions will be earlier than the relevant deadlines specified above. See "Procedures for Participating in the Offer" in the Tender Offer Memorandum.

Tender Instructions will be irrevocable except in the limited circumstances described in "Amendment and Termination - Revocation Rights" in the Tender Offer Memorandum.

Before making a decision with respect to the Offer, Holders should carefully consider all of the information in the Tender Offer Memorandum and, in particular, the risk factors described in the section entitled "Risk Factors and Other Considerations" in the Tender Offer Memorandum.

FURTHER INFORMATION

Lucid Issuer Services Limited has been appointed by the Offeror as tender agent (the "Tender Agent") in connection with the Offer.

Lloyds Bank Corporate Markets plc has been appointed by the Offeror as Dealer Manager (the "Dealer Manager") for the purposes of the Offer.

For further information please contact:

Investor Relations:

Douglas RadcliffeGroup Investor Relations DirectorTelephone: +44 (0)20 7356 1571Email: douglas.radcliffe@finance.lloydsbanking.com

DISCLAIMER

This announcement must be read in conjunction with the Tender Offer Memorandum. This announcement and the Tender Offer Memorandum contain important information which should be read carefully before any decision is made with respect to the Offer. If any Holder is in any doubt as to the action it should take or is unsure of the impact of the Offer, it is recommended to seek its own financial and legal advice, including as to any tax consequences, from its stockbroker, bank manager, solicitor, accountant or other independent financial or legal adviser. Any individual or company whose Notes are held on its behalf by a broker, dealer, bank, custodian, trust company or other nominee or intermediary must contact such entity if it wishes to tender Notes in the Offer. None of the Offeror, the Dealer Manager or the Tender Agent (or any of their respective directors, officers, employees, agents or affiliates) is providing Holders with any legal, business, tax or other advice in the Tender Offer Memorandum. Holders should consult with their own advisers as needed to assist them in making an investment decision and to advise them whether they are legally permitted to tender Notes for cash.

OFFER AND DISTRIBUTION RESTRICTIONS

Neither this announcement nor the Tender Offer Memorandum constitutes an offer or an invitation to participate in the Offer in the United States or in any other jurisdiction in which, or to any person to or from whom, it is unlawful to make such offer or invitation or for there to be such participation under applicable laws. The distribution of this announcement and the Tender Offer Memorandum in certain jurisdictions may be restricted by law. Persons into whose possession this announcement and/or theTender Offer Memorandum comes are required by each of the Offeror, the Dealer Manager and the Tender Agent to inform themselves about and to observe any such restrictions.

United States

The Offer is not being made, and will not be made, directly or indirectly in or into, or by use of the mail of, or by any means or instrumentality of interstate or foreign commerce of or of any facilities of a national securities exchange of, the United States. This includes, but is not limited to, facsimile transmission, electronic mail, telex, telephone, the internet and other forms of electronic communications. The Notes may not be tendered in the Offer by any such use, means, instrumentality or facility from or within the United States or by persons located or resident in the United States as defined in Regulation S of the U.S. Securities Act of 1933, as amended. Accordingly, copies of this announcement, the Tender Offer Memorandum and any other documents or materials relating to the Offer are not being, and must not be, directly or indirectly mailed or otherwise transmitted, distributed or forwarded (including, without limitation, by custodians, nominees or trustees) in or into the United States. Any purported tender of Notes in the Offer resulting directly or indirectly from a violation of these restrictions will be invalid and any purported tender of Notes made by a person located in the United States or any agent, fiduciary or other intermediary acting on a non-discretionary basis for a principal giving instructions from within the United States will be invalid and will not be accepted.

Each holder of Notes participating in the Offer will represent that it is not located in the United States and is not participating in the Offer from the United States or it is acting on a non-discretionary basis for a principal located outside the United States that is not giving an order to participate in the Offer from the United States. For the purposes of this and the above paragraph, "United States" means United States of America, its territories and possessions, any state of the United States of America and the District of Columbia.

United Kingdom

The communication of this announcement and the Tender Offer Memorandum by the Offeror and any other documents or materials relating to the Offer is not being made, and such documents and/or materials have not been approved, by an authorised person for the purposes of section 21 of the Financial Services and Markets Act 2000 (the "FSMA"). Accordingly, such documents and/or materials are not being distributed to, and must not be passed on to, the general public in the United Kingdom. The communication of such documents and/or materials is exempt from the restriction on financial promotions under section 21 of the FSMA on the basis that it is only directed at and may be communicated to (1) those persons who are existing members or creditors of the Offeror or other persons within Article 43 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, and (2) to any other persons to whom these documents and/or materials may lawfully be communicated.

Belgium

Neither this announcement, the Tender Offer Memorandum nor any other documents or materials relating to the Offer has been submitted to, or will be submitted for approval or recognition to, the Belgian Financial Services and Markets Authority (Autorité des services et marchés financiers/Autoriteit voor financiële diensten en markten) and, accordingly, the Offer may not be made in Belgium by way of a public offering, as defined in Articles 3 and 6 of the Belgian Law of 1 April 2007 on public takeover bids (as amended) (the "Belgian Takeover Law"). Accordingly, the Offer may not be advertised and the Offer will not be extended, and neither this announcement, the Tender Offer Memorandum nor any other documents or materials relating to the Offer (including any memorandum, information circular, brochure or any similar documents) has been or shall be distributed or made available, directly or indirectly, to any person in Belgium other than (i) to "qualified investors" within the meaning of Article 10 of the Belgian Law of 16 June 2006 on the public offer of placement instruments and the admission to trading of placement instruments on regulated markets (as amended), acting on their own account and (ii) in any circumstances set out in Article 6, §4 of the Belgian Takeover Law. Insofar as Belgium is concerned, the Tender Offer Memorandum has been issued only for the personal use of the above qualified investors and exclusively for the purpose of the Offer. Accordingly, the information contained in this announcement and the Tender Offer Memorandum may not be used for any other purpose or disclosed to any other person in Belgium.

France

The Offer is not being made, directly or indirectly, to the public in the Republic of France ("France"). Neither this announcement, the Tender Offer Memorandum nor any other documents or offering materials relating to the Offer have been or shall be distributed to the public in France and only qualified investors (investisseurs qualifiés) acting for their own account, all as defined in, and in accordance with, Articles L.411-1, L.411-2 and D.411-1 of the French Code monétaire et financier, are eligible to participate in the Offer. The Tender Offer Memorandum has not been submitted to the clearance procedures (visa) of the Autorité des marchés financiers.

Italy

None of this announcement, the Tender Offer Memorandum or any other documents or materials relating to the Offer have been or will be submitted to the clearance procedure of the Commissione Nazionale per le Società e la Borsa ("CONSOB") pursuant to Italian laws and regulations.

The Offer is being carried out in the Republic of Italy as exempted offers pursuant to Article 101-bis, paragraph 3-bis of the Legislative Decree No. 58 of 24 February 1998, as amended (the "Financial Services Act") and Article 35-bis, paragraph 4 of CONSOB Regulation No. 11971 of 14 May 1999, as amended (the "Issuers' Regulation").

A holder of Notes located in the Republic of Italy can tender Notes through authorised persons (such as investment firms, banks or financial intermediaries permitted to conduct such activities in the Republic of Italy in accordance with the Financial Services Act, CONSOB Regulation No. 20307 of 15 February 2018, as amended from time to time, and Legislative Decree No. 385 of 1 September 1993, as amended) and in compliance with applicable laws and regulations or with requirements imposed by CONSOB or any other Italian authority.

Each intermediary must comply with the applicable laws and regulations concerning information duties vis-à-vis its clients in connection with the Notes or the Offer.

GENERAL

The Dealer Manager and the Tender Agent (and their respective directors, officers, employees, agents or affiliates) make no representations or recommendations whatsoever regarding this announcement, the Tender Offer Memorandum or the Offer. The Tender Agent is the agent of the Offeror and owes no duty to any Holder. None of the Offeror, the Dealer Manager or the Tender Agent (or any of their respective directors, officers, employees, agents or affiliates) makes any recommendation as to whether or not Holders should participate in the Offer.

Neither this announcement nor the Tender Offer Memorandum constitutes an offer to buy or the solicitation of an offer to sell Notes (and tenders of Notes in the Offer will not be accepted from Holders) in any circumstances in which such offer or solicitation is unlawful. In those jurisdictions where the securities, blue sky or other laws require an Offer to be made by a licensed broker or dealer or similar and the Dealer Manager or any of the Dealer Manager's affiliates is such a licensed broker or dealer or similar in any such jurisdiction, the Offer shall be deemed to be made by the Dealer Manager or such affiliate, as the case may be, on behalf of the Offeror in such jurisdiction.

In addition to the representations referred to above in respect of the United States, the United Kingdom, Belgium, France and Italy, each Holder participating in the Offer will also be deemed to give certain representations, acknowledgements, warranties and undertakings and make certain agreements in respect of the other jurisdictions referred to above and generally as set out in "Procedures for Participating in the Offer" in the Tender Offer Memorandum. Any tender of Notes for purchase pursuant to the Offer from a Holder that is unable to make these representations will not be accepted. Each of the Offeror, the Dealer Manager and the Tender Agent reserves the right, in its absolute discretion (and without prejudice to the relevant Holder's responsibility for the representations made by it), to investigate, in relation to any tender of Notes for purchase pursuant to the Offer, whether any such representation given by a Holder is correct and, if such investigation is undertaken and as a result the Offeror determines (for any reason) that such representation is not correct, such tender shall not be accepted.

FORWARD LOOKING STATEMENTS

Certain statements included herein may constitute forward looking statements with respect to the business, strategy and plans of the Offeror and its current goals and expectations relating to its future financial condition and performance. Statements that are not historical facts, including statements about the Offeror or its directors' and/or management's beliefs and expectations, are forward looking statements. Words such as 'believes', 'anticipates', 'estimates', 'expects', 'intends', '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 circumstances that will or may occur in the future.

The forward looking statements contained in this announcement are made as of the date hereof, and the Offeror expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward looking statements contained in this announcement to reflect any change in the Offeror's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.