Bank of Scotland Plc 63GF Notice of Covered Bondholder Meeting

  Bank of Scotland Plc (63GF) - Notice of Covered Bondholder Meeting

RNS Number : 0351R
Bank of Scotland Plc
13 November 2012




                     NOTICE OF COVERED BONDHOLDER MEETING

   THIS NOTICE IS IMPORTANT AND REQUIRES THE IMMEDIATE ATTENTION OF COVERED
                                 BONDHOLDERS.

 If Covered Bondholders are in any doubt about any aspect of the proposals in
 this notice and/or the action they should take, they are recommended to seek
 their own financial advice immediately from their stockbroker, bank manager,
    solicitor, accountant or other financial adviser authorised under the
Financial Services and Markets Act 2000 (if they are in the United Kingdom) or
 from another appropriately authorised independent financial adviser and such
 other professional advisor from their own professional advisors as they deem
                                  necessary.

 If you have recently sold or otherwise transferred your entire holding(s) of
Covered Bonds referred to below, you should immediately forward this document
  to the purchaser or transferee or to the stockbroker, bank or other agent
    through whom the sale or transfer was effected for transmission to the
                           purchaser or transferee.

FURTHER INFORMATION REGARDING THE MATTERS REFERRED TO IN THIS ANNOUNCEMENT IS
 AVAILABLE IN THE CONSENT SOLICITATION MEMORANDUM (THE "CONSENT SOLICITATION
     MEMORANDUM") ISSUED BY THE ISSUER TODAY, AND COVERED BONDHOLDERS ARE
      ENCOURAGED TO READ THIS ANNOUNCEMENT IN CONJUNCTION WITH THE SAME.

                             BANK OF SCOTLAND PLC

                                 (the Issuer)

  (Incorporated with limited liability in Scotland with registered number SC
                                   327000)

                     NOTICE OF COVERED BONDHOLDER MEETING

                        to each of the holders of the

    EUR 2,000,000,000 Series 2 Covered Bonds due 2013 (ISIN: XS0178952650)

    EUR 1,250,000,000 Series 4 Covered Bonds due 2019 (ISIN: XS0193640629)

    EUR 2,000,000,000 Series 5 Covered Bonds due 2014 (ISIN: XS0201674594)

     GBP 500,000,000 Series 6 Covered Bonds due 2014 (ISIN: XS0208047778)

    EUR 1,500,000,000 Series 7 Covered Bonds due 2020 (ISIN: XS0212074388)

     EUR 89,100,000 Series 10 Covered Bonds due 2013 (ISIN: XS0226832250)

     USD 70,200,000 Series 11 Covered Bonds due 2013 (ISIN: XS0226831872)

    EUR 292,250,000 Series 12 Covered Bonds due 2012 (ISIN: XS0236528385)

    EUR 233,800,000 Series 13 Covered Bonds due 2013 (ISIN: XS0236528542)

    GBP 200,000,000 Series 14 Covered Bonds due 2013 (ISIN: XS0236527817)

   EUR 2,000,000,000 Series 15 Covered Bonds due 2013 (ISIN: XS0241851764)

   EUR 1,500,000,000 Series 16 Covered Bonds due 2021 (ISIN: XS0260981658)

   EUR 1,500,000,000 Series 17 Covered Bonds due 2016 (ISIN: XS0260981229)

   EUR 2,000,000,000 Series 18 Covered Bonds due 2014 (ISIN: XS0275093473)

   USD 2,193,934,000 Series 21 Covered Bonds due 2017 (ISIN: XS0286774483;

                       US40411EAB48; CUSIP: 40411EAB4)

   EUR 1,250,000,000 Series 22 Covered Bonds due 2017 (ISIN: XS0304458721)

   EUR 1,250,000,000 Series 23 Covered Bonds due 2022 (ISIN: XS0304459026)

   EUR 2,000,000,000 Series 25 Covered Bonds due 2015 (ISIN: XS0327502224)

   DKK 4,680,000,000 Series 26 Covered Bonds due 2018 (ISIN: DK0030075023)

   EUR 1,196,000,000 Series 29 Covered Bonds due 2019 (ISIN: XS0366238375)

   GBP 1,000,000,000 Series 33 Covered Bonds due 2014 (ISIN: XS0390482213)

    EUR 591,750,000 Series 35 Covered Bonds due 2014 (ISIN: XS0390479185)

    EUR 591,750,000 Series 36 Covered Bonds due 2016 (ISIN: XS0390479268)

    EUR 591,750,000 Series 37 Covered Bonds due 2016 (ISIN: XS0391406591)

    GBP 410,000,000 Series 38 Covered Bonds due 2014 (ISIN: XS0391406088)

   EUR 2,130,300,000 Series 39 Covered Bonds due 2015 (ISIN: XS0391405783)

    EUR 591,750,000 Series 40 Covered Bonds due 2017 (ISIN: XS0391405940)

    EUR 850,000,000 Series 41 Covered Bonds due 2016 (ISIN: XS0496583468)

(the Covered Bonds, and the holders thereof, the Covered Bondholders) of the
                        Issuer presently outstanding.

NOTICE IS HEREBY GIVEN that a meeting of the Covered Bondholders (the Meeting)
convened by the Issuer will be held at  the offices of Allen & Overy LLP,  One 
Bishops Square, London E1 6AD on 6 December 2012. The Meeting will be held at
3 p.m. (London time) (4 p.m. CET and  10 a.m. New York time), for the  purpose 
of considering and, if thought fit, passing the Resolution set out below which
will be  proposed  as  an  Extraordinary Resolution  in  accordance  with  the 
provisions of the Trust Deed dated 18  July 2003 as amended and restated  from 
time to time (the  Trust Deed) made between  the Issuer, the Group  Guarantor, 
the LLP and Citicorp Trustee Company Limited (the Bond Trustee) as trustee for
the Covered Bondholders and constituting the Covered Bonds. Capitalised terms
used in this notice and not  otherwise defined herein shall have the  meanings 
given to them in  the Consent Solicitation Memorandum  dated 13 November  2012 
(the Consent Solicitation  Memorandum), which is  available upon request  from 
the Principal Paying Agent and in the Data Room (see "Documents Available  for 
Inspection" below).  In accordance  with normal  practice, each  of the  Bond 
Trustee, the Security Trustee, the  Tabulation Agent, the Solicitation  Agent, 
the Principal Paying Agent, the Paying Agent, the Bond Registrar, the LLP  and 
the Group Guarantor have not been  involved in the formulation of, express  no 
opinion on,  and make  no representations  as to  the merits  of, the  Covered 
Bondholder Proposal  set  out  in the  Consent  Solicitation  Memorandum,  the 
Extraordinary  Resolution,  the  proposed   amendments  referred  to  in   the 
Extraordinary Resolution  set  out  below.  Each of  the  Bond  Trustee,  the 
Security Trustee, the Tabulation Agent, the Solicitation Agent, the  Principal 
Paying Agent, the  Paying Agent,  the Bond Registrar,  the LLP  and the  Group 
Guarantor has authorised it to be stated that, on the basis of the information
set out herein,  it has  no objection  to the  Extraordinary Resolution  being 
submitted to the  Covered Bondholders  for their consideration.  None of  the 
Bond Trustee, the Security Trustee, the Tabulation Agent, the Principal Paying
Agent, the Paying Agent,  the Bond Registrar, the  LLP or the Group  Guarantor 
makes any representation that all  relevant information has been disclosed  to 
Covered Bondholders in or  pursuant to this  Notice, the Consent  Solicitation 
Memorandum or otherwise. None of the Bond Trustee, the Security Trustee,  the 
Tabulation Agent,  the Solicitation  Agent, the  Principal Paying  Agent,  the 
Paying Agent, the Bond Registrar, the LLP or the Group Guarantor have approved
the draft  amended  Transaction Documents  referred  to in  the  Extraordinary 
Resolution set  out  below  and  the  Bond  Trustee  recommends  that  Covered 
Bondholders arrange  to  inspect and  review  such draft  amended  Transaction 
Documents as provided below in this Notice. Accordingly, Covered  Bondholders 
should take  own independent  legal, financial,  tax or  other advice  on  the 
merits  and  the  consequences  of  voting  in  favour  of  the  Extraordinary 
Resolution,  including  any  tax  consequences,  and  on  the  impact  of  the 
implementation of the Extraordinary Resolution.

None of  the Bond  Trustee the  Security Trustee,  nor any  of the  Tabulation 
Agent, the Solicitation Agent, the  Principal Paying Agent, the Paying  Agent, 
the Bond Registrar,  the LLP or  the Group Guarantor  are responsible for  the 
accuracy, completeness, validity or correctness of the statements made in  the 
Consent Solicitation Memorandum or omissions therefrom.

Neither this announcement nor  the Consent Solicitation Memorandum  constitute 
or form part of, and  should be construed as, an  offer for sale, exchange  or 
subscription of, or a solicitation of any offer to buy, exchange or  subscribe 
for, any securities of  the Issuer or any  other entity. The distribution  of 
the Consent Solicitation Memorandum  may nonetheless be  restricted by law  in 
certain jurisdictions. Persons into whose possession the Consent Solicitation
Memorandum comes are required to inform themselves about, and to observe,  any 
such restrictions.

The EUR 292,250,000 Series 12 Covered Bonds due 2012 (ISIN: XS0236528385) (the
Series 12 Covered Bonds) are  due to be redeemed in  full on 26 November  2012 
and therefore prior to the proposed Meeting. Covered Bondholders holding  the 
Series 12 Covered Bonds will not be entitled to attend or vote at the Meeting,
to the extent that  the Series 12  Covered Bonds are  redeemed on 26  November 
2012, as expected.

                                  BACKGROUND

The Bank  of  Scotland  plc's  EUR 60  billion  covered  bond  programme  (the 
Programme) was  the first  covered bond  programme to  be established  in  the 
United Kingdom, in 2003. Bank of  Scotland plc was registered as a  regulated 
covered bond issuer in 2008, and all covered bonds issued under this Programme
are regulated covered bonds as per the Regulated Covered Bond Regulations (the
RCB Regulations).

Rating agency criteria have  changed since the  Programme was established  and 
certain  transaction  documents  drafted  in  accordance  with  rating  agency 
criteria at the  time of  execution no longer  meet the  latest rating  agency 
criteria.

S&P published revised counterparty  criteria in respect  of covered bonds  and 
structured finance  transactions on  31  May 2012  (the New  S&P  Counterparty 
Criteria). The New S&P Counterparty Criteria do not permit the grandfathering
of existing covered  bonds or  programmes and therefore  the Programme  and/or 
S&P's AAA rating  of the  covered bonds  issued under  it are  expected to  be 
directly impacted if the amendments required in order to implement the New S&P
Counterparty Criteria are not  so implemented. To avoid  any such impact  the 
amendments required in relation to the  New S&P Counterparty Criteria must  be 
implemented by 11 January 2013.

Failure to implement such changes in relation to the Programme may potentially
result in (1) the ratings ascribed to all existing covered bonds issued  under 
the Programme being downgraded by S&P or otherwise adversely affected and  (2) 
other adverse  consequences  for  the holders  of  covered  bonds  (including, 
without limitation, in  relation to the  price at which  the existing  covered 
bonds may trade).

Fitch reviewed their covered bond rating criteria on 10 September 2012. On  13 
September 2012, Fitch published  a press release stating  the new "D-Cap"  for 
the Programme  would  be 3  (moderate  high), placing  an  uplift  restriction 
commensurate with this score on the  covered bond rating relative to the  Bank 
of Scotland  plc's  issuer  default  rating.  The  proposed  amendments  are 
intended to improve the Fitch D-Cap score.

Since the establishment of the Programme, several other credit institutions in
the UK  have set  up covered  bond  programmes. All  such programmes  have  a 
broadly similar structure to that of  the Programme. However, over time  there 
have  been   developments  and   updates  to   rating  agency   criteria   and 
methodologies, developments in the RCB  Regulations and market practices.  To 
address changes  in  rating  agency criteria  and  methodologies,  ensure  the 
Programme is more  closely aligned  with particular features  used in  certain 
other covered bond programmes in  the UK and to  align the Programme with  the 
Issuer's current business practices, it is proposed that certain amendments be
made.

Please note that  the Amendment Documents  have been delivered  to the  Rating 
Agencies for their  review and it  is expected that  the Rating Agencies  will 
notify the Issuer  as to  whether the  Amendment Documents  are acceptable  to 
them. Should any Rating Agency provide  notice prior to the execution of  the 
Amendment Documents that such Rating Agency may take adverse rating action  in 
relation to the Covered Bonds even if the proposed amendments are implemented,
then the Amendment  Documents may not  be executed. The  Issuer shall  notify 
existing Covered Bondholders if that happens.



                         COVERED BONDHOLDER PROPOSAL

Pursuant to the above, the Issuer has convened the Meeting by the above notice
to request that Covered Bondholders consider and agree by Extraordinary
Resolution to the matters contained in the Extraordinary Resolution set out
below.

The Extraordinary  Resolution,  if  passed,  constitutes  (amongst  others)  a 
direction by the  Covered Bondholders  to the  Bond Trustee  and the  Security 
Trustee to consent and  to concur with the  following amendments to the  Trust 
Deed, the Conditions, the LLP Deed, the Agency Agreement, the Cash  Management 
Agreement, the  Bank  Account  Agreement, the  Mortgage  Sale  Agreement,  the 
Original Interest Rate Swap  Agreement, each Covered  Bond Swap Agreement  and 
the MDCA  to address  changes  in rating  agency criteria  and  methodologies, 
ensure the Programme is more closely aligned with particular features used  in 
certain other covered  bond programmes in  the UK and  to align the  Programme 
with the Issuer's current business practices:

(A) to update the Original Interest Rate Swap Agreement and each Covered
Bond Swap  Agreement to  address changes  to the  criteria of  S&P, Fitch  and 
Moody's, and to make certain other changes;

(B) to amend the LLP Deed and the Conditions and change the period  when 
failure to  fund the  Pre-Maturity  Ledger will  trigger  an Issuer  Event  of 
Default from six months prior to the relevant maturity, to eleven months;

(C) to update the Account Bank Ratings in line with the latest  criteria 
of the rating agencies;

(D) to  terminate  the stand-by  arrangements  under the  terms  of  the 
Stand-By Bank Account Agreement  and Stand-by Guaranteed Investment  Contract, 
and the  removal  of  references  to these  arrangements  in  the  Transaction 
Documents;

(E) to update the Reserve  Fund Required Amount to reflect  arrangements 
used in certain other UK regulated  covered bond programmes and latest  rating 
agency criteria;

(F) to update  the calculation of  the set-off risk  used in the  Asset 
Coverage Test, in  line with the  current rating agency  criteria which  takes 
account of  the  application of  the  Financial Services  Compensation  Scheme 
(FSCS) as a  risk mitigant, as  well as  to introduce a  rating trigger  above 
which no amounts for set-off risk would need to be posted;

(G) to amend certain Transaction Documents  to allow for the posting  of 
Swap Collateral in the form of securities (in addition to cash), and to  allow 
for the appointment  of one or  more custodians to  hold such securities,  and 
make amendments to the definition  of the Account Bank  (in the MDCA) and  the 
Bank Account Agreement  to refer  to any  custodian and  account agreement  in 
respect of any swap collateral account;

(H)  to  amend  the  definition  of  Swap  Provider  Default  to  remove 
references to a Termination Event;

(I) to amend  the Mortgage  Sale Agreement  (MSA), to  permit a  single 
signatory  to  provide  solvency  certificates  and  to  delete  the   largely 
duplicative requirement to undertake  legal and auditor  due diligence on  the 
annual Programme update;

(J) to amend the Trust Deed to allow the Bond Trustee and the  Security 
Trustee to  agree  (without  the  need for  further  consent  of  the  Covered 
Bondholders) future  amendments to  the Transaction  Documents required  as  a 
result  of,  or  in  consequence  of  ongoing  updates  and  changes  to   the 
methodologies and criteria adopted by rating agencies, to the RCB Regulations,
to permit for greater efficiency in any future novation of counterparty roles,
and to introduce soft bullet covered bonds into the covered bond programme,

together with such consequential amendments and documents as may be  necessary 
to give effect thereto, the Covered Bondholder Proposal.

The Covered Bondholder Proposal  is being put to  Covered Bondholders for  the 
reasons set out in the Consent Solicitation Memorandum.

Covered Bondholders are referred to the Consent Solicitation Memorandum  which 
provides further  background to  the Covered  Bond Proposals  and the  reasons 
therefor.

             EXTRAORDINARY RESOLUTION OF THE COVERED BONDHOLDERS

"THAT this Meeting (the Meeting) of the holders of EUR 2,000,000,000 Series  2 
Covered Bonds  due  2013  (ISIN: XS0178952650),  EUR  1,250,000,000  Series  4 
Covered Bonds  due  2019  (ISIN: XS0193640629),  EUR  2,000,000,000  Series  5 
Covered Bonds due 2014 (ISIN: XS0201674594), GBP 500,000,000 Series 6  Covered 
Bonds due 2014 (ISIN: XS0208047778), EUR 1,500,000,000 Series 7 Covered  Bonds 
due 2020 (ISIN: XS0212074388), EUR 89,100,000 Series 10 Covered Bonds due 2013
(ISIN: XS0226832250), USD 70,200,000 Series  11 Covered Bonds due 2013  (ISIN: 
XS0226831872), EUR  292,250,000  Series  12  Covered  Bonds  due  2012  (ISIN: 
XS0236528385), EUR  233,800,000  Series  13  Covered  Bonds  due  2013  (ISIN: 
XS0236528542), GBP  200,000,000  Series  14  Covered  Bonds  due  2013  (ISIN: 
XS0236527817), EUR  2,000,000,000  Series 15  Covered  Bonds due  2013  (ISIN: 
XS0241851764), EUR  1,500,000,000  Series 16  Covered  Bonds due  2021  (ISIN: 
XS0260981658), EUR  1,500,000,000  Series 17  Covered  Bonds due  2016  (ISIN: 
XS0260981229), EUR  2,000,000,000  Series 18  Covered  Bonds due  2014  (ISIN: 
XS0275093473), USD  2,193,934,000  Series 21  Covered  Bonds due  2017  (ISIN: 
XS0286774483; US40411EAB48;  CUSIP: 40411EAB4),  EUR 1,250,000,000  Series  22 
Covered Bonds  due  2017 (ISIN:  XS0304458721),  EUR 1,250,000,000  Series  23 
Covered Bonds  due  2022 (ISIN:  XS0304459026),  EUR 2,000,000,000  Series  25 
Covered Bonds  due  2015 (ISIN:  XS0327502224),  DKK 4,680,000,000  Series  26 
Covered Bonds  due  2018 (ISIN:  DK0030075023),  EUR 1,196,000,000  Series  29 
Covered Bonds  due  2019 (ISIN:  XS0366238375),  GBP 1,000,000,000  Series  33 
Covered Bonds due 2014 (ISIN: XS0390482213), EUR 591,750,000 Series 35 Covered
Bonds due 2014 (ISIN: XS0390479185),  EUR 591,750,000 Series 36 Covered  Bonds 
due 2016 (ISIN:  XS0390479268), EUR  591,750,000 Series 37  Covered Bonds  due 
2016 (ISIN: XS0391406591), GBP  410,000,000 Series 38  Covered Bonds due  2014 
(ISIN: XS0391406088),  EUR  2,130,300,000 Series  39  Covered Bonds  due  2015 
(ISIN: XS0391405783), EUR 591,750,000 Series 40 Covered Bonds due 2017  (ISIN: 
XS0391405940), EUR  850,000,000  Series  41  Covered  Bonds  due  2016  (ISIN: 
XS0496583468) of BANK OF SCOTLAND PLC presently outstanding (the Covered Bonds
and the Issuer respectively) constituted by the Trust Deed dated 18 July  2003 
as further amended and  supplemented from time to  time (the Trust Deed)  made 
between the Issuer,  HBOS PLC (the  Group Guarantor), HBOS  Covered Bonds  LLP 
(the LLP) and Citicorp Trustee Company  Limited (the Bond Trustee) as  trustee 
for the holders of the Covered Bonds hereby:

1. approves and assents to the Covered Bondholder Proposal;

2. assents to and authorises, directs, requests and empowers the  Bond 
Trustee, the Issuer, the  Group Guarantor, the LLP,  the Security Trustee  and 
each other party  thereto or  referred to therein  to consent  to the  Covered 
Bondholder  Proposal  and  consent  to  and  execute  the  modifications   and 
amendments included  in the  Twelfth Supplemental  Trust Deed  (including  the 
Conditions), the Amended and Restated Bank Account Agreement, the Amended  and 
Restated Mortgage Sale Agreement, the  Amendment Agreement in relation to  the 
Original Interest Rate Swap  Agreement and each  Covered Bond Swap  Agreement, 
the Amended and  Restated Master Definitions  and Construction Agreement,  the 
Amended and  Restated  LLP Deed,  the  Amended and  Restated  Cash  Management 
Agreement and  the  Amended  and  Restated  Agency  Agreement  (together,  the 
Amendment Documents) and such consequential amendments and documents necessary
to reflect and implement the Covered Bond Proposal;

3. sanctions and assents to every abrogation, modification, compromise
or  arrangement  in  respect  of   the  rights  of  the  Covered   Bondholders 
appertaining to the  Covered Bonds  against the  Issuer, whether  or not  such 
rights arise under  the Trust Deed,  involved in  or resulting from  or to  be 
effected by, the modifications referred to in paragraph (1) of this Resolution
and their implementation;

4. authorises, directs,  requests and empowers  the Bond Trustee,  the 
Issuer, the Group  Guarantor, the  LLP, the  Security Trustee  and each  other 
party thereto to concur in the  modifications referred to in paragraph (1)  of 
this Resolution and,  in order  to give effect  thereto and  to implement  the 
same, forthwith to execute the Amendment  Documents in draft form produced  to 
this Meeting and  for the  purpose of  identification signed  by the  Chairman 
thereof with  such amendments  (if  any) thereto  as  the Bond  Trustee  shall 
require or approve and  to concur in,  and to execute and  do, all such  other 
deeds, instruments, acts  and things  as may  be necessary  or appropriate  to 
carry out and  give effect to  this Resolution and  the implementation of  the 
modifications referred to in paragraph (1) of this Resolution;

5. discharges and exonerates each of the Bond Trustee and the Security
Trustee from  all liability  for which  they  may have  become or  may  become 
responsible under  the  Trust  Deed,  the Covered  Bonds  or  any  Transaction 
Document  in  respect  of  any  act  or  omission  in  connection  with   this 
Extraordinary Resolution and the implementation thereof;

6. waives  any  and  all  requirements,  restrictions  and  conditions 
precedent  set  forth  in  the   Transaction  Documents  on  any  person,   in 
implementing the Amendment  Documents, this Extraordinary  Resolution and  the 
Covered Bond Proposal;

7. discharges  and  exonerates  the  Issuer, the  LLP  and  the  Group 
Guarantor from  all liability  for which  it  may have  become or  may  become 
responsible under  the  Trust  Deed,  the Covered  Bonds  or  any  Transaction 
Document or any document related thereto in respect of any act or omission  in 
connection with the passing of this Extraordinary Resolution or the  executing 
of any deeds, agreements,  documents or instructions,  the performance of  any 
acts, matters or things to be done to carry out and give effect to the matters
contemplated in  the  Amendment  Documents,  the Notice  of  Meeting  or  this 
Extraordinary Resolution;

8. agrees that  capitalised terms  in this  documentwhere not  defined 
herein shall  have the  meanings given  to them  in the  Consent  Solicitation 
Memorandum dated 13 November 2012 (a copy of which is available for inspection
as referred to in the Notice of Covered Bondholders); and

9. concurs in, executing and doing, all such other deeds, instruments,
acts and things and take such steps as may be necessary and desirable to carry
out and give effect to the Covered Bond Proposal and the Amendment Documents."

                             GENERAL INFORMATION

The attention  of Covered  Bondholders  is particularly  drawn to  the  quorum 
required for the  Covered Bondholders  Meeting and for  any adjourned  Meeting 
which is  set out  in paragraphs  1., 2.,  3. and  4. of  "Voting and  Quorum" 
below. Having regard to such  requirements, Covered Bondholders are  strongly 
urged either to attend the Meeting or  to take steps to be represented at  the 
Meeting, as referred to below, as soon as possible.

                              VOTING AND QUORUM

1. The provisions governing the  convening and holding of the  Meeting 
are set out  in the  fourth schedule to  the Trust  Deed, a copy  of which  is 
available for inspection  by the  Covered Bondholders  during normal  business 
hours at the specified  offices of the Principal  Paying Agent on any  weekday 
(public holidays excepted) and in the Data  Room up to and including the  date 
of the Meeting and at the Meeting.

All of the  Covered Bonds are  represented by  a global Covered  Bond and  are 
either: (i) held  by a common  depositary or common  safekeeper for  Euroclear 
Bank  S.A./N.V.   (Euroclear)  and   Clearstream  Banking,   société   anonyme 
(Clearstream, Luxembourg); (ii) held by a custodian for, and registered in the
name of Cede & Co. as nominee for, The Depository Trust Company (DTC) or (iii)
held in custody  by Danske  Bank A/S  as a  depositary, and  registered in  VP 
Securities A/S (VPS). For the purposes  of the Meeting, a Covered  Bondholder 
shall mean each person who is for the time being shown in the records of  DTC, 
VPS, Euroclear  or  Clearstream, Luxembourg  as  the holder  of  a  particular 
Principal Amount Outstanding of the Covered Bonds.

A Covered Bondholder wishing to attend  the Meeting in person must produce  at 
the Meeting a valid  voting certificate issued by  the Principal Paying  Agent 
relating to the Covered Bond(s) in respect of which it wishes to vote.

Any Covered Bondholder  who wishes  to vote  in respect  of the  Extraordinary 
Resolution but does not wish  to attend the Meeting  in person should: (i)  in 
the case of a beneficial owner whose Covered Bonds are held in book-entry form
by a  custodian, request  such beneficial  owner's custodian  to vote  on  the 
Extraordinary Resolution in accordance with the procedures set out in  Section 
4 - Procedures  in connection  with the  Consent Solicitation  of the  Consent 
Solicitation Memorandum, or  (ii) in the  case of a  Covered Bondholder  whose 
Covered Bonds are held  in book-entry form directly  in the relevant  Clearing 
System, vote on the Extraordinary Resolution in accordance with the procedures
set out in Section 4 - Procedures in connection with the Consent  Solicitation 
of the Consent Solicitation Memorandum.

Covered Bondholders should note that the timings and procedures set out  below 
reflect the  requirements for  Covered Bondholders'  meetings set  out in  the 
Trust Deed, but that the Clearing Systems and the relevant intermediaries  may 
have their own additional requirements as to timings and procedures for voting
on the Extraordinary Resolution. Accordingly, Covered Bondholders wishing  to 
vote in respect of the Extraordinary  Resolution are strongly urged either  to 
contact their custodian (in the case of a beneficial owner whose Covered Bonds
are held in book-entry  form by a custodian)  or the relevant Clearing  System 
(in the  case  of  a  Covered  Bondholder whose  Covered  Bonds  are  held  in 
book-entry form  directly  in  the  relevant  Clearing  System),  as  soon  as 
possible.

2. The quorum at any  meeting for passing an Extraordinary  Resolution 
shall (subject as provided  below) be one or  more persons present holding  or 
representing  Covered  Bonds  or  voting  certificates  or  being  proxies  or 
representatives and holding or representing  in aggregate not less than  fifty 
per cent. of  the Principal Amount  Outstanding of all  Covered Bonds for  the 
time being outstanding. If a quorum is not present within 15 minutes (or such
longer period not exceeding 30 minutes  as the chairman may decide) after  the 
time fixed for a Meeting, the Meeting will be adjourned for such period  being 
not less than 13 clear days nor more than 42 clear days, and to such place  as 
may be appointed  by the  chairman of  the meeting  and approved  by the  Bond 
Trustee. The  Extraordinary Resolution  will be  considered at  an  adjourned 
Meeting (notice of which  will be given to  the Covered Bondholders). At  any 
adjourned meeting,  one or  more persons  present holding  Definitive  Covered 
Bonds or voting certificates or being proxies or representatives (whatever the
nominal amount of  the Covered  Bonds so held  or represented  by them)  shall 
(subject as provided below) form a quorum and shall have the power to pass the
Extraordinary Resolution.

3. To be passed, the Extraordinary Resolution requires (a) a  majority 
in favour consisting  of not  less than  three-fourths of  the persons  voting 
thereat upon a  show of  hands or if  a poll  is duly demanded  by a  majority 
consisting of not less than three-fourths of  the votes cast on such poll;  or 
(b) a resolution  in writing  signed by or  on behalf  of Covered  Bondholders 
holding not less than fifty per  cent. in Principal Amount Outstanding of  the 
Covered Bonds, which resolution in writing may be contained in one document or
in several documents in like form each signed  by or on behalf of one or  more 
of the Covered Bondholders.  The question submitted to  the Meeting shall  be 
decided in the first instance by a show of hands unless a poll is (before,  or 
on the  declaration of,  the result  of the  show of  hands) demanded  by  the 
chairman of the Meeting, the Issuer,  the Guarantors, the Bond Trustee or  any 
person present holding a  Definitive Covered Bond or  a voting certificate  or 
being a proxy or representative (whatever the Principal Amount Outstanding  of 
the Covered Bonds so held or represented by him) a declaration by the chairman
that a resolution has been carried or carried by a particular majority or lost
or not carried by  a particular majority shall  be conclusive evidence of  the 
fact without proof of the number or proportion of the votes recorded in favour
of or against  such resolution. In  respect of the  outstanding Covered  Bonds 
which are not  denominated in  Sterling, the Principal  Amount Outstanding  of 
such Covered Bonds shall be the equivalent in Sterling at the relevant Covered
Bond Swap Rate. In such circumstances,  on any poll each person present  shall 
have one vote for each £1 (or  such other Sterling amount as the Bond  Trustee 
may in its absolute discretion stipulate) of the Principal Amount  Outstanding 
of the Covered Bonds (converted as above) which it holds or represents.

4. If passed, the Extraordinary Resolution passed at the Meeting  will 
be binding upon all  the Covered Bondholders and  upon all Receiptholders  and 
Couponholders of each Series whether or not present or voting at the Meeting.

5. If the  EUR 292,250,000  Series 12  Covered Bonds  due 2012  (ISIN: 
XS0236528385) (the Series 12 Covered Bonds) are redeemed in full prior to  the 
date of the Meeting, the  holders of the Series 12  Covered Bonds will not  be 
entitled to attend or vote at the Meeting.



                      DOCUMENTS AVAILABLE FOR INSPECTION

Copies  of  items  (a)  to   (c)  below  (together,  the  Covered   Bondholder 
Information) will  be  available  (1)  from  the  date  of  this  Notice,  for 
inspection by  existing Covered  Bondholders at  the specified  office of  the 
Principal Paying Agent  and (2) from  13 November 2012,  for inspection in  an 
on-line  data   room   accessible   to   existing   Covered   Bondholders   at 
https://echo.irooms.net/BoS1ConsentSolicitation (the  Data Room).  Access  to 
the Covered  Bondholder Information  in  the Data  Room  will be  provided  to 
existing Covered  Bondholders  on request  to  the Tabulation  Agent  and  the 
production of evidence  satisfactory to  the Tabulation Agent  of an  entity's 
status as an existing  Covered Bondholder and, in  the case of a  corporation, 
that the individual is a duly authorised representative of an existing Covered
Bondholder.

(a) this Notice;

(b) the Amendment Documents (including, for the avoidance of doubt, the
forms of the template that  will be used for  the Original Interest Rate  Swap 
and each Covered Bond Swap, attached to the draft of the Amendment Agreement);
and

(c) such  other ancillary  documents as  may be  approved by  the  Bond 
Trustee and/or such other relevant party as are necessary or desirable to give
effect to the Covered Bondholder Proposal in full.

This Notice  should  be  read  in  conjunction  with  the  Covered  Bondholder 
Information.

The Covered Bondholder  Information may  be supplemented from  time to  time. 
Existing Covered Bondholders should note  that the Amendment Documents may  be 
subject to amendment  (where such  amendments are  in line  with the  Proposed 
Amendments up until 7 days  prior to the date  fixed for the Meeting.  Should 
such amendments  be made,  blacklined  copies (showing  the changes  from  the 
originally available Amendment Documents) and clean versions will be available
for inspection, at the specified office  of the Principal Paying Agent and  in 
the Data Room. The  blackline copies of the  Amendment Documents will  contain 
certain other additional minor  amendments which are not  the subject of  this 
Consent  Solicitation  Memorandum,  or   the  Covered  Bond  Proposal,   being 
separately agreed with the Bond Trustee.

Existing Covered Bondholders will be  informed of amendments to the  Amendment 
Documents by announcements released on the information services of the  London 
Stock Exchange,  the Luxembourg  Stock Exchange  and the  OMX Nordic  Exchange 
Copenhagen A/S, and/or (where they have previously accessed the Data Room)  by 
e-mail.

Existing Covered Bondholders may access the Data Room or inspect the Amendment
Documents at the specified  office of the Principal  Paying Agent one or  more 
times prior to and on the date that Covered Bondholder Meeting is held.

Existing Covered  Bondholders who  request access  to the  Data Room  will  be 
deemed to have  authorised the Tabulation  Agent to pass  their details on  to 
Bank of Scotland plc, Lloyds TSB Bank plc and their respective advisers.



                             CONTACT INFORMATION

Further information relating to the  Proposed Amendments can be obtained  from 
Lloyds TSB Bank plc directly:



Lloyds TSB Bank plc

10 Gresham Street

London EC2V 7AE

United Kingdom

Telephone number: +44 20 7158 2057

Attention: Bond Syndicate

Email: BoSConsentSolicitation@lloydstsb.co.uk  The  address of  the  Principal 
Paying Agent, the Tabulation Agent, the Security Trustee and the Bond  Trustee 
are set out below:

Bond Trustee and Security Trustee         Tabulation Agent
Citicorp Trustee Company Limited          Lucid Issuer Services Limited
                                          Leroy House
Citigroup Centre                          436 Essex Road
                                          London N1 3QP
Canada Square, Canary Wharf
                                          United Kingdom
London E14 5LB
                                          Telephone number: +44 20 7704 0880
United Kingdom                            Email: lbg@lucid-is.com



Fax: +44 (0)20 7500 5857
Attention: Agency and Trust
Principal Paying Agent                    
Citibank, N.A., London Branch             

21st Floor, Citigroup Centre

Canada Square

Canary Wharf

London E14 5LB



Telephone: +44 20 7508 3830/3835

Telefax: +44 20 7508 3875/3876

Attention: Agency and Trust



Covered Bondholders whose Covered Bonds are held by Euroclear or  Clearstream, 
Luxembourg should contact the Tabulation Agent for further information on  how 
to vote at the Meeting:

Lucid Issuer Services Limited

Leroy House

436 Essex Road

London N1 3QP

United Kingdom



Attention: David Shilson / Thomas Choquet

Tel: +44 (0)20 7704 0880

Fax: +44 (0)20 7067 9098

Email: lbg@lucid-is.com



DTC direct participants or holders of Covered Bonds registered in VPS  wishing 
to obtain  and/or  deliver a  form  of proxy  in  accordance with  the  voting 
procedure described in the Consent Solicitation Memorandum should contact:



Lucid Issuer Services Limited

Leroy House

436 Essex Road

London N1 3QP

United Kingdom

Telephone number: +44 20 7704 0880

Attention: David Shilson / Thomas Choquet

Email: lbg@lucid-is.com



                                ANNOUNCEMENTS

If the Issuer is required to make an announcement relating to matters set  out 
in this Notice,  any such  announcement will be  made in  accordance with  all 
applicable rules and regulations via (i)  notices to the Clearing Systems  for 
communication to Covered  Bondholders, (ii)  an announcement  released on  the 
information services  of  the  London Stock  Exchange,  the  Luxembourg  Stock 
Exchange and the  OMX Nordic  Exchange Copenhagen  A/S and/or  (iii) a  notice 
published on Bloomberg.

This Notice is given by:

BANK OF SCOTLAND PLC

Dated 13 November 2012.





                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


MSCBUBDBRUBBGDX -0- Nov/13/2012 15:58 GMT
 
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