Bischoff, who became chairman of the state-owned bank in September 2009, said he will be retiring no later than the shareholders meeting in May 2014.
The exact date for Bischoff’s retirement has not been set but it is expected to be announced once LBG finds his successor.
Bischoff said: “Lloyds Banking Group has, over the past four years, made significant progress in its goal to become a strong, efficient, UK-focused retail and commercial bank.
"Whilst clearly some challenges remain, the performance of the Group is well on track. Indeed, in many areas, it is ahead of plan.
“This gives me every confidence in the future success of the Group and it is therefore a good time to start the search for my successor."
The search for Bischoff’s successor will be conducted by senior independent director Anthony Watson.
Bischoff’s announcement comes just four days before the bank’s annual general meeting on Thursday.
