Aberdeen Banking Company (1767-1849)
Foundation
Aberdeen from the south in the early 19th century, by John Clark
The Aberdeen Banking Company, also known as the Banking Company in Aberdeen was established in 1767 as a co-partnery with a starting capital of £72,000. The bulk of its shareholders were landowners, while a substantial proportion (around a third) were merchants.
It was one of a number of provincial partnership banks formed from 1747 onwards to provide banking services for local regions in Scotland. The Aberdeen Banking Company was the tenth such provincial banking company to be formed and the second in Aberdeen.
As well as providing local banking services, the bank was also established in response to the problem of the proliferation of small banknotes of doubtful value in Scotland during the 1760s.
The original contract of co-partnery made reference to this, warning 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".
Early difficulties
The bank had to struggle to survive during the first eighteen months of its existence as a result of a bank note war waged on it by agents of the Thistle Bank and the British Linen Company. This difficulty was exacerbated by the chronic shortage of coin being experienced throughout the country at this time. These initial problems were overcome however and by 1770 the company had seven agencies (branches) 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, 1 Aug 1801 (uncirculated)
Later history
The company continued to operate very successfully between 1778 and 1806, but there were underlying problems. Large advances were being made to firms in which the directors of the bank also had an interest. It was only on the appointment of a new cashier in 1839, that these potential bad debts were brought to the directors' attention. No action was taken however until 1842, by which time it was too late. In 1849, the firms to which the large advances had been made failed, and the business of the Aberdeen Banking Company was acquired by the Union Bank of Scotland in the same year.
Further information
• 'The History of the Union Bank of Scotland' by Robert Rait (John Smith & Son, 1930), chapter 7.
• Archival records relating to the Aberdeen Banking Company are held by HBOS Group Archives.
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