Caledonian Banking Company

(1838-1907)

Early History

The Caledonian Banking Company was established in Inverness as a joint-stock company, in 1838. It had a nominal capital of £125,000. The Gaelic motto used on its banknotes – 'Tir nam Beann, nan Gleann, s'an Gaisgeach' – translates as 'Land of Mountains, Glens and Heroes'.

Between 1838 and 1845, the Bank established 20 branches in the Highland areas of Moray Firth, Caithness and Wester Ross. But its expansion eastwards caused friction with the Aberdeen-based North of Scotland Bank. The latter saw the Caledonian as encroaching on its patch.

The customer base of the Caledonian Bank consisted mainly of farmers, Highland gentry, fishermen, whisky distillers and grain factors.

Former head office of the Caledonian Bank, High Street, Inverness
Former head office of the Caledonian Bank, High Street, Inverness.

In 1847, it built a new head office on Inverness High Street, to the designs of Mackenzie and Matthews. 

Turbulent Times

The Bank enjoyed reasonable growth, until the spectacular collapse of the City of Glasgow Bank in 1878. The Caledonian held £400 of stock in the Glasgow bank, as security for a loan. The latter did not have limited liability, and so shareholders were responsible for all debts. Panic set in, and the Caledonian Bank was forced to close its doors on 5th December 1878. Later, it emerged that its total liability as a City of Glasgow Bank shareholder would be confined to £11,000. In the light of this, and with assistance from Bank of Scotland, the Caledonian was able to re-open in August 1879.

The rot, however, had set in. The Bank's decline became increasingly evident around the turn of the century. In 1896, the Caledonian had liabilities of £1,223,000, and net profits of only £14,000. By 1907, its reserves were down to £195,000, with net profits barely above £12,000.

Caledonian Bank £1 note (1904) and £100 note (1883).
Caledonian Bank £1 note (1904) and £100 note (1883).


The Final Years

There were two further nails in the coffin. Firstly, the Bank's lending and investment controls were not sufficiently stringent. Loans advanced to build some of the famous Highland distilleries, at the turn of the century, would never have been granted by the more conservative Edinburgh and Glasgow banks. Secondly, the Scottish India Coffee Company of Madras Province went into liquidation in 1902. It left the Caledonian Bank with a debt of £30,000.

Unable to recover, the Bank's directors approached Bank of Scotland in 1906, requesting an amalgamation. This the proprietors duly approved, at a special meeting in 1907.

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Further Information

  • Scottish Banking A History, 1695-1973 by S. G. Checkland (Collins, Glasgow & London, 1975).
  • Bank of Scotland A History 1695-1995 by Richard Saville (Edinburgh University Press, Edinburgh, 1996).
  • Bank of Scotland 1695-1995: A Very Singular Institution by Alan Cameron (Mainstream Publishing, Edinburgh, 1995).
  • Archives relating to the Caledonian Banking Company and the Scottish India Coffee Company are held by Lloyds Banking Group Archives in Edinburgh - for further information see our archive collections.