Bank of Scotland
Encyclopedia
The Bank of Scotland plc (Scottish Gaelic: Banca na h-Alba) is a commercial
and clearing bank based in Edinburgh
, Scotland
. With a history dating to the 17th century, it is the second oldest surviving bank (the Bank of England
having been established one year before) in what is now the United Kingdom
, and is the only commercial institution created by the Parliament of Scotland
to remain in existence. It was also the first bank in Europe
to print its own banknotes.
The Bank of Scotland continues to print its own sterling banknotes under legal arrangements which allow some UK banks to issue currency.
On 17 September 2007 The Governor and Company of the Bank of Scotland became Bank of Scotland plc
, as part of the HBOS Group Reorganisation Act 2006
.
Since 19 January 2009, the Bank of Scotland has formed a key part of the Lloyds Banking Group
, following the acquisition of HBOS
by Lloyds TSB Group.
on 17 July 1695, the Act for erecting a Bank in Scotland, opening for business in February 1696. Although established soon after the Bank of England
(1694), the Bank of Scotland was a very different institution. Where the Bank of England was established specifically to finance defence spending by the English
government, the Bank of Scotland was established by the Scottish government
to support Scottish business, and was prohibited from lending to the government without parliamentary approval. The founding Act granted the bank a monopoly
on public banking in Scotland for 21 years, permitted the bank's directors to raise a nominal capital of £1,200,000 pound Scots
(£100,000 pound sterling
), gave the Proprietors (shareholders) limited liability
, and in the final clause (repealed only in 1920) made all foreign-born Proprietors naturalised Scotsmen "to all Intents and Purposes whatsoever". John Holland
, an Englishman
, was one of the bank's founders. Its first chief accountant was George Watson
.
sympathies. Its first rival, the Royal Bank of Scotland
was formed by Royal Charter
in 1727. This led to a period of great competition between the two banks as they set to drive each other out of business. Although the "Bank Wars" ended in around 1751, competition soon arose from other sources, as other Scottish banks were founded throughout the country. In response, the Bank of Scotland itself began to open branches throughout Scotland. The first branch in London
opened in 1865.
The bank also took the lead in establishing the security and stability of the entire Scottish banking system, which became more important after the collapse of the Ayr Bank
in 1772, in the crisis following the collapse of the London house of Neal, James, Fordyce and Down
. The Western Bank collapsed in 1857, and the Bank of Scotland stepped in with the other Scottish banks to ensure that all Western Bank's notes were paid. See Crisis of 1772.
based, North West Securities (now Capital Bank). In 1971, the Bank agreed to merge with the British Linen Bank
, owned by Barclays Bank. The merger saw Barclays Bank acquire a 35% stake in the Bank of Scotland, a stake it retained until the 1990s. The merchant banking division of the Bank of Scotland was relaunched as British Linen Bank (now known as HBOS Treasury Services).
In 1959 Bank of Scotland became the first bank in the UK to install a computer
to process accounts centrally. At 11 am on 25 January 1985 the Bank introduced HOBS (Home and Office Banking Services), an early application of remote access technology being made available to banking customers. This followed a small-scale service operated jointly with the Nottingham Building Society
for two years but developed by Bank of Scotland. The new HOBS service enabled customers to access their accounts directly on a television screen, using the Prestel
telephone network.
to Scotland in the 1970s allowed the Bank of Scotland to expand into the energy sector. The Bank later used this expertise in energy finance to expand internationally. The first international office opened in Houston, Texas
, followed by more in the United States
, Moscow
and Singapore
. In 1987, the Bank acquired Countrywide Bank
of New Zealand
(later sold to Lloyds TSB
in 1998). The Bank later expanded into the Australia
n market by acquiring the Perth
-based Bank of Western Australia
.
A controversial period in the Bank's history was the attempt in 1999 to enter the United States retail banking
market via a joint venture with evangelist Pat Robertson
. The move was met with criticism from civil rights groups in the UK due to Robertson's controversial views on homosexuality
. The Bank was forced to cancel the deal when Robertson described Scotland as a "dark land overrun by homosexuals".
In the late 1990s, the UK financial sector market underwent a period of consolidation on a large scale. Many of the large building societies
were demutualising and becoming banks in their own right or merging with existing banks. For instance Lloyds Bank and TSB Bank merged in 1995 to create Lloyds TSB
. In 1999, the Bank of Scotland made a takeover bid for the NatWest Bank
. Since the Bank of Scotland was significantly smaller than the English-based NatWest, the move was seen as an audacious and risky move. However, the Royal Bank of Scotland
tabled a rival offer, and a bitter takeover battle ensued, with the Royal Bank the victor.
The Bank of Scotland was now the centre of other merger opportunities. A proposal to merge with the Abbey National
was explored, but later rejected. In 2001, the Bank of Scotland and the Halifax agreed a merger to form HBOS ("Halifax Bank of Scotland")
. The headquarters was to stay in Edinburgh
, and both banks' brands would continue to be used.
, a private Act of Parliament that would allow the group to operate in a more simplified structure. The Act allowed HBOS to make the Governor and Company of the Bank of Scotland a public limited company, Bank of Scotland plc, which became the principal banking subsidiary of HBOS. Halifax plc transferred its undertakings to Bank of Scotland plc, and although the brand name was retained, Halifax then began to operate under the latter company's UK banking licence.
The provisions in the Act were implemented on 17 September 2007.
Group agreed to be taken over by Lloyds TSB Group.
Lloyds TSB stated that it will keep the Bank of Scotland as a brand name, and retain its Scottish head office in Edinburgh. Lloyds TSB Scotland and Bank of Scotland branches in Scotland were expected to merge, however the group is now planning to sell all Lloyds TSB Scotland branches along with Cheltenham & Gloucester
and Intelligent Finance
following pressure from the European Commission.
The new group began trading on 19 January 2009 as the Lloyds Banking Group
.
banknotes to this day. These notes are equal in value to notes issued by the Bank of England
, the central bank of the United Kingdom.
to successfully issue paper currency
redeemable for cash on demand (which was an extremely useful facility given the poor state of the Scottish coinage
at the end of the 17th century). Following the Acts of Union
in 1707, the bank supervised the reminting of the old Scottish coinage into Sterling
.
The right to issue banknotes was extended to other banks after 1716 when the Bank of Scotland's monopoly was allowed to lapse. Up until the middle of the 19th century, privately owned banks in Great Britain and Ireland
were permitted to issue their own banknotes, and money issued by provincial Scottish, English, Welsh and Irish banking companies circulated freely as a means of payment. While the Bank of England eventually gained a monopoly for issuing banknotes in England and Wales, attempts to restrict Scottish banks from issuing notes were met with popular opposition.
In 1826, there was outrage in Scotland at the attempt of the United Kingdom Parliament to prevent the production of banknotes of less than five pounds face value. Sir Walter Scott wrote a series of letters to the Edinburgh Weekly Journal under the pseudonym "Malachi Malagrowther" which provoked such a response that the government was forced to relent and allow the Scottish banks to continue printing £1 notes. For this reason Sir Walter still appears on all Bank of Scotland notes.
Bank of Scotland's previous note issue was in 1995, known as the Tercentenary Series as they were issued in the year of the three hundredth anniversary of the foundation of the bank. Each denomination features Sir Walter Scott on the front, and on the back are representations of industries that Scotland excels in:
These notes continue in circulation and are gradually being replaced by the 2007 series.
Bank of Scotland began issuing a new series of banknotes in the Autumn of 2007, which feature the common theme of Scottish bridges. It will take at least three years for the current issue of Bank of Scotland notes to be phased out of circulation. In keeping with the bank's tradition, the front of the notes depict an image of Sir Walter Scott; the image on the 2007 series is based on the portrait of Scott painted by Henry Raeburn
.
While the colours and sizes of all of the new notes are the same as previous designs, text on the notes is larger than before. The raised, large denomination also acts as an aid for the partially sighted. 'Cornerstones' have been added to the new notes. These are watermark patterns on all corners of the notes, which will improve their durability.
Some new security features have also been added to the new design. These include a metallic security thread embedded in every banknote, which contains the numerical value of the note and the note's bridge image. A new hologram and foil patch has been introduced on the front of the £20, £50 and £100 notes, which features the Bank of Scotland logo and the numerical value of the note.
community, the Bank of Scotland was still operating exclusively in English
in the early 1970s. In 1972, Gaelic activist Iain Noble
persuaded the bank to issue him with its first Gaelic (actually bilingual) cheque-book. These have since become popular, and the Royal Bank
soon followed suit. Today the bank advertises itself in the Highlands
and Hebrides
under the Gaelic title Banca na h-Alba, although the new issue of Bank of Scotland notes does not include any Gaelic as many supporters of the language had hoped would be the case.
from its inception in 1998 to season 2006/2007 when it declined to renew the deal in favour of investing in grassroots sport instead.
Bank of Scotland also sponsors scottishathletics
.
Commercial bank
After the implementation of the Glass–Steagall Act, the U.S. Congress required that banks engage only in banking activities, whereas investment banks were limited to capital market activities. As the two no longer have to be under separate ownership under U.S...
and clearing bank based in Edinburgh
Edinburgh
Edinburgh is the capital city of Scotland, the second largest city in Scotland, and the eighth most populous in the United Kingdom. The City of Edinburgh Council governs one of Scotland's 32 local government council areas. The council area includes urban Edinburgh and a rural area...
, Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...
. With a history dating to the 17th century, it is the second oldest surviving bank (the Bank of England
Bank of England
The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694, it is the second oldest central bank in the world...
having been established one year before) in what is now the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
, and is the only commercial institution created by the Parliament of Scotland
Parliament of Scotland
The Parliament of Scotland, officially the Estates of Parliament, was the legislature of the Kingdom of Scotland. The unicameral parliament of Scotland is first found on record during the early 13th century, with the first meeting for which a primary source survives at...
to remain in existence. It was also the first bank in Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
to print its own banknotes.
The Bank of Scotland continues to print its own sterling banknotes under legal arrangements which allow some UK banks to issue currency.
On 17 September 2007 The Governor and Company of the Bank of Scotland became Bank of Scotland plc
Public limited company
A public limited company is a limited liability company that sells shares to the public in United Kingdom company law, in the Republic of Ireland and Commonwealth jurisdictions....
, as part of the HBOS Group Reorganisation Act 2006
HBOS Group Reorganisation Act 2006
The HBOS Group Reorganisation Act 2006 is a private Act of Parliament, passed by the Parliament of the United Kingdom in June 2006. The aim of the act was to provide HBOS plc, a banking and insurance group in the UK, the legal authority to reorganise its subsidiaries into a simplified structure...
.
Since 19 January 2009, the Bank of Scotland has formed a key part of the Lloyds Banking Group
Lloyds Banking Group
Lloyds Banking Group plc is a major British financial institution, formed through the acquisition of HBOS by Lloyds TSB in 2009. As at February 2010, HM Treasury held a 41% shareholding through UK Financial Investments Limited . The Group headquarters is located at 25 Gresham Street in London, with...
, following the acquisition of HBOS
HBOS
HBOS plc is a banking and insurance company in the United Kingdom, a wholly owned subsidiary of the Lloyds Banking Group having been taken over in January 2009...
by Lloyds TSB Group.
Establishment
The Governor and Company of the Bank of Scotland was established by an Act of the Parliament of ScotlandParliament of Scotland
The Parliament of Scotland, officially the Estates of Parliament, was the legislature of the Kingdom of Scotland. The unicameral parliament of Scotland is first found on record during the early 13th century, with the first meeting for which a primary source survives at...
on 17 July 1695, the Act for erecting a Bank in Scotland, opening for business in February 1696. Although established soon after the Bank of England
Bank of England
The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694, it is the second oldest central bank in the world...
(1694), the Bank of Scotland was a very different institution. Where the Bank of England was established specifically to finance defence spending by the English
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
government, the Bank of Scotland was established by the Scottish government
Privy Council of Scotland
The Privy Council of Scotland was a body that advised the King.In the range of its functions the council was often more important than the Estates in the running the country. Its registers include a wide range of material on the political, administrative, economic and social affairs of Scotland...
to support Scottish business, and was prohibited from lending to the government without parliamentary approval. The founding Act granted the bank a monopoly
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...
on public banking in Scotland for 21 years, permitted the bank's directors to raise a nominal capital of £1,200,000 pound Scots
Pound Scots
The pound Scots was the national unit of currency in the Kingdom of Scotland before the country entered into political and currency union with the Kingdom of England in 1707 . It was introduced by David I, in the 12th century, on the model of English and French money, divided into 20 shillings...
(£100,000 pound sterling
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
), gave the Proprietors (shareholders) limited liability
Limited liability
Limited liability is a concept where by a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a company or partnership with limited liability. If a company with limited liability is sued, then the plaintiffs are suing the company, not its...
, and in the final clause (repealed only in 1920) made all foreign-born Proprietors naturalised Scotsmen "to all Intents and Purposes whatsoever". John Holland
John Holland (banker)
John Holland was a founder of the Bank of Scotland, in 1695....
, an Englishman
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
, was one of the bank's founders. Its first chief accountant was George Watson
George Watson (accountant)
George Watson, was born in Scotland to parents John Watson and Marion Ewing. He was orphaned at an early age, but thanks to his aunt, Elizabeth Davidson, he was sent in 1672 to be educated in book-keeping at Rotterdam. He returned to Edinburgh to become, in 1676, private secretary to Sir James Dick...
.
18th and 19th centuries
The Bank of Scotland was suspected of JacobiteJacobite rising
The Jacobite Risings were a series of uprisings, rebellions, and wars in Great Britain and Ireland occurring between 1688 and 1746. The uprisings were aimed at returning James VII of Scotland and II of England, and later his descendants of the House of Stuart, to the throne after he was deposed by...
sympathies. Its first rival, the Royal Bank of Scotland
Royal Bank of Scotland
The Royal Bank of Scotland Group is a British banking and insurance holding company in which the UK Government holds an 84% stake. This stake is held and managed through UK Financial Investments Limited, whose voting rights are limited to 75% in order for the bank to retain its listing on the...
was formed by Royal Charter
Royal Charter
A royal charter is a formal document issued by a monarch as letters patent, granting a right or power to an individual or a body corporate. They were, and are still, used to establish significant organizations such as cities or universities. Charters should be distinguished from warrants and...
in 1727. This led to a period of great competition between the two banks as they set to drive each other out of business. Although the "Bank Wars" ended in around 1751, competition soon arose from other sources, as other Scottish banks were founded throughout the country. In response, the Bank of Scotland itself began to open branches throughout Scotland. The first branch in London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
opened in 1865.
The bank also took the lead in establishing the security and stability of the entire Scottish banking system, which became more important after the collapse of the Ayr Bank
Ayr Bank
Douglas, Heron & Company was a Scottish bank with its head office at Ayr. It was known as the Ayr Bank. It opened in 1769 and folded in 1772 during the crisis of 1772.-References:* * *...
in 1772, in the crisis following the collapse of the London house of Neal, James, Fordyce and Down
Neal, James, Fordyce and Down
Neal, James, Fordyce and Down was a London banking house which collapsed in June 1772, precipitating a major banking crisis which included the collapse of almost every private bank in Scotland, and a liquidity crisis in the two major banking centres of the world, London and Amsterdam...
. The Western Bank collapsed in 1857, and the Bank of Scotland stepped in with the other Scottish banks to ensure that all Western Bank's notes were paid. See Crisis of 1772.
20th century
In the 1950s, the Bank of Scotland was involved in several mergers and acquisitions with different banks. In 1955, the Bank merged with the Union Bank of Scotland. The Bank also expanded into consumer credit with the purchase of ChesterChester
Chester is a city in Cheshire, England. Lying on the River Dee, close to the border with Wales, it is home to 77,040 inhabitants, and is the largest and most populous settlement of the wider unitary authority area of Cheshire West and Chester, which had a population of 328,100 according to the...
based, North West Securities (now Capital Bank). In 1971, the Bank agreed to merge with the British Linen Bank
British Linen Bank
The British Linen Bank was a commercial bank based in Edinburgh, Scotland. It was acquired by the Bank of Scotland in 1969 and served as the Bank's merchant bank arm from 1977 until 1999.-Foundation:...
, owned by Barclays Bank. The merger saw Barclays Bank acquire a 35% stake in the Bank of Scotland, a stake it retained until the 1990s. The merchant banking division of the Bank of Scotland was relaunched as British Linen Bank (now known as HBOS Treasury Services).
In 1959 Bank of Scotland became the first bank in the UK to install a computer
Computer
A computer is a programmable machine designed to sequentially and automatically carry out a sequence of arithmetic or logical operations. The particular sequence of operations can be changed readily, allowing the computer to solve more than one kind of problem...
to process accounts centrally. At 11 am on 25 January 1985 the Bank introduced HOBS (Home and Office Banking Services), an early application of remote access technology being made available to banking customers. This followed a small-scale service operated jointly with the Nottingham Building Society
Nottingham Building Society
Nottingham Building Society is a building society founded in 1849 by a group led by Samuel Fox , a Quaker and prominent local grocer....
for two years but developed by Bank of Scotland. The new HOBS service enabled customers to access their accounts directly on a television screen, using the Prestel
Prestel
Prestel , the brand name for the UK Post Office's Viewdata technology, was an interactive videotex system developed during the late 1970s and commercially launched in 1979...
telephone network.
International expansion
The arrival of North Sea OilNorth Sea oil
North Sea oil is a mixture of hydrocarbons, comprising liquid oil and natural gas, produced from oil reservoirs beneath the North Sea.In the oil industry, the term "North Sea" often includes areas such as the Norwegian Sea and the area known as "West of Shetland", "the Atlantic Frontier" or "the...
to Scotland in the 1970s allowed the Bank of Scotland to expand into the energy sector. The Bank later used this expertise in energy finance to expand internationally. The first international office opened in Houston, Texas
Texas
Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...
, followed by more in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, Moscow
Moscow
Moscow is the capital, the most populous city, and the most populous federal subject of Russia. The city is a major political, economic, cultural, scientific, religious, financial, educational, and transportation centre of Russia and the continent...
and Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
. In 1987, the Bank acquired Countrywide Bank
Countrywide Bank (New Zealand)
Countrywide Bank was a Reserve Bank-registered retail bank operating throughout New Zealand. It was created from Countrywide Building Society, which itself emerged from the original Auckland Co-operative Terminating Building Society created in March 1897....
of New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
(later sold to Lloyds TSB
Lloyds TSB
Lloyds TSB Bank Plc is a retail bank in the United Kingdom. It was established in 1995 by the merger of Lloyds Bank, established in Birmingham, England in 1765 and traditionally considered one of the Big Four clearing banks, with the TSB Group which traces its origins to 1810...
in 1998). The Bank later expanded into the Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
n market by acquiring the Perth
Perth, Western Australia
Perth is the capital and largest city of the Australian state of Western Australia and the fourth most populous city in Australia. The Perth metropolitan area has an estimated population of almost 1,700,000....
-based Bank of Western Australia
Bank of Western Australia
Bank of Western Australia is a full service bank based in Perth, Western Australia. Formerly a wholly owned subsidiary of HBOS plc, it was sold in October 2008 to the Commonwealth Bank of Australia for 2.1 billion....
.
A controversial period in the Bank's history was the attempt in 1999 to enter the United States retail banking
Retail banking
Retail banking is banking in which banking institutions execute transactions directly with consumers, rather than corporations or other banks. Services offered include: savings and transactional accounts, mortgages, personal loans, debit cards, credit cards, and so forth.-Types of...
market via a joint venture with evangelist Pat Robertson
Pat Robertson
Marion Gordon "Pat" Robertson is a media mogul, television evangelist, ex-Baptist minister and businessman who is politically aligned with the Christian Right in the United States....
. The move was met with criticism from civil rights groups in the UK due to Robertson's controversial views on homosexuality
Homosexuality
Homosexuality is romantic or sexual attraction or behavior between members of the same sex or gender. As a sexual orientation, homosexuality refers to "an enduring pattern of or disposition to experience sexual, affectional, or romantic attractions" primarily or exclusively to people of the same...
. The Bank was forced to cancel the deal when Robertson described Scotland as a "dark land overrun by homosexuals".
Formation of HBOS
Building society
A building society is a financial institution owned by its members as a mutual organization. Building societies offer banking and related financial services, especially mortgage lending. These institutions are found in the United Kingdom and several other countries.The term "building society"...
were demutualising and becoming banks in their own right or merging with existing banks. For instance Lloyds Bank and TSB Bank merged in 1995 to create Lloyds TSB
Lloyds TSB
Lloyds TSB Bank Plc is a retail bank in the United Kingdom. It was established in 1995 by the merger of Lloyds Bank, established in Birmingham, England in 1765 and traditionally considered one of the Big Four clearing banks, with the TSB Group which traces its origins to 1810...
. In 1999, the Bank of Scotland made a takeover bid for the NatWest Bank
National Westminster Bank
National Westminster Bank Plc, commonly known as NatWest, is the largest retail and commercial bank in the United Kingdom and has been part of The Royal Bank of Scotland Group Plc since 2000. The Royal Bank of Scotland Group is ranked as the second largest bank in the world by assets...
. Since the Bank of Scotland was significantly smaller than the English-based NatWest, the move was seen as an audacious and risky move. However, the Royal Bank of Scotland
Royal Bank of Scotland
The Royal Bank of Scotland Group is a British banking and insurance holding company in which the UK Government holds an 84% stake. This stake is held and managed through UK Financial Investments Limited, whose voting rights are limited to 75% in order for the bank to retain its listing on the...
tabled a rival offer, and a bitter takeover battle ensued, with the Royal Bank the victor.
The Bank of Scotland was now the centre of other merger opportunities. A proposal to merge with the Abbey National
Abbey National
Abbey National plc was a UK-based bank and former building society, which latterly traded under the Abbey brand name. It became a wholly owned subsidiary of Grupo Santander of Spain in 2004, and was rebranded as Santander in January 2010, forming Santander UK along with the savings business of the...
was explored, but later rejected. In 2001, the Bank of Scotland and the Halifax agreed a merger to form HBOS ("Halifax Bank of Scotland")
HBOS
HBOS plc is a banking and insurance company in the United Kingdom, a wholly owned subsidiary of the Lloyds Banking Group having been taken over in January 2009...
. The headquarters was to stay in Edinburgh
Edinburgh
Edinburgh is the capital city of Scotland, the second largest city in Scotland, and the eighth most populous in the United Kingdom. The City of Edinburgh Council governs one of Scotland's 32 local government council areas. The council area includes urban Edinburgh and a rural area...
, and both banks' brands would continue to be used.
HBOS Reorganisation Act
In 2006, HBOS secured the passing of the HBOS Group Reorganisation Act 2006HBOS Group Reorganisation Act 2006
The HBOS Group Reorganisation Act 2006 is a private Act of Parliament, passed by the Parliament of the United Kingdom in June 2006. The aim of the act was to provide HBOS plc, a banking and insurance group in the UK, the legal authority to reorganise its subsidiaries into a simplified structure...
, a private Act of Parliament that would allow the group to operate in a more simplified structure. The Act allowed HBOS to make the Governor and Company of the Bank of Scotland a public limited company, Bank of Scotland plc, which became the principal banking subsidiary of HBOS. Halifax plc transferred its undertakings to Bank of Scotland plc, and although the brand name was retained, Halifax then began to operate under the latter company's UK banking licence.
The provisions in the Act were implemented on 17 September 2007.
Lloyds Banking Group
In 2008, HBOSHBOS
HBOS plc is a banking and insurance company in the United Kingdom, a wholly owned subsidiary of the Lloyds Banking Group having been taken over in January 2009...
Group agreed to be taken over by Lloyds TSB Group.
Lloyds TSB stated that it will keep the Bank of Scotland as a brand name, and retain its Scottish head office in Edinburgh. Lloyds TSB Scotland and Bank of Scotland branches in Scotland were expected to merge, however the group is now planning to sell all Lloyds TSB Scotland branches along with Cheltenham & Gloucester
Cheltenham & Gloucester
Cheltenham & Gloucester plc is a mortgage and savings provider in the United Kingdom, a subsidiary of Lloyds Banking Group. C&G specialises in mortgages and savings products. Previously, C&G was a building society, known as the Cheltenham and Gloucester Building Society. C&G is one of the largest...
and Intelligent Finance
Intelligent Finance
Intelligent Finance is a Scottish offset bank, a division of Bank of Scotland plc which is part of Lloyds Banking Group. It was established as a division of Halifax plc in 2000 by Jim Spowart, who helped establish other direct financial services firms including Direct Line.Following a...
following pressure from the European Commission.
The new group began trading on 19 January 2009 as the Lloyds Banking Group
Lloyds Banking Group
Lloyds Banking Group plc is a major British financial institution, formed through the acquisition of HBOS by Lloyds TSB in 2009. As at February 2010, HM Treasury held a 41% shareholding through UK Financial Investments Limited . The Group headquarters is located at 25 Gresham Street in London, with...
.
Banknotes
Although the Bank of Scotland today is not a central bank, it retains the right (along with two other Scottish commercial banks) to issue pound sterlingPound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
banknotes to this day. These notes are equal in value to notes issued by the Bank of England
Bank of England note issues
The Bank of England, which is now the Central Bank of the United Kingdom, has issued banknotes since 1694. Since 1970, its new series of notes have featured portraits of British historical figures. Of the eight banks authorised to issue banknotes in the UK, only the Bank of England can issue...
, the central bank of the United Kingdom.
Banknote history
The Bank of Scotland was the first bank in EuropeEurope
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
to successfully issue paper currency
Currency
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...
redeemable for cash on demand (which was an extremely useful facility given the poor state of the Scottish coinage
Scottish coinage
The coinage of Scotland covers a range of currency and coins in Scotland during Classical antiquity, the reign of ancient provincial kings, royal dynasties of the ancient Kingdom of Scotland and the later Mediaeval and Early modern periods....
at the end of the 17th century). Following the Acts of Union
Acts of Union 1707
The Acts of Union were two Parliamentary Acts - the Union with Scotland Act passed in 1706 by the Parliament of England, and the Union with England Act passed in 1707 by the Parliament of Scotland - which put into effect the terms of the Treaty of Union that had been agreed on 22 July 1706,...
in 1707, the bank supervised the reminting of the old Scottish coinage into Sterling
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
.
The right to issue banknotes was extended to other banks after 1716 when the Bank of Scotland's monopoly was allowed to lapse. Up until the middle of the 19th century, privately owned banks in Great Britain and Ireland
United Kingdom of Great Britain and Ireland
The United Kingdom of Great Britain and Ireland was the formal name of the United Kingdom during the period when what is now the Republic of Ireland formed a part of it....
were permitted to issue their own banknotes, and money issued by provincial Scottish, English, Welsh and Irish banking companies circulated freely as a means of payment. While the Bank of England eventually gained a monopoly for issuing banknotes in England and Wales, attempts to restrict Scottish banks from issuing notes were met with popular opposition.
In 1826, there was outrage in Scotland at the attempt of the United Kingdom Parliament to prevent the production of banknotes of less than five pounds face value. Sir Walter Scott wrote a series of letters to the Edinburgh Weekly Journal under the pseudonym "Malachi Malagrowther" which provoked such a response that the government was forced to relent and allow the Scottish banks to continue printing £1 notes. For this reason Sir Walter still appears on all Bank of Scotland notes.
1995 series
- £5 note featuring a vignetteVignette (graphic design)Vignettes, in graphic design, are decorative designs usually in books, used both to separate sections or chapters and to decorate borders.In Descriptive, or Analytical Bibliography for the hand-press period a vignette refers to an engraved design printed using a copper-plate press, on a page that...
of oilPetroleumPetroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
and energyEnergyIn physics, energy is an indirectly observed quantity. It is often understood as the ability a physical system has to do work on other physical systems... - £10 note featuring a vignette of distillingDistillationDistillation is a method of separating mixtures based on differences in volatilities of components in a boiling liquid mixture. Distillation is a unit operation, or a physical separation process, and not a chemical reaction....
and brewingBrewingBrewing is the production of beer through steeping a starch source in water and then fermenting with yeast. Brewing has taken place since around the 6th millennium BCE, and archeological evidence suggests that this technique was used in ancient Egypt... - £20 note featuring a vignette of educationEducationEducation in its broadest, general sense is the means through which the aims and habits of a group of people lives on from one generation to the next. Generally, it occurs through any experience that has a formative effect on the way one thinks, feels, or acts...
and researchResearchResearch can be defined as the scientific search for knowledge, or as any systematic investigation, to establish novel facts, solve new or existing problems, prove new ideas, or develop new theories, usually using a scientific method... - £50 note featuring a vignette of artArtArt is the product or process of deliberately arranging items in a way that influences and affects one or more of the senses, emotions, and intellect....
s and cultureCultureCulture is a term that has many different inter-related meanings. For example, in 1952, Alfred Kroeber and Clyde Kluckhohn compiled a list of 164 definitions of "culture" in Culture: A Critical Review of Concepts and Definitions... - £100 note featuring a vignette of leisureRecreationRecreation is an activity of leisure, leisure being discretionary time. The "need to do something for recreation" is an essential element of human biology and psychology. Recreational activities are often done for enjoyment, amusement, or pleasure and are considered to be "fun"...
and tourismTourismTourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...
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These notes continue in circulation and are gradually being replaced by the 2007 series.
Current 2007 series
Henry Raeburn
Sir Henry Raeburn was a Scottish portrait painter, the first significant Scottish portraitist since the Act of Union 1707 to remain based in Scotland.-Biography:...
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Some new security features have also been added to the new design. These include a metallic security thread embedded in every banknote, which contains the numerical value of the note and the note's bridge image. A new hologram and foil patch has been introduced on the front of the £20, £50 and £100 notes, which features the Bank of Scotland logo and the numerical value of the note.
- £5 note features Brig o' DoonBrig o' DoonThe Brig o' Doon is a late medieval bridge used as the setting for the final verse of the Robert Burns's poem Tam o' Shanter. In this scene Tam is on horseback and is being chased by Nannie the witch...
- £10 note features Glenfinnan ViaductGlenfinnan ViaductGlenfinnan Viaduct is a railway viaduct on the West Highland Line in Glenfinnan, Lochaber, Highland, Scotland. It was built between 1897 and 1901...
- £20 note features Forth Bridge (railway)Forth Bridge (railway)The Forth Bridge is a cantilever railway bridge over the Firth of Forth in the east of Scotland, to the east of the Forth Road Bridge, and 14 kilometres west of central Edinburgh. It was opened on 4 March 1890, and spans a total length of...
- £50 note features Falkirk WheelFalkirk WheelThe Falkirk Wheel is a rotating boat lift located in Scotland, UK,connecting the Forth and Clyde Canal with the Union Canal, opened in 2002. It is named after the nearby town of Falkirk which is in central Scotland...
- £100 note features Kessock BridgeKessock BridgeThe Kessock Bridge carries the A9 trunk road across the Beauly Firth at Inverness.-Description:The Kessock Bridge is a cable-stayed bridge across the Beauly Firth, an inlet of the Moray Firth, between the village of North Kessock and the city of Inverness in the Scottish Highlands.The bridge has a...
Gaelic policy
Although it had a presence in every major GaelicScottish Gaelic language
Scottish Gaelic is a Celtic language native to Scotland. A member of the Goidelic branch of the Celtic languages, Scottish Gaelic, like Modern Irish and Manx, developed out of Middle Irish, and thus descends ultimately from Primitive Irish....
community, the Bank of Scotland was still operating exclusively in English
English language
English is a West Germanic language that arose in the Anglo-Saxon kingdoms of England and spread into what was to become south-east Scotland under the influence of the Anglian medieval kingdom of Northumbria...
in the early 1970s. In 1972, Gaelic activist Iain Noble
Iain Noble
Sir Iain Andrew Noble, 3rd Baronet of Ardkinglas and Eilean Iarmain was a businessman, landowner in the Isle of Skye and a noted Scottish Gaelic language activist. He died at home in Skye on 25 December 2010....
persuaded the bank to issue him with its first Gaelic (actually bilingual) cheque-book. These have since become popular, and the Royal Bank
Royal Bank of Scotland
The Royal Bank of Scotland Group is a British banking and insurance holding company in which the UK Government holds an 84% stake. This stake is held and managed through UK Financial Investments Limited, whose voting rights are limited to 75% in order for the bank to retain its listing on the...
soon followed suit. Today the bank advertises itself in the Highlands
Scottish Highlands
The Highlands is an historic region of Scotland. The area is sometimes referred to as the "Scottish Highlands". It was culturally distinguishable from the Lowlands from the later Middle Ages into the modern period, when Lowland Scots replaced Scottish Gaelic throughout most of the Lowlands...
and Hebrides
Hebrides
The Hebrides comprise a widespread and diverse archipelago off the west coast of Scotland. There are two main groups: the Inner and Outer Hebrides. These islands have a long history of occupation dating back to the Mesolithic and the culture of the residents has been affected by the successive...
under the Gaelic title Banca na h-Alba, although the new issue of Bank of Scotland notes does not include any Gaelic as many supporters of the language had hoped would be the case.
Corporate structure
The Bank has several subsidiaries and brands including:- Halifax
- Intelligent FinanceIntelligent FinanceIntelligent Finance is a Scottish offset bank, a division of Bank of Scotland plc which is part of Lloyds Banking Group. It was established as a division of Halifax plc in 2000 by Jim Spowart, who helped establish other direct financial services firms including Direct Line.Following a...
- Birmingham MidshiresBirmingham MidshiresBirmingham Midshires is a commercial bank in the United Kingdom, a division of Bank of Scotland plc . It is headquartered at Pendeford Business Park, Wolverhampton, England and has 67 offices throughout England...
- Bank of Scotland Corporate (including the former Capital Bank)
- Banco Halifax HispaniaBanco Halifax HispaniaLloyds Bank International, is a Spanish bank and part of the Lloyds Banking Group. The bank was set up in 1993 as Banco Halifax, the Spanish subsiidiary of Halifax....
- Sainsbury's BankSainsbury's BankSainsbury's Bank, now trading as Sainsbury's Finance, is a 50:50 joint venture between J Sainsbury and Bank of Scotland . Sainsbury’s was the first major British supermarket to open a bank, commencing trading in February 1997...
(50% joint ventureJoint ventureA joint venture is a business agreement in which parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets...
with retailer Sainsburys) - Bank of Scotland Investment Services
- Bank of Scotland Private Banking
- HBOS Financial Services Ltd
- HBOS Insurance & Investment Group Ltd
- HBOS Treasury Services plc
- Halifax Ireland
- Bank of Scotland (Netherlands)Bank of Scotland (Netherlands)The Bank of Scotland is the Dutch subsidiary of Bank of Scotland plc, part of the Lloyds Banking Group. It was established in 1999 and is headquartered in Amsterdam....
List of Governors of the Bank of Scotland
- John HollandJohn Holland (banker)John Holland was a founder of the Bank of Scotland, in 1695....
1696-1697 - David Melville, 3rd Earl of LevenDavid Melville, 3rd Earl of LevenDavid Leslie-Melville, 3rd Earl of Leven and 2nd Earl of Melville was a Scots aristocrat, politician, and soldier.The third son of George Melville, 1st Earl of Melville and his second wife Catherine Leslie-Melville, he shared the Whig political and the Presbyterian religious sympathies of his...
1697-1728 - Alexander Hume, 2nd Earl of Marchmont 1728-1740
- Charles Hope, 1st Earl of HopetounCharles Hope, 1st Earl of HopetounCharles Hope, 1st Earl of Hopetoun KT was a Scottish nobleman.He was the son of John Hope of Hopetoun, grandson of Sir Thomas Hope, 1st Baronet of Craighall, Fife. John Hope purchased the barony of Niddry Castle from the Earl of Winton around 1680...
1740-1742 - Colonel John Stratton 1742
- John Hay, 4th Marquess of TweeddaleJohn Hay, 4th Marquess of TweeddaleJohn Hay, 4th Marquess of Tweeddale PC was a Scottish nobleman.Tweeddale was an able and accomplished statesman, and possessed considerable knowledge of law. He was appointed an Extraordinary Lord of Session in 1721, the last person to hold this office. He was one of the Scottish representative...
1742-1762 - Hugh Hume, 3rd Earl of Marchmont 1763-1790
- Henry Dundas, 1st Viscount MelvilleHenry Dundas, 1st Viscount MelvilleHenry Dundas, 1st Viscount Melville PC and Baron Dunira was a Scottish lawyer and politician. He was the first Secretary of State for War and the last person to be impeached in the United Kingdom....
1790-1811 - Robert Dundas, 2nd Viscount MelvilleRobert Dundas, 2nd Viscount MelvilleRobert Dundas, 2nd Viscount Melville KT, PC, FRS was a British statesman, the son of Henry Dundas, the 1st Viscount. Dundas was the Member of Parliament for Hastings in 1794, Rye in 1796 and Midlothian in 1801. He was also Keeper of the Signet for Scotland from 1800...
1812-1851 - James Broun Ramsay, 1st Marquess of Dalhousie 1851-1860
- John Campbell, 2nd Marquess of BreadalbaneJohn Campbell, 2nd Marquess of BreadalbaneJohn Campbell, 2nd Marquess of Breadalbane KT, PC, FRS , styled Lord Glenorchy until 1831 and as Earl of Ormelie from 1831 to 1834, was a Scottish nobleman and Liberal politician.-Background and education:...
1861-1862 - George Hamilton-Baillie, 11th Earl of Haddington 1863-1870
- John Hamilton Dalrymple, 10th Earl of StairJohn Hamilton Dalrymple, 10th Earl of StairSir John Hamilton Dalrymple, 10th Earl of Stair KT was a Scottish peer and politician, styled as Viscount Dalrymple from 1853 until 1864, who served as Governor of the Bank of Scotland for thirty-three years....
1870-1903 - Alexander Hugh Bruce, 6th Baron Balfour of Burleigh 1904-1921
- William John Mure 1921-1924
- Sidney Herbert, 16th Baron Elphinstone 1924-1955
- Sir John Craig 1955-1957
- Steven Bilsland, 1st Baron Bilsland 1957-1966
- Henry Alexander Hepburne-Scott, 10th Lord Polwarth 1966-1972
- Ronald John Bilsland Colville, 2nd Baron Clydesmuir 1972-1981
- Sir Thomas Neilson Risk 1981-1991
- Sir David Bruce Pattullo 1991-1998
- Sir Matthew Alistair GrantMatthew Alistair GrantSir Alistair Grant FRSE was a British businessman.-Career:Alistair Grant was educated at Woodhouse Grove School in Yorkshire...
1998-1999 - Sir John Shaw 1999-2001
- Sir Peter BurtPeter Burt-Early life:Peter Alexander Burt was educated in Scotland. He graduated from the University of St Andrews and the University of Pennsylvania's Wharton School and later worked in the computer industry in California and Scotland....
2001-2003 - George Mitchell 2003-2006
- Dennis Stevenson, Baron Stevenson of CoddenhamDennis Stevenson, Baron Stevenson of CoddenhamHenry Dennistoun "Dennis" Stevenson, CBE, DL was created a life peer as Baron Stevenson of Coddenham, of Coddenham in the County of Suffolk in 1999, and was awarded a CBE in 1981...
2006- 2007
Sponsorship
Bank of Scotland sponsored the Scottish Premier LeagueScottish Premier League
The Scottish Premier League , also known as the SPL , is a professional league competition for association football clubs in Scotland...
from its inception in 1998 to season 2006/2007 when it declined to renew the deal in favour of investing in grassroots sport instead.
Bank of Scotland also sponsors scottishathletics
Scottishathletics
Scottishathletics is the national governing body for the sport of athletics in Scotland. Established as a limited company on 1 April 2001, it succeeded the Scottish Athletics Federation . scottishathletics is a member of the Commonwealth Games Council for Scotland.The organisation is built up of 22...
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See also
- British banknotes
- List of banks
- Royal Bank of ScotlandRoyal Bank of ScotlandThe Royal Bank of Scotland Group is a British banking and insurance holding company in which the UK Government holds an 84% stake. This stake is held and managed through UK Financial Investments Limited, whose voting rights are limited to 75% in order for the bank to retain its listing on the...
- William Paterson (banker)William Paterson (banker)Sir William Paterson was a Scottish trader and banker.- Early life :...
- HomelinkHomelinkHomelink was the UK's first online banking system. It was set up by the Nottingham Building Society in 1983 in association with the Bank of Scotland, using the UK Post Office's Prestel Viewdata system....
- Museum on the MoundMuseum on the MoundThe Museum on the Mound is a museum in Edinburgh, Scotland, that focusses on money, coinage and economics. Located in the headquarters of the multinational HBOS banking group, it opened in 2006.It is open to all members of the public, and run school visits....
External links
- Bank of Scotland
- history, from the HBOS website
- museumonthemound.com Official page of the company's museum