EXHIBIT
4(b)(iii)


17 November 2010


Ms Anita M Frew


Dear Anita


Non-executive director appointment - Lloyds
Banking Group plc (“the company”)


I am pleased on behalf of our Board to confirm my invitation
for you to join the board of Lloyds Banking Group plc as a non-executive
director.


All directors of the company also serve on the principal
subsidiary boards of Lloyds TSB Bank plc, HBOS plc and BOS plc. This letter
also covers your appointment as non-executive director of those companies. The
boards generally meet simultaneously.


Your appointment is subject to the terms and conditions set
out in this letter. 


	
  

 
	
 Appointment

 
	
  

 
	
 Your
 appointment will commence on 1 December 2010 and is for an initial term of
 three years, expiring at the AGM 2014. At the end of the three year term,
 your appointment will be reviewed. Subject to satisfactory performance and
 Board approval, you may be invited to serve for a further period.

 
	
  

 
	
 Continuation
 of your appointment is subject to:

 






	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 confirmation
 by the Financial Services Authority (FSA) that your application for Approved
 Person status has been approved and to this status being maintained
 throughout your tenure. Directors must inform the FSA and the company of any
 significant changes in their personal circumstances which may have an impact
 on their status as approved persons/directors;

 
	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 satisfactory
 performance and contribution to the Board and any committees of which you are
 a member;

 
	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 election
 and re-election as a director by the company’s shareholders in general
 meeting as required by the company’s articles of association and codes to
 which the company subscribes, in particular, the Financial Reporting
 Council’s UK Corporate Governance Code (formerly the Combined Code).

 



Termination


You will cease to hold the office of director if:


	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 you
 resign from your appointment or choose not to stand for re-election;

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 the
 company terminates your appointment or chooses not to propose you for
 re-election;

 
	
  

 	
  

 	
  

 
	
  

 	
 (iii)

 	
 shareholders
 fail to elect or re-elect you;

 
	
  

 	
  

 	
  

 
	
  

 	
 (iv)

 	
 the
 articles of association or any law or regulation prevents you from continuing
 in office.

 



In the case of (i) and (ii) above, there is no entitlement
to notice or to compensation for loss of office. However, where possible, you
are requested to make the Chairman aware of your intention not to seek
re-election so that the board can plan for orderly succession.


In the case of termination under (iii) or (iv) above, your
appointment will terminate automatically with immediate effect and without
compensation.


Board Committees


In addition to your appointment as a non-executive director,
you may be required to serve on standing or ad hoc Board Committees. Initially,
you will be invited to serve on the following committees:


	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 Member,
 Audit Committee

 
	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 Member,
 Risk Oversight Committee

 



Role


Your duties will be those required of a non-executive
director. Non-executive directors have the same legal responsibilities as any
other director. The Board as a whole is collectively responsible for promoting
the success of the company by directing the company’s affairs. As members of
the unitary board, all directors are required to:


	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 provide
 sound leadership of the company within a framework of prudent and effective
 controls which enable risk to be assessed and managed;

 
	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 set
 the company’s strategy having regard to its risk appetite, ensuring that the
 necessary financial and human resources are in place for the company to meet
 its objectives, and review management performance; and

 
	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 set
 the company’s values and standards and ensure that its obligations to its
 shareholders and others are understood and met.

 



Key accountabilities


Key accountabilities for non-executive directors will
consist of:


	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 Strategy.
 Non-executive directors should constructively challenge and help to develop
 proposals on strategy by bringing a different and external perspective to
 Board discussions.

 
	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 Performance.
 Non-executive directors should support and scrutinise the performance of
 management in meeting agreed goals and objectives and monitor the reporting
 of performance.

 













	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 Risk.
 Non-executive directors should satisfy themselves that Board discussion and
 decision making on risk matters is based on accurate and appropriately
 comprehensive information and draws, as far as they believe it to be relevant
 or necessary, on external analysis and input. In particular, non-executive
 directors should satisfy themselves on the integrity of financial information
 and that financial controls and systems of risk management are robust,
 adequate and effective.

 
	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 People.
 Through membership of Board Committees, non-executive directors are
 responsible for determining appropriate policies, structure and levels of
 remuneration for executive directors and senior executive management and
 ensuring appropriate arrangements are in place for Board appointments and
 executive and non-executive succession planning.

 



Time Commitment


As a non-executive director, you are required to devote such
time as is necessary for the effective discharge of your duties. The estimated
time commitment for your role is approximately 3 days per month which is made
up as follows:


	
  

 	
  

 	
  

 
	
 -

 	
 Base
 time commitment for LBG non-executive directors:

 	
 20 days

 
	
 -

 	
 Additional
 time for membership of Audit Committee

 	
 7 days

 
	
 -

 	
 Additional
 time for membership of Risk Oversight Committee

 	
 7 days

 
	
  

 	
  

 	

 


 
	
 -

 	
 Total
 estimated time commitment per annum:

 	
 34 days

 
	
  

 	
  

 	

 


 



The estimated time commitment includes all scheduled Board
and Committee meetings relevant to your role, plus strategy sessions,
attendance at the AGM and preparation for meetings. A schedule of Board and
committee meetings for 2010 and 2011 is attached.


The above time commitment is based on planned events. From
time to time, however, you may be required to attend meetings at short notice.
You will be expected to relinquish other appointments to ensure that you can meet
the time commitments and make yourself available as appropriate.


By accepting this appointment, you confirm that you are able
to allocate sufficient time to meet the expectations of your role to the
satisfaction of the board.


The agreement of the Chairman should be sought before
accepting additional commitments that might affect your ability to meet the
time commitments necessary to discharge your duties.


Fees and Expenses


The following fees per annum are payable in respect of your
appointment:


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 •

 	
 Non-executive
 director base fee:

 	
  

 	
 £

 	
 65,000

 	
  

 
	
 •

 	
 Additional
 fee for membership of Audit Committee

 	
  

 	
 £

 	
 20,000

 	
  

 
	
 •

 	
 Additional
 fee for membership of Risk Oversight Committee

 	
  

 	
 £

 	
 15,000

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Total
 fees payable:

 	
  

 	
 £

 	
 100,000

 	
  

 



Fees are payable monthly and will be paid to a LloydsTSB
bank account held in your name. If you do not hold a LloydsTSB account, you
will be required to open one for this purpose. Please contact the Company
Secretary who will be happy to make the necessary arrangements.


The company will reimburse you for all reasonable and
properly documented expenses incurred by you in the performance of your duties.


Outside Interests


It is accepted and acknowledged that you have business
interests other than those of the company. As a condition of your appointment
you are required to declare any such directorships, appointments and interests
to the board in writing. If you take on any additional business interests or
become aware of any potential conflicts of interest, these must be disclosed
to the board as soon as they arise or become known to you. If at any time you
are considering acquiring any new interest which might give rise to a conflict
of interest with the company you must first discuss the matter with the senior
independent director and obtain a resolution of the board authorising such
acquisition. Regardless of any approval given in relation to outside interests,
it is your responsibility to ensure that you can meet the time commitment
required by the role.


Confidentiality


You will not use or disclose to any person, firm or
organisation (except as required by law or to carry out your duties under this
letter) any trade secrets, know-how, business information or other private or
confidential information relating to the business, finances or affairs of the
company, or any customer of the company or any other information provided on
the basis that it is confidential. You will use your best endeavours to prevent
the unauthorised use or disclosure of any such information. This restriction
will continue to apply after your appointment ends without limit in time but
will not apply to information which becomes public, unless through unauthorised
disclosure by you. After your appointment ends you will return all documents
and information (whether written, visual or electronic) under your control
which belong to the company or any member of the Lloyds Banking Group.


Your attention is also drawn to the requirements under both
legislation and regulation relating to the disclosure of price sensitive
information. You should avoid making any statements or engaging in any dealings
that might contravene these requirements. The Company Secretary can provide
further information and advice on these matters if required.


Induction


Following appointment, the company will provide a tailored
induction programme. You are entitled to request any additional information or
briefings to assist you in the execution of your duties. 





Evaluation and review of performance


The performance of individual directors and the board and
its committees is evaluated annually. In the interim, if there are any matters
which you wish to discuss in relation to your role, please feel free to contact
me. 


Directors’ Liability Indemnity and Insurance


To the extent permitted by law, directors are entitled to be
indemnified by the company against all costs and liabilities incurred by them
in execution of their duties. A copy of the company’s deed of indemnity is
included in your appointment pack for information.


You will also have the benefit of any directors’ and
officers’ insurance cover maintained from time to time by the company (but this
shall not oblige the company to maintain any such cover either at all, or on
current terms).


Independent Professional Advice


Occasions may arise when you consider that you need
professional advice in the furtherance of your duties as a director and it will
be appropriate for you to consult independent advisers at the company’s
expense. The company will reimburse the full cost of expenditure incurred in
accordance with the company’s policy, details of which are set out in the
appointment pack.


Disclosure and Dealings in Shares


The company may be required to include in its annual
accounts a note of any material interest that a director may have in any
transaction or arrangement that the company has entered into. You must disclose
any such interest as soon as possible but no later than the board meeting at
which the transaction or arrangement is first discussed so that the Board can
note your interest and, if appropriate, approve any conflicts. A general
notice that you are interested in any contracts with a particular person, firm
or company is acceptable.


During the continuation of your appointment you will be
expected to comply (and to procure that your spouse and any connected persons
comply) where relevant with any rule of law or regulation of any competent
authority or of the company from time to time in force in relation to dealings
in shares, debentures and other securities of the company and the unpublished
price sensitive information affecting the shares, debentures and other
securities of the company.


Details of the procedure for dealing in shares, together
with explanatory notes on the code of market conduct/model code, will be
included in your appointment pack.


Shareholdings


All directors are encouraged to hold shares in the company.
If you would like to receive the whole or a part of your monthly fee in shares,
we would be happy to make the necessary arrangements for you.


Please acknowledge receipt and acceptance of the above terms
by signing and returning the enclosed copy of this letter.


Please do not hesitate to contact me for any assistance in
any matters during the term of your appointment. I look forward to welcoming
you to the Board.



Yours sincerely



/s/ Win Bischoff



	
  

 
	

 


 
	
 I
 acknowledge receipt of the letter dated 17 November 2010 of which this is a
 copy and accept the terms of appointment.

 




Signed /s/ Anita Frew



Date 23/11/2010