Watkins was appointed to the post of managing director of residential mortgages after the merger between HBOS and Lloyds TSB was completed in December 2008.
He was previously chief executive of retail products at HBOS and had been part of the group since he joined BM Solutions in 1993.
In addition, Jo Dawson, who replaced the infamous whistle-blower Paul Moore as group risk director at HBOS, has also resigned from her position as director of the wealth and international division at Lloyds.
Mike Kula, previously head of retail operations at Lloyds, will take over Watkins’ position for the time being as interim head of mortgages at Lloyds.
One source told Mortgage Strategy: “Both members were previously members of HBOS’ main board and the timing of both departures cannot be coincidental.”