Aberdeen Banking Company
The Aberdeen Banking Company, also known as the Banking Company in Aberdeen, was established in 1767. It was a co-partnery, with a starting capital of £72,000. The bulk of its shareholders were landowners, while a substantial proportion were merchants.
From 1747 onwards, a number of provincial partnership banks were formed in Scotland. The Aberdeen Banking Company was the tenth such bank, and the second in Aberdeen.
It was established, in part, to deal with the proliferation in Scotland of small denomination banknotes, which were of doubtful value. The original contract of co-partnery made specific reference to this. It warned of 'the imminent danger that all ranks of people are exposed to from the extensive and industrious circulation of a variety of Bank Notes from distant and remote parts of this Kingdom, issued and signed by people for the most part totally unknown in this Part of the Country.'
By issuing its own notes, the Aberdeen Banking Company sought to give local people a paper currency in which they could have confidence.
The bank struggled to survive during its first 18 months, due to the banknote war waged on it by the Thistle Bank and the British Linen Bank. Its difficulties were exacerbated by the country's chronic shortage of coin at this time.
But these initial problems were overcome, and by 1770, the Company had established seven agencies (branches). These were located in Inverness, Huntly, Forres, Peterhead, Banff, Montrose and Fraserburgh. Nevertheless, it was not until 1771 that a substantial profit was made, and the first dividend was not paid until March 1772.
The Banking Company in Aberdeen £20, 1st August 1801 (uncirculated)
The Company appeared to operate very successfully between 1778 and 1806, but there were underlying problems. Large advances were made to firms in which the directors of the bank also had an interest. It was only in 1839, on the appointment of a new cashier, that these potential bad debts came to light. However, no action was taken for another three years, by which time it was too late...
By 1849, the Aberdeen Banking Company was in serious trouble. Local businesses, to whom large advances had been made, had failed as a result of the economic downturn of 1847. The loans could not be repaid, and the Company saw its capital of £300,000 reduced to just over £7,000. In consequence, its business was acquired by the Union Bank of Scotland.
Return to the Bank of Scotland family tree.
- The History of the Union Bank of Scotland by Robert Rait (John Smith & Son Ltd., Glasgow, 1930), chapter 7.
- Archives relating to the Aberdeen Banking Company are maintained by Lloyds Banking Group Archives in Edinburgh - for further information see our archive collections.