"The ridiculously short time scale.
The fact that those with good broker contact would easily meet the
reqirements for Euroclear numbers, whilst the less fortunate (possibly those who most depended on the income) would encounter difficulties.
The fact that the default position was not made abundantly clear.
The fact that Lloyds had the option of offering a reduced coupon to all bond holders rather than ECNs to the fortunate few.
The fact that without notice to bond holders, Halifax PSBs were swapped to BOS PSBs
The feeling that the whole exercise was designed to restrict the no. of ECNs issued"
The £700 per half year loss of interest, may add to my wife's determination to live until 2012, it will certainly dent our moderate income."

CASE 2

"myself and my wife have £50,000 of this share which we rely upon for income as my wife is a housewife and i am semi-retired. to lose £3.4 per year in income is a major anxiety for us and we dont know how we will manage. we are frantic with worry.

we cant understand how some prefs.will receive income and others will miss out. i thought company law was that all classes of share were equal. we cant understand either how a company can have distributable reserves and not meet a commitment.
i know you cannot advise even if you have the time to respond to us, but we just thought you would like to know some profound effects of this situation on two minnow investors."

CASE 3

"I had my ECN form returned by Equiniti because not understanding the requirement to have a Euroclear or Clearstream account with a broker I had sent the form off with the account no. that was on the LLPF share certificate.The form, but not the certificate, was returned only two days
before the closure date although the form and share certificate had been sent to Equiniti weeks before. at any rate only a day or so after I had
received the form from them. With such a short time to firstly understand what I had done wrong and then get the form to Equiniti in time I had a
problem which I only began to understand by ringing round Eqiniti -who would not help me by giving me the name of a broker that could do what they wanted- and four brokers ,two of which I normally deal with but could not help either because they did not deal with this sort of transaction or because their deadline had been passed. On the forth attempt Walker Crips ,a broker I had dealt with some years ago and had no existing account with after a few hours working out what to do sent me forms to fill in over the internet so that I could have an account with them and asked to sent these forms together with the form Equiniti had returned to me and the letter accompanying it to them(Walker Crips) by guaranteed next day delivery. I did all this and although I received a letter from them thanking me for opening an account with them I have as yet received no information regarding whether the papers reached Equiniti in time or anything else regarding the progress of this business.
Well that's my story to date and as for a comment,well for a starting point of not understanding what was wanted of me and having the form returned and being at a loss regarding what to do with the returned form to the present point in time when I still have no idea of the outcome all I can say is that for a person like myself the process that Lloyds used was completely incomprehensable ,put me to much trouble and I believe requires at the very least an apology and if things did not turn well perhaps compensation.
Wishing you the very best in what you are doing. "

In a message dated 08/12/2009 10:05:25 GMT Standard Time, MarkDTaber writes:

Dear Mr Oliver

I trust you will appreciate that I have left some time for the dust settle on this issue. However, I am still being contacted on a daily basis by
Lloyds investors who were either unable to accept the Exchange Offer or have had their Forms rejected and returned because they did not have a
Clearstream / Euroclear Account. These new cases mainly relate to certificated holders.

I am sure you are well aware that the points you have made in defence of the way the Offer was structured and communicated omit any comment on the fact that holding ECN's in CDI form through Crest was not an option at the time the Offer was communicated and only came about due to pressure exerted by concerned parties such as myself. Furthermore Lloyds did not communicate this new arrangement to certificated investors and even your registrars (who you used to provide a 'helpline') gave out incorrect and misleading information about this. In addition the one page Offer Letter and Form which was sent to certificated holders did not stress key points such as the need for a Clearstream / Euroclear account not the fact that coupons on non-exchanged securities were likely to be deferred for 2 years.

The above failures on the part of Lloyds have compounded to cause a large number of certificated holders (many pensioners with over £50,000 nominal invested) to suffer significant economic loss. This is evidenced by the fact that the bid price on the old securities they are left with is now about 30% lower than that on the ECN's into which they should have been able to exchange.

It really is time for Lloyds to do the honourable thing and admit that errors were made, acknowledge the direct consequences and take steps to
rectify the situation for the victims. I look forward to hearing from you.

Yours sincerely

Mark Taber

In a message dated 25/11/2009 19:57:01 GMT Standard Time, Michael.Oliver@LTSB-Finance.co.uk writes:

Dear Mr Taber,

We have corresponded at length on a number of issues relating to the Exchange Offers, but it is probably worth me summarising our position. 

There were two principal aims in structuring the Exchange Offers:

- a successful commercial outcome; and

- treating holders fairly.

A successful commercial outcome required a large take up from both institutional and retail holders, and that is what we tried to facilitate. Institutional investors require bonds to be held in clearing systems (Euroclear or Clearstream). In contrast, certain non-institutional/retail
holders only have access to the clearing systems or CREST indirectly via brokers or other intermediaries.

A question was raised as to why certificated ECNs could not be issued to holders of certificated Existing Securities. Structurally, the clearing
systems do not permit the bonds of a particular series to be represented in part by a global bearer bond held in their systems while at the same time definitive bearer bonds relating to the same series exist outside the clearing systems. However, to provide accessibility not only for
institutional investors and for those retail holders whose brokers have access to Euroclear and Clearstream but also for those retail holders whose brokers only have access to CREST accounts, the CREST Depositary Interests solution was implemented.  This allowed broker nominees to hold CREST depositary interests ("CDI"s) in ECNs on behalf of retail investors. The CDI solution was also available for, and taken up by, retail investors who hold Existing Securities in definitive certificated form.

- Like institutional holders, retail holders could sell their securities in the market outside the Exchange Offer for cash.

- Like institutional holders, retail holders holding £1,000 nominal or more could choose the equity option (ECA) under the Exchange Offer and receive either certificated or uncertificated shares.

- Like institutional holders, retail holders holding £1,000 nominal or more could elect to receive ECNs.

In addition, however, certain small holders (<£1,000) will be given the opportunity to cash out under the Retail Holdings Offer ("RHO").

In summary, there were a number of potential routes for retail holders who hold £1000 nominal or more: cash (as described above), ECNs (through CDIs if necessary) or equity.

It is worth noting that the Exchange Offer was held open for a period significantly longer than that for any normal exchange offer in order to
give retail and other holders time to participate.  The offer period was left open for the maximum period possible prior to the General Meeting.

It is also worth noting that a number of brokers were both willing and able to process requests to dematerialise certificated holdings within a period of one to two days and we are aware of holders having done that through a range of different brokers and nominees in order to participate in the Exchange Offer.

In addition, the prospectus describing the Exchange Offer was prepared to the standard mandated by the EU Prospectus Directive for retail offers and was approved by the UKLA as such.

With regard to the Retail Holdings Offer, as I have previously mentioned, without going into the detail of our discussions with our regulators, there
was a limit to the amount available to the Retail Holding Offer and we simply did not have 'carte blanche' in this regard. Approximately 90% of
individual investors have holdings of less than £1,000 and we developed the Retail Holdings Offer to assist those investors.  On the issue of pooled broker nominee accounts - neither we nor our advisors have access to verify underlying holders and holdings within pooled nominee accounts.  When I mentioned to you that there are a high proportion of holdings under the £1,000 threshold, I was not referring to holdings within pooled nominee accounts but rather to direct holdings which we are able to verify.

Mr Taber, we believe that the Group has done as much as was practicable and reasonable to facilitate the participation of all holders in the Exchange Offer and to treat holders equitably.

Regards

Michael Oliver
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