REG-Lon.Scottish Bank: Business update

London Scottish Bank plc

Business update and preliminary results

London Scottish Bank plc ("LSB" or "the Company"), the speciality provider of
financial services, today provides an update further to its announcement on 31
December 2007.

LSB has been working closely with its advisers and further progress has been
made in relation to the matters covered in its announcement on 31 December
2007. The Financial Services Authority ("FSA") has been kept in close touch
with developments.

The Company has prepared and submitted to the FSA a plan to remedy the
shortfall in its regulatory capital. One element of this plan involves reduced
lending volumes until the shortfall in regulatory capital has been remedied.
Nevertheless, LSB continues to lend, albeit at reduced levels, in all its main
business units and is redirecting its resources towards the business units with
the highest returns. In particular, Robinson Way continues to purchase debt
portfolios. As part of this plan, the Company is also examining a number of
financing alternatives to increase its capital base. The Company expects to
receive, in the near future, the FSA's assessment of the plan.

Additionally, the Company is preparing a revised assessment of its view of the
amount of regulatory capital it needs to hold to meet regulatory requirements
and will submit this shortly to the FSA. LSB expects that this process should
enable the FSA to determine the amount of regulatory capital it considers that
LSB must hold and thus give formal Individual Capital Guidance ("ICG") to LSB.
The Company now expects that this process will be completed within a few
weeks. In the meantime, the interim ICG previously announced will apply.

The finalisation of the audited results for the year ended 31 October 2007 is
progressing. Further to the announcement on 31 December 2007 that the Company
expected to charge additional impairment provisions of up to £22m in those
results, the Company now confirms that it expects the additional impairment
provision to be £21.6m.

Preliminary results for the year ended 31 October 2007 will be announced in
February 2008, on a date to be confirmed in due course, when a more detailed
update including further information about its regulatory capital position,
will also be provided.

Enquiries:

Citigate Dewe Rogerson 0207 638 9571
Sarah Gestetner
Fiona Mulcahy

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