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The Royal Bank of Scotland Group PLC is one of Scotland's three national clearing banks and one of the oldest in the UK, founded in Edinburgh in 1727 by Royal Charter.

Today it is the largest bank in Scotland, the second largest in the UK and Europe, and the fifth largest in the world by market capitalisation being worth over £50Bn. Its shares have a primary listing on the London Stock Exchange.

The bank's registered head office is located at St Andrew's Square in Edinburgh. In 2005, Queen Elizabeth II opened the bank's new head office building in Gogarburn, Edinburgh. It has offices throughout Europe, America and Asia.

History of the Royal Bank of Scotland

The bank traces its origin to the Equivalent Society which was set up by investors in the failed Company of Scotland to protect the compensation they received as part of the arrangements of the 1707 Acts of Union. The Equivalent Society became the Equivalent Company in 1724, and the new company wished to move into banking. The British government received the request favourably as the "Old Bank", the Bank of Scotland, was suspected of having Jacobite sympathies. Accordingly the "New Bank" was chartered in 1727 as the Royal Bank of Scotland.

Competition between the Old and New Banks was fierce, and centred on the issue of banknotes. The policy of the Royal Bank was to either drive the Bank of Scotland out of business or to take it over on favourable terms.

The Royal Bank built up large holdings of the Bank of Scotland's notes, which it acquired in exchange for its own notes, and then suddenly presented them to the Bank of Scotland for payment. To pay for these notes the Bank of Scotland was forced to call in its loans and, in March 1728, to suspend payments. The suspension relieved the immediate pressure on the Bank of Scotland at the cost of substantial damage to its reputation, and gave the Royal Bank a clear space to expand its own business, although the Royal Banks' increased note issue also made it more vulnerable to the same tactics.

Despite talk of a merger with the Bank of Scotland, the Royal Bank did not possess the wherewithall to complete the deal. By September 1728 the Bank of Scotland was able to start redeeming its notes again, with interest, and in March 1729 it restarted lending. To prevent similar attacks in the future, the Bank of Scotland put an "option clause" on its notes, giving it the right to make the notes interest-bearing while delaying payment for six months; the Royal Bank followed suit. Both banks eventually decided that the policy they had followed was mutually self-destructive and a truce was arranged, but it still took until 1751 before the two banks agreed to accept each other's notes.

Constituents of the Royal Bank of Scotland Group

In August 2005 Royal Bank of Scotland purchased a 5% stake in the Bank of China.

Other facts

  • The Royal Bank of Scotland, along with Clydesdale Bank and Bank of Scotland, still prints its own banknotes for Scotland
  • It is the only UK bank that still prints a 1 pound note
  • It was the first bank in the world to offer an overdraft facility
  • In June 1997, The Royal Bank of Scotland became the first high street bank in the UK to introduce an Internet banking service.

See also

External links

Data

1727 establishments | Banks of the United Kingdom | Banks of Scotland | Royal Bank of Scotland Group | Banks of the European Union

Royal Bank of Scotland | Royal Bank of Scotland | Royal Bank of Scotland | Royal Bank of Scotland | Royal Bank of Scotland | Royal Bank of Scotland

 

This article is licensed under the GNU Free Documentation License. It uses material from the "Royal Bank of Scotland".

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