The bank has come under fire for being slow to react the fraud, which was carried out between 2003 and 2007, causing a number of victims to file for bankruptcy.
The £100 million provision comes on top of the £250 million Lloyds has both lost or set aside for compensation and will be detailed in a trading update on 27 April.
The bank has also appointed Professor Russel Griggs OBE to carry out an independent customer review, reassessing victims’ compensation claims, in consultation with the Financial Conduct Authority (FCA).
It said it will pay compensation on a case by case basis to assist victims in financial difficulty with living costs, cover their legal fees if they need advice and write off customers’ remaining ‘relevant debts’.
Chief executive of Lloyds António Horta-Osório (pictured) said: ‘We would like to express our deep regret and apologies to any customers directly affected by the criminal behaviour of these individuals.
'We are absolutely determined that victims of the crimes committed at HBOS Reading are fairly, swiftly and appropriately compensated.
‘We take responsibility for putting right the wrongs that were committed at HBOS Reading at the time. That is why today we are providing an additional package of measures to ensure that customers have all the help they need as we resolve their cases as quickly as possible.’
The FCA today announced that it has reopened its investigation into the fraud, perpetrated out of Lloyds’ Reading branch, which will focus on the ‘extent and nature of these matters within HBOS’.
A report by the Sunday Times said that an internal email seen by the paper showed HBOS bosses had covered up the fraud for nine years.
The bank's share price has broadly shrugged off the news, falling 0.4p, or 0.63% to 63.19p by 11:45am.
Lloyds' decision follows the jailing of Lynden Scourfield and five associates for a combined 47 years and nine months last week.
Sentencing Scourfield, judge Martin Beddoe described him as a ‘thoroughly corrupt and devious man’ who ‘sold his soul for sex, luxury trips, bling and swag’.
Scourfield convinced small business customers to use corporate turnaround firm Quayside Corporate Services in exchange for bribes, between 2003 and 2007. Quayside, which was run by Mills, charged hefty fees and many of the businesses ended up going bust.
It was said that Mills and Michael Bancroft, another associate, who was jailed for 10 years, arranged sex parties and exotic holidays for Scourfield as they siphoned off the fees.
Prosecuter Brian O’Neill QC told the court: ‘What Scourfield gave Mills in addition to fees was the opportunity to take control of the various businesses and, in some cases, to acquire ownership of them.
'Mills and his associates used the bank's customers and the banks' money dishonestly to enrich themselves.’
The owners of a number of these small businesses went bankrupt and many are still seeking compensation. Some estimates of the eventual bill to resolve outstanding liabilities have put the figure as high as £1 billion.