Lloyds Banking Group PLC — Proxy Solicitation & Information Statement 2015

Mar 27, 2015

LLOYDS BANKING GROUP

Dividend Reinvestment Plan Invitation

If you have any doubt about the action you should take, it is recommended that you consult your stockbroker, solicitor, accountant or other independent professional adviser authorised under the Financial Services and Markets Act 2000.

If you have sold or transferred all your ordinary shares in Lloyds Banking Group plc, please give this and the accompanying documents to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was made.

27 March 2015

Dear Shareholder

Lloyds Banking Group plc (the 'Company')

Dividend Reinvestment Plan Invitation

We announced on 27 February 2015 that your Directors were recommending a dividend of 0.75 pence per ordinary share in respect of the 2014 financial year. Shareholders will be asked to approve this dividend at the Company's 2015 annual general meeting. We also announced on 27 February that your Directors have decided to relaunch the Company's Dividend Reinvestment Plan ('DRIP'). I am now writing to you about your choice to receive the proposed 2014 dividend in cash or in the form of shares under the DRIP. I set out below some key information about your dividend choices, including how you can join the DRIP or continue to enjoy the benefits of the DRIP if you were a participant prior to the DRIP's suspension.

What is the DRIP?

The DRIP is a low cost way to use your dividend payments from the Company to purchase additional shares, enabling you to increase your shareholding in a convenient and cost-effective manner. The DRIP is administered by Equiniti Financial Services Limited ('Equiniti').

If you choose to join the DRIP or continue to participate in the DRIP, Equiniti will use your cash dividend to purchase shares on your behalf in the market as soon as practicable after the dividend payment date. Fees and charges are located in the DRIP Terms and Conditions.

Why are we relaunching the DRIP?

Shareholders at the 2014 Annual General Meeting passed a resolution which authorised your Directors to introduce a Scrip Dividend Programme ('SCRIP'). SCRIP provides shareholders with the option to take their dividend in the form of shares but, unlike a DRIP where the shares are bought in the market, SCRIP shares are newly issued which has the effect of diluting the holdings of shareholders who do not participate.

Following the AGM approval, revised Share Capital Management Guidelines were issued noting that investors now favour dividend reinvestment plans over an issue of new shares (as would occur under the SCRIP) to avoid dilution of their shareholding. Your Directors believe that it is in the best interests of shareholders to recommence the DRIP rather than proceed with the SCRIP, which has not yet been implemented. As such, we do not intend currently to utilise the authority given to implement the SCRIP. The authority for the SCRIP will expire on 30 June 2019. The Directors reserve the right to replace the DRIP with a SCRIP at any time until the authority expires.

What do you need to read?

We have published documentation on the DRIP to explain the choices available to shareholders. Shareholders will receive different DRIP documents depending on whether they are an existing participant in the DRIP.

Shareholders not currently in the DRIP will receive:

• a Dividend Payment Instruction Form detailing the existing payment method for receipt of cash dividends. If this applies to you, we ask that you check the details are correct. The Dividend Payment Instruction Form enables shareholders to change or add an instruction to pay dividends directly to a bank or building society account. Shareholders who elect to receive their dividend payment directly to their bank or building society account will receive the proceeds on the dividend payment date without the inconvenience of having to present a cheque and wait for it to clear; and
• a DRIP Election Form to enable those shareholders who would like to choose to receive their dividend in shares to join the DRIP.

Shareholders currently in the DRIP will receive:

• a DRIP Revocation Form confirming their existing participation in the DRIP. The Revocation Form allows shareholders to withdraw from the DRIP, should they wish to do so; and
• a Dividend Payment Instruction Form, which should only be completed by shareholders who choose to withdraw from the DRIP and would like to have their cash dividends paid directly to a bank or building society account.

You will also receive a guide titled 'Your Dividend - Your Choice' explaining the choices available, key dates for the DRIP and instructions on how to complete the forms mentioned above. It also provides additional information about the DRIP in the form of Frequently Asked Questions.

If you receive hard-copy communications from the Company, the DRIP Terms and Conditions are enclosed with this letter. Otherwise, they can be found at www.shareview.co.uk/info/drip

What do you need to do?

If you are not currently in the DRIP and would like to receive your dividend payment in cash, we ask that you check your existing payment method. You should only complete and return the Dividend Payment Instruction Form if the details have changed or you would like to add an instruction to pay dividends direct to your bank or building society account. You should not complete or return the DRIP Election Form.

If you are not currently in the DRIP but would like to join, please complete and return the DRIP Election Form. We ask that you read the 'Your Dividend - Your Choice' guide and the DRIP Terms and Conditions before making your choice.

If you are an existing participant in the DRIP, you will be treated as though you wish to remain in the DRIP unless you complete and return the DRIP Revocation Form. If you wish to stay in the DRIP, you do not need to take any further action. If you remain in the DRIP, any cash sum currently held on your behalf which was insufficient to purchase a share at the time of the last dividend will be rolled over and put towards the purchase of additional shares in respect of the dividend for the 2014 financial year. If you withdraw from the DRIP, any cash sum currently held on your behalf will be paid to you by Equiniti.

You will find a flow chart overleaf setting out the choices available which will enable you to quickly identify what action, if any, you should take.

When must you make your choice?

If you are making a change, to ensure that payment of the proposed 2014 dividend is paid in accordance with your instructions, Equiniti must receive the appropriate form no later than 5.00 pm on 21 April 2015. A reply paid envelope is enclosed for your convenience. Any forms received by Equiniti after this time will be applied to future dividend payments. Instructions may only be given using the forms provided as described above, or if necessary, a duplicate thereof supplied by Equiniti. We regret that electronic instructions, other than in CREST, cannot be accepted.

Shareholders can join or withdraw from the DRIP at any other time by notifying Equiniti (see paragraphs 3 and 13 of the DRIP Terms and Conditions). Any notice to join or withdraw from the DRIP will be effective at the time that such notice is received by Equiniti.

Participation in the DRIP is optional, and this invitation does not constitute advice to join, continue to participate in, or withdraw from, the DRIP. If you are unsure about joining, continuing to participate in, or withdrawing from the DRIP, we recommend that you seek independent financial advice. As described above, if you take no action you will receive your dividend in the method shown on the form sent to you.

If you have any questions about the DRIP please contact our Shareholder helpline on 0871 384 2990* or +44 121 415 7066 from outside the UK.

Yours faithfully

Lord Blackwell

Chairman

*Lines are open 8.30 am to 5.30 pm, Monday to Friday. Calls cost 8p per minute plus network extras.

Calls to +44 121 415 7066 from outside the UK are charged at applicable international rates.

Lloyds Banking Group plc is registered in Scotland no. 95000. Registered office: The Mound Edinburgh EH1 1YZ

*Note: Extended opening hours

31 March to 17 April 2015 (weekdays) - 8.00 am to 8.00 pm

6 April 2015 (only) - 10.00 am to 4.00 pm

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DIVIDEND REINVESTMENT PLAN ('DRIP')

WHAT ACTION DO YOU NEED TO TAKE?