NOTICE OF PREFERENCE COURT MEETINGS

HBOS plc

(registered in Scotland with registered number SC218813)

NOTICE IS HEREBY GIVEN that, in a petition presented by HBOS plc (the Company ) to the Court of Session in Edinburgh, Scotland (the Court ) and by an order pronounced on 14 November 2008 (the Order ), the Court has directed that separate meetings (each a Preference Court Meeting and together the Preference Court Meetings ) be convened of the holders (other than Restricted Entities (as defined in the Preference Scheme)) of (i) HBOS 9¼% Preference Shares; (ii) HBOS 9¾% Preference Shares; (iii) HBOS 6.0884% Preference Shares; (iv) HBOS 6.475% Preference Shares; (v) HBOS 6.3673% Preference Shares; (vi) HBOS 6.413% Preference Shares; (vii) HBOS 5.92% Preference Shares; and (viii) HBOS 6.657% Preference Shares (all as defined in the Preference Scheme and (i) to (viii) hereafter being referred to as the HBOS Preference Shares ) be convened for the purpose of considering and, if thought fit, approving (with or without modification) a scheme of arrangement (the Preference Scheme ) pursuant to Part 26 of the Companies Act 2006 proposed to be made between the Company and the holders of HBOS Preference Shares ( HBOS Preference Shareholders ) and that meetings of the classes of HBOS Preference Shareholders will be held at The NEC, Birmingham, B40 1NT on 12 December 2008 at the undermentioned times (London time), at which place and time all HBOS Preference Shareholders of each respective class of HBOS Preference Shares (other than any Restricted Entities) are invited to attend:

(i)  the meeting of the holders (other than any Restricted Entities) of the HBOS 9¼% Preference Shares will be held at 12 noon (or as soon thereafter as the general meeting of the Company convened for 10.10a.m. on the same day and at the same place shall have concluded or been adjourned);

(ii)   the meeting of the holders (other than any Restricted Entities) of the HBOS 9¾% Preference Shares will be held at 12.05p.m. (or as soon thereafter as the meeting convened for 12 noon on the same day and at the same place, by an order of the Court, shall have concluded or been adjourned);

(iii)   the meeting of the holders (other than any Restricted Entities) of the HBOS 6.0884% Preference Shares will be held at 12.10p.m. (or as soon thereafter as the meeting convened for 12.05p.m. on the same day and at the same place, by an order of the Court, shall have concluded or been adjourned);

(iv)   the meeting of the holders (other than any Restricted Entities) of the HBOS 6.475% Preference Shares will be held at 12.15p.m. (or as soon thereafter as the meeting convened for 12.10p.m. on the same day and at the same place, by an order of the Court, shall have concluded or been adjourned);

(v)   the meeting of the holders (other than any Restricted Entities) of the HBOS 6.3673% Preference Shares will be held at 12.20p.m. (or as soon thereafter as the meeting convened for 12.15p.m. on the same day and at the same place, by an order of the Court, shall have concluded or been adjourned);

(vi)   the meeting of the holders (other than any Restricted Entities) of the HBOS 6.413% Preference Shares will be held at 12.25p.m. (or as soon thereafter as the meeting convened for 12.20p.m. on the same day and at the same place, by an order of the Court, shall have concluded or been adjourned);

(vii)   the meeting of the holders (other than any Restricted Entities) of the HBOS 5.92% Preference Shares will be held at 12.30p.m. (or as soon thereafter as the meeting convened for 12.25p.m. on the same day and at the same place, by an order of the Court, shall have concluded or been adjourned); and

(viii)   the meeting of the holders (other than any Restricted Entities) of the HBOS 6.657% Preference Shares will be held at 12.35p.m. (or as soon thereafter as the meeting convened for 12.30p.m. on the same day and at the same place, by an order of the Court, shall have concluded or been adjourned).

At each of the Preference Court Meetings, the following resolution will be proposed:

‘‘That subject to the Ordinary Scheme (as defined in the Preference Scheme referred to below) becoming effective, the scheme of arrangement dated 14 November 2008 (the Preference Scheme ), between the Company and each class of Preference Scheme Shareholders (as defined in the Preference Scheme), a print of which has been produced to this meeting and for the purposes of identification signed by the chairman hereof in its original form or with or subject to any modification, addition or condition approved or imposed by the Court, be approved and the directors of the Company be authorised to take all such actions as they consider necessary or appropriate for carrying the Preference Scheme into effect.’’

Voting on the resolution at each Preference Court Meeting will be by poll which shall be conducted as the chairman of the Preference Court Meetings may determine. For a Preference Court Meeting (or any adjournment thereof) to be properly convened, a quorum of two persons (other than any Restricted Entities) who hold at least one third of the total nominal value of the existing shares of the relevant class of HBOS Preference Share in issue and who are entitled to vote on the resolution must be present whether in person or by proxy. If a Preference Court Meeting is adjourned, the quorum for that adjourned Preference Court Meeting shall be two HBOS Preference Shareholders of the relevant class (other than any Restricted Entities) present in person or by proxy.

In the event that a quorum is not present at any Preference Court Meeting, that Preference Court Meeting will be adjourned to 10.00 a.m. on 15 December 2008 and will be held at the offices of the Company at 33 Old Broad Street, London EC2N 1HZ.

A circular (the Circular ) containing a copy of the Preference Scheme and a copy of the explanatory statement required to be furnished pursuant to section 897 of the Companies Act 2006 in relation to the Preference Scheme is being issued to HBOS Preference Shareholders and to HBOSSA Participants, Halifax Share Dealing Account Participants, E&C Participants and HBOS Preference ADS Holders (as such terms are defined in the Circular). Copies of the Circular may be obtained by logging on to the Company's website, www.hbosplc.com, or from the Company's registrar, Computershare Investor Services PLC, in person at The Pavilions, Bridgwater Road, Bristol, BS13 8AE (or by calling +44 (0) 870 702 0102*). Copies of the Circular may be inspected during normal business hours on any weekday (Saturday, Sunday and UK public holidays excepted) at the offices of HBOS plc, The Mound, Edinburgh EH1 1YZ, United Kingdom and at the offices of Allen & Overy LLP, One Bishops Square, London E1 6AD, United Kingdom. *Calls from BT landlines to 0870 numbers will cost no more than 6p a minute plus a 7p connection fee. The price of calls through other phone companies and from mobile phones will be different. The call price quoted is correct as of October 2008.

By the Order, the Court has appointed Lord Stevenson, or, failing him, Sir Ronald Garrick whom failing Ms Karen Jones, to act as chairman of the Preference Court Meetings and has directed the chairman to report the result of each meeting to the Court.

The Preference Scheme will be subject to the subsequent sanction of the Court.

Dated 14 November 2008

Allen & Overy LLP            Dickson Minto W.S.

One Bishops Square            16 Charlotte Square

London E1 6AD              Edinburgh EH2 4DF

Solicitors for the Company

Information for HBOS Preference Shareholders

The holders of each class of HBOS Preference Share are entitled to attend, speak and vote at the relevant Preference Court Meeting, may vote in person at the relevant Preference Court Meeting or they may appoint another person as their proxy to attend and vote in their place or, if any HBOS Preference Shareholder is a corporation, it may vote by way of (a) corporate representative(s). A proxy need not be a member of the class of HBOS Preference Shares, or of the Company. A blue Form of Proxy for use at the Preference Court Meetings is enclosed with the Circular which is being sent to HBOS Preference Shareholders in connection with the Preference Scheme. Completion and return of a blue Form of Proxy will not prevent a HBOS Preference Shareholder from attending and voting at the relevant Preference Court Meeting of the class of HBOS Preference Shares of which he is a member, or any adjournment thereof, in person if he or she wishes to do so.

HBOS Preference Shareholders are entitled to appoint a proxy in respect of some or all of their HBOS Preference Shares. HBOS Preference Shareholders are also entitled to appoint more than one proxy, provided that each proxy is appointed to exercise the rights attached to a different HBOS Preference Share held by such holder. A space has been included in the blue Form of Proxy to allow HBOS Preference Shareholders to specify the number of HBOS Preference Shares in respect of which that proxy is appointed. HBOS Preference Shareholders who return the blue Form of Proxy duly executed but leave this space blank will be deemed to have appointed the proxy in respect of all of their HBOS Preference Shares. HBOS Preference Shareholders who wish to appoint more than one proxy in respect of their shareholding should contact Computershare Investor Services PLC (the Registrar ) for further blue Forms of Proxy or photocopy the Form of Proxy as required.

In the case of joint holders of HBOS Preference Shares, the vote of the senior joint holder who tenders a vote, whether in person or by proxy, or (where that senior joint holder is a corporation) by corporate representative, will be accepted to the exclusion of the vote(s) of any other joint holder(s) and, for this purpose, seniority will be determined by the order in which the names stand in the Register of Members of the Company in respect of the joint holding.

To be valid blue Forms of Proxy, together with any power of attorney or other authority (if any) under which it is signed, should be lodged with Computershare Investor Services PLC, PO Box 1912, The Pavilions, Bridgwater Road, Bristol BS3 9BR, no later than 6.00 p.m. on 10 December 2008, or no later than 48 hours before the time of any adjourned meeting (the Preference Voting Record Time ). If the Form of Proxy is not so lodged it may be handed to the Company’s registrar on behalf of the chairman of the relevant Preference Court Meeting before the start of the relevant Preference Court Meeting, or adjourned meeting.

As an alternative to completing the printed Form of Proxy, HBOS Preference Shareholders may, no later than the Preference Voting Record Time, submit their vote electronically by logging on to www.hbosplc.com/gm/onlinevoting using the Online Proxy voting PIN printed on the blue Form of Proxy.

HBOS Preference Shareholders entitled to attend and vote at the Preference Court Meeting of the class of HBOS Preference Share of which he is a member who hold their HBOS Preference Shares through CREST may appoint a proxy or proxies through the CREST electronic proxy appointment service by using the procedures described in the CREST Manual. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.

In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a CREST Proxy Instruction ) must be properly authenticated in accordance with Euroclear UK & Ireland’s specifications and must contain the information required for such instructions, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or any amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the Registrar (ID 3RA50) no later than 6.00 p.m. on 10 December 2008, or no later than 48 hours before the time of any adjourned meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the Registrar is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.

The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the CREST Regulations.

Forms of Proxy returned by fax or email will not be accepted.

Entitlement of a HBOS Preference Shareholder to attend and vote at the relevant Preference Court Meeting or any adjournment thereof, and the number of votes which may be cast thereat, will be determined by reference to the Register of Members of the Company at 6.00 p.m. on 10 December 2008 or, if the relevant meeting is adjourned, 6.00 p.m. on the day two days before the date fixed for such adjourned meeting unless such HBOS Preference Shareholder is a holder of a Share Warrant (as defined in the Circular) in which case, entitlement to attend and vote at the relevant Preference Court Meeting and any adjournment thereof, and the number of votes which may be cast thereat, will be determined by reference to the certificate issued by the Company after the holder of the Share Warrant has deposited the Share Warrant at the Company's offices at 33 Old Broad Street, London, EC2N 1HZ (so as to be received by the Company at least 72 hours before the time fixed for the relevant meeting). Changes to the Register of Members of the Company after 6.00 p.m. (London time) on 10 December 2008 or, if a Preference Court Meeting is adjourned, 6.00 p.m. (London time) on the day two days before the date fixed for such adjourned meeting, shall be disregarded in determining the rights of any person to attend and vote at the relevant Preference Court Meeting.

Information for HBOSSA Participants and Halifax Share Dealing Account Participants (all as defined in the Circular)

HBOSSA Participants and Halifax Share Dealing Account Participants are requested to complete and sign the blue Form of Direction enclosed with the Circular which is being sent to them in connection with the Preference Scheme and to return the Form of Direction in accordance with the instructions printed thereon as soon as possible, but in any event, so as to be received at Computershare Investor Services PLC, PO Box 1912, The Pavilions, Bridgwater Road, Bristol BS3 9BR at least 72 hours before the time fixed for the relevant Preference Court Meeting or any adjournment thereof.

By completing and returning a Form of Direction, HBOSSA Participants may either: (a) instruct Halifax Nominees Limited to appoint a proxy (who may be the Chairman of the relevant meeting) to attend and vote on their behalf, or (b) request that Halifax Nominees Limited appoint them as proxy in order for them to attend and vote at the Preference Court Meeting themselves.

By completing and returning a Form of Direction, Halifax Share Dealing Account Participants may either: (a) instruct HSDL Nominees Limited to appoint a proxy (who may be the Chairman of the relevant meeting) to attend and vote on their behalf, or (b) request that HSDL Nominees Limited appoint them as proxy in order for them to attend and vote at the Preference Court Meeting themselves.

As an alternative to completing and returning the printed Form of Direction, participants may, at least 72 hours before the time fixed for the relevant Preference Court Meeting or any adjournment thereof, submit a Form of Direction electronically by accessing www.hbosplc.com/gm/onlinevoting using their Online Proxy Voting PIN printed on the relevant Form of Direction. Forms of Direction returned by fax or email will not be accepted.

Information for holders of Share Warrants (as defined in the Circular)

If you are a holder of a Share Warrant and would like to vote at the relevant Preference Court Meeting, please deposit your Share Warrant at 33 Old Broad Street, London EC2N 1HZ as soon as possible but in any event so as to be received by the Company at least 72 hours before the time fixed for the relevant meeting.

Information for HBOS Preference ADS Holders (as defined in the Circular)

If you are a registered holder of HBOS Preference ADSs, please complete and sign the Preference ADS Voting Instruction Card which is being sent to holders in connection with the Preference Scheme in accordance with the instructions printed thereon and return it in the postage-paid envelope provided (for use in the US only) to the HBOS Preference Share Depositary (as defined in the Circular) at the appropriate address set forth on the Preference ADS Voting Instruction Card as soon as possible and, in any event, so as to be received no later than 5.00 p.m. (New York time) on 9 December 2008. The nominee of the HBOS Preference Share Depositary will endeavour to vote in accordance with holders' instructions.

If you hold your HBOS Preference ADSs indirectly, you must rely on the procedures of the bank, broker or other financial institution through which you hold your HBOS Preference ADSs if you wish to give voting instructions.

Alternatively, if you wish to vote on the Preference Scheme and/or attend the relevant Preference Court Meeting, you may present your HBOS Preference ADSs to the HBOS Preference Share Depositary for cancellation and receive (upon compliance with the HBOS Preference Share Deposit Agreement pursuant to which the underlying HBOS Preference Shares have been deposited, including payment of any depositary fees and any applicable taxes and governmental charges) delivery of the underlying HBOS Preference Shares so as to become a registered holder of such HBOS Preference Shares prior to the Preference Voting Record Time.

Only holders of HBOS Preference ADSs on the register of Preference ADS Holders of the HBOS Preference Share Depositary as at 5.00 p.m. (New York time) on 10 November 2008 are entitled to give voting instructions in respect of the Preference Court Meeting in respect of the number of Preference Scheme Shares underlying their HBOS Preference ADSs at that time.

Information for holders who hold their HBOS Preference Shares through Euroclear and/or Clearstream and/or E&C Participants (as defined in the Circular)

If you hold your HBOS Preference Shares through Euroclear and/or Clearstream, Luxembourg, please arrange for the E&C Participant through which you hold your shares to submit a CD Voting Instruction (as defined in the Circular) on your behalf to Euroclear and/or Clearstream, Luxembourg before the deadline specified by Euroclear and/or Clearstream, Luxembourg.

The receipt of such CD Voting Instruction by Euroclear and/or Clearstream, Luxembourg will be acknowledged in accordance with the standard practices of Euroclear and/or Clearstream, Luxembourg and will result in the blocking of the relevant shares in the holder’s account with Euroclear and/or Clearstream, Luxembourg so that no transfers may be effected in relation to such HBOS Preference Shares.

You must take the appropriate steps through Euroclear and/or Clearstream, Luxembourg so that no transfers may be effected in relation to such blocked HBOS Preference Shares at any time after the date of submission of such CD Voting Instruction, in accordance with the requirements of Euroclear and/or Clearstream, Luxembourg and the deadlines required by Euroclear and/or Clearstream, Luxembourg. By blocking such HBOS Preference Shares in Euroclear and/or Clearstream, Luxembourg, each E&C Participant will be deemed to consent to have Euroclear and/ or Clearstream, Luxembourg provide details concerning such E&C Participant’s identity to the CD Nominee (and for the CD Nominee to provide such details to the Company).

If you are an E&C Participant, please submit a CD Voting Instruction to Euroclear and/or Clearstream, Luxembourg on behalf of holders who hold HBOS Preference Shares through Euroclear and/or Clearstream, Luxembourg before the deadline specified by Euroclear and/or Clearstream, Luxembourg. The CD Nominee, in the case of shares held through Euroclear and/or Clearstream, Luxembourg, is the registered holder of the relevant HBOS Preference Shares and will endeavour to vote in accordance with your instructions.