Bank of Scotland plc
	Public limited company
Founded	1695
Headquarters	Edinburgh, Scotland, UK
Industry	Finance and Insurance
Products	Financial Services
Employees	20,000
Owner	HBOS plc
Website	www.bankofscotland.co.uk

Bank of Scotland plc is a commercial and clearing bank, based in Edinburgh, Scotland. With a history dating to the 17th century, it is the oldest surviving bank 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, a function it still performs today.

Since 10 September 2001 the Bank of Scotland has formed part of HBOS plc, following a merger with the Halifax Group (formerly the Halifax Building Society). The Bank owns a 50% stake in Sainsbury's Bank - the other 50% being owned by J Sainsbury plc.

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.

History

Establishment

The Governor and Company of the Bank of Scotland was established by an Act of the Parliament of Scotland 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 [1]. 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Pound Scots (£100,000 Pound Sterling), gave the Proprietors (shareholders) limited liability, and in the final clause (repealed only in 1920) made all foreign-born Proprietors naturalised Scotsmen "to all Intents and Purposes whatsoever".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.

18th and 19th Century

The Bank of Scotland was instrumental in the raising of money for the first Jacobite Rising in 1715. As a result the Bank's monopoly ended in 1716, and 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 1740, competition soon arose from other sources, as other Scottish banks were founded throughout the country. In response, the Bank of Scotland themselves 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. 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.

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 Chester 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.

International expansion

The arrival of North Sea Oil 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 Australian market by acquiring the Perth based Bank of Western Australia.

A controversial period in the Bank's history was the attempt 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". [2]

HBOS

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 bank's brands would continue to be used.

Since then HBOS has grown to become the fourth largest bank in the UK by market value, and the UK's largest mortgage lender. In Scotland, all of the Halifax's branches have been amalgamated with the Bank of Scotland, with the Halifax brand only used for mortgages and savings products. Halifax branches in England have used the Bank of Scotland brand for business purposes.

HBOS Group Reorganisation Act 2006

In 2006, HBOS secured the passing of the HBOS Group Reorganisation Act 2006, 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 is now the principal banking subsidiary of HBOS. Halifax plc transferred to Bank of Scotland plc, although the brand name will be retained.

Bank notes

Bank of Scotland was the first bank in Europe 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 seventeenth century). The right to issue banknotes has been maintained to the present day, but extended to other banks after 1716 when the Bank's monopoly was allowed to lapse. Following the Acts of Union in 1707, the bank supervised the reminting of the old Scottish coinage into Sterling.

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.

Current issue

Bank of Scotland's current note issue feature Sir Walter Scott on the front, and on the back- representations of industries that Scotland excels in:

• 5 pound note featuring a vignette of oil and energy
• 10 pound note featuring a vignette of distilling and brewing
• 20 pound note featuring a vignette of education and research
• 50 pound note featuring a vignette of arts and culture
• 100 pound note featuring a vignette of leisure and tourism.

New 2007 series

Bank of Scotland will begin issuing a new series of banknotes in the Autumn of 2007, which will 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.

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.

• £5 note features Brig o' Doon
• £10 note features Glenfinnan Viaduct
• £20 note features Forth Bridge (railway)
• £50 note features Falkirk Wheel
• £100 note features Kessock Bridge

Gaelic policy

The Bank of Scotland, like the other Scottish banks, historically saw itself as an institution of the lowland Scottish establishment. Although it had a presence in every major Gaelic community, it 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 forthcoming new issue of notes fails to include any Gaelic which is regarded as disappointing by many Gaelic supporters given the rising status of the language in Scotland.

Corporate Structure

The Bank has several subsidiaries and brands:

• Halifax
• Banco Halifax Hispania
• Birmingham Midshires
• Intelligent Finance
• Sainsbury's Bank (50%)
• Bank of Scotland Corporate
• Bank of Scotland Investment Services
• Bank of Scotland Private Banking
• Capital Bank
• HBOS Financial Services Ltd
• HBOS Insurance & Investment Group Ltd
• HBOS Treasury Services plc
• Bank of Scotland (Ireland)
• Bank of Scotland (Netherlands)

List of Governors of the Bank of Scotland

1. John Holland 1696-1697
2. David Melville, 3rd Earl of Leven 1697-1728
3. Alexander Hume, 2nd Earl of Marchmont 1728-1740
4. Charles Hope, 1st Earl of Hopetoun 1740-1742
5. Colonel John Stratton 1742
6. John Hay, 4th Marquess of Tweeddale 1742-1762
7. Hugh Hume, 3rd Earl of Marchmont 1763-1790
8. Henry Dundas, 1st Viscount Melville 1790-1811
9. Robert Dundas, 2nd Viscount Meville 1812-1851
10. James Alexander, 10th Earl of Dalhousie 1851-1860
11. John Campbell, 2nd Marquess of Breadalbane 1861-1862
12. George Hamilton-Baillie, 11th Earl of Haddington 1863-1870
13. John Hamilton Dalrymple, 10th Earl of Stair 1870-1903
14. Alexander Hugh Bruce, 6th Baron Balfour of Burleigh 1904-1921
15. William John Mure 1921-1924
16. Sidney Herbert, 16th Baron Elphinstone 1924-1955
17. Sir John Craig 1955-1957
18. Steven Bilsland, 1st Baron Bilsland 1957-1966
19. Henry Alexander Hepburne-Scott, 10th Lord Polwarth 1966-1972
20. Ronald John Bilsland Colville, 2nd Baron Clydesmuir 1972-1981
21. Sir Thomas Neilson Risk 1981-1991
22. Sir David Bruce Pattullo 1991-1998
23. Sir Matthew Alistair Grant 1998-1999
24. Sir John Shaw 1999-2001
25. Sir Peter Burt 2001-2003
26. George Mitchell 2003-2006
27. Dennis Stevenson, Lord Stevenson of Coddenham 2006- 2007

Football

Bank of Scotland sponsored the Scottish Premier League from its inception in 1998 to season 2006/2007 when it declined to renew the deal in favour of investing in grassroots sport instead.

See also

• British banknotes
• List of banks
• Royal Bank of Scotland
• William Paterson (banker)

External links

• Bank of Scotland
• history, from the HBOS website

•  • [ e] Topics on Scotland
History	Timeline Prehistoric Scotland Kingdom of Scotland Scotland in the High Middle Ages Davidian Revolution Wars of Scottish Independence Scotland in the Late Middle Ages Scottish Reformation Scottish colonisation of the Americas Acts of Union 1707 Scottish Enlightenment Jacobitism Highland Clearances Lowland Clearances
Geography	Geology Climate Demographics Mountains and hills Islands Lochs Fauna Highlands
Economy	Companies Bank of Scotland Royal Bank of Scotland North Sea oil Whisky Tourism Harris Tweed Renewable energy Transport
Law	Courts Lord President Crown Office Lord Advocate Solicitor General Procurator Fiscal
People	List of Scots Inventors Musicians Scientists Writers
Politics	Political parties Elections Scottish Parliament Scottish Executive First Minister of Scotland Secretary of State for Scotland Scotland Office Local government Monarchs of Scotland Military Scottish independence
Religion	Church of Scotland General Assembly Roman Catholicism Judaism Scottish Episcopal Church Islam Hinduism
Language	Scottish Gaelic language Scots language Scottish English Highland English
Culture	Clans Cuisine Education Flags Coat of arms Anthem Hogmanay Innovations Literature Music Sport World Heritage sites Nationalism
See also

•  • [ e] Banks of Scotland
Airdrie Savings Bank Bank of Scotland Clydesdale Lloyds TSB Scotland Royal Bank of Scotland Tesco Personal Finance

•  • [ e] Banks of the United Kingdom

Abbey • Adam and Company • Airdrie Savings Bank • Alliance & Leicester • Allied Irish Bank (GB) • Anglo Irish Bank • Arbuthnot Latham • Bank of Ireland • Bank of Scotland • Barclays • Birmingham Midshires • Bradford & Bingley • Bristol and West • Cahoot • Cheltenham and Gloucester • Clydesdale • Co-operative Bank • Coutts & Co • Drummonds • Egg • first direct • First Trust Bank • Halifax • Harrods Bank • HSBC • Intelligent Finance • Islamic Bank of Britain • Julian Hodge Bank • Lloyds TSB • National Savings and Investments • National Westminster Bank • Northern Bank • Northern Rock • Reliance Bank • Royal Bank of Scotland • Sainsbury's Bank • Standard Chartered Bank • Tesco Personal Finance • The Woolwich • Ulster Bank • Yorkshire Bank