Scotland’s first and oldest bank celebrates 320 years

17 July 2015

Scotland’s first and oldest bank is celebrating its 320th birthday today, having been founded by an Act of the Scottish Parliament on 17 July 1695, post-dating the Bank of England by just one year.

This is a milestone year for Lloyds Banking Group as 2015 also marks the 200th anniversary of Scottish Widows, the 250th anniversary of Lloyds Bank and the 30th year of the Lloyds Bank Foundations. To mark this occasion, here are some interesting facts on Scotland’s first and oldest bank that you might not know about.

Early years

Following the passing of the Act, the Bank's promoters opened two subscription books to raise the Bank's starting capital. The Edinburgh subscription book lay in a pub (the Cross Keys Tavern) from 1 Nov to 31 Dec 1695, so that people could sign up to be shareholders ('Adventurers') in the new venture.

Primarily set up to develop Scotland’s trade with mainly England and the Low Counties, Bank of Scotland began business in February 1696 with a working capital of £120,000 Scots – which is just £10,000 in today’s money.

Branch life

Famous customers of the past include Henry Raeburn, Thomas Telford, Walter Scott, Thomas Carlyle, Robert Stevenson and Mrs Robert Burns.

The very first record of Bank of Scotland providing a loan to a customer appears in the minutes of 13 Apr 1696.  These record that the directors approved a loan of £500 to the Earl of Strathmore, secured by a 'pledge of silver plate' to the value of £600.

Bank of Scotland successfully opened its first branch offices in Dumfries and Kelso in 1774. Evidence suggests Dumfries was first branch to be operational - the first account at this branch was approved 26 Sep 1774, a couple of weeks before the first account at the Kelso branch.

On 23 August 1826, the last duel in Scotland was fought at Cardenbarns, Kirkcaldy. The duellers were David Landale and his bank manager, George Morgan who was the Bank of Scotland agent (manager) at Kirkcaldy. Morgan had challenged Landale to a duel following a long-standing quarrel over Landale’s credit worthiness. When Morgan was killed, Landale stood trial for murder but was acquitted on grounds of self-defence.

The first fleet of mobile banks were introduced in April 1963, serving the rural communities in Bathgate and Haddington. The service was extended over the following year, with a floating bank being introduced to serve the Orkney Islands. It was operated from the ‘M.V. Orcadia’, a passenger and cargo vessel.

Bank notes

In 1696, Bank of Scotland became the first European commercial bank to successfully issue printed currency. Notes were printed in black and white, on one side only, and with sections that had to be completed by hand. Colour wasn’t introduced to notes until the 1860s.

The first known forgery of a Bank of Scotland note occurred in February 1700, when Thomas McGhie changed the word 'five' to 'fifty'. McGhie fled to England, abandoning his wife of just 14 days, and never returned. The Bank swiftly took steps to alter the design of the notes to make them more difficult to forge.

The earliest surviving Bank of Scotland note is dated 16 April 1716 and can be seen at the Group's Museum on the Mound in Edinburgh.

Robert Burns composed a poem on the back of a Bank of Scotland guinea note in 1786, bemoaning his lack of money. His fortunes changed soon afterwards when he published his book 'Poems, chiefly in the Scottish dialect'. Shortly after his death in 1796, Mrs Robert Burns opened an account at the Bank's Dumfries branch.

Sir Walter Scott appears on Bank of Scotland notes today because he led a successful campaign (writing a series of letters to the Edinburgh Weekly Journal under the pen name Malachi Malagrowther) to stop the abolition of the Scottish £1 note in 1826.

The Bank’s first notes to incorporate a design on the reverse appeared in 1929, when the £1 note featured an image of the Bank's Head Office on the Mound. The Mound still features on notes today.

Later this year Bank of Scotland notes will be printed on hard-wearing synthetic polymer. The first polymer banknote will be a one off, limited edition £5 note with a design from a children’s competition to support our Charity of the Year, BBC Children in Need. Only 50 of these special collectable £5 notes will be printed and they will be auctioned to help change the lives of children and young people in the UK.

Today, Bank of Scotland's note issue is the longest continuous note issue in the world.

A pioneer for change

Throughout its history, Bank of Scotland has been a pioneer for change. In 1959 it was the first bank in the UK to introduce computers for centralised accounting. The Centralised Accounting Unit initially served just four branches and it took a decade to transfer all the customer accounts on to the system.

'Scotcash', a forerunner of the ATM, was introduced by Bank of Scotland in 1968. The machines operated 24 hours a day so customers could now withdraw cash even when their branch was closed. The machines proved popular, and by the end of 1971, there were 26 in operation across Scotland.

Bank of Scotland pioneered the financing of North Sea energy. It established a specialist Oil Division in 1974 and became fondly known as the ‘Oil Bank’.

In 1985, before the internet was widely available, the Bank launched the revolutionary Home and Office Banking Service (HOBS) which allowed customers to manage their accounts using a television and a telephone line.

Mike Moran, Director at Bank of Scotland said, “A lot has changed since 1695, but building relationships with our customers and helping them make the right decisions, both big and small, is just as important to us today as it was right at the very beginning. Our focus on serving the needs of the people, communities and businesses of Scotland is stronger than ever. We are Scotland’s relationship bank, part of the fabric of everyday life, and we’re very proud of how far we’ve come. "