The taxpayer-backed lender is expected to apply for a licence later this year that would convert its Bank of Scotland-branded site – which was acquired as part of its HBOS takeover in 2008 – into a separate European division.
It is understood that few jobs would leave London as a result of the move, as the 300-strong branch is already well equipped to serve European clients.
It is currently the only major high-street lender without an EU subsidiary and was previously thought to be eyeing up existing offices in Frankfurt and Amsterdam.
Experts have speculated that rival financial centres such as Dublin, Frankfurt and Paris could end up siphoning off some of the City’s business as they court financial services firms ahead of Brexit.
Lloyds would be the first big bank to select Berlin for its EU subsidiary in the wake of the Brexit vote.
The news comes just weeks after Germany’s financial watchdog Bafin hosted around 50 representatives from more than 20 banks for a workshop that provided guidelines for setting up shop in the country following Brexit.
Lloyds declined to comment.
Financial services firms have been ramping up contingency plans after Prime Minister Theresa May confirmed government plans to scrap access to the EU’s single ahead of key negotiations.
A hard Brexit would effectively remove passporting rights that allow UK-based financial services to trade across the bloc without needing to apply for licences in each member state.