British Linen Bank (1746-1999)

Foundation

The British Linen Bank (initially called the British Linen Company) was established by a Royal Charter from George II in 1746.  The new company was empowered to "carry on the Linen Manufactory in all its branches" and was granted limited liability. The word 'British' in its title was a reflection of the suspicion aroused by all things Scottish after the Jacobite Rebellion of 1745.

The new company's first premises were in Halkerston's Wynd in Edinburgh. Its key promoters were the 3rd Duke of Argyll, Lord Milton, the Earl of Panmure and George Middleton, a London banker.  Its initial nominal capital was £100,000 which was not increased until 1806, when it was raised to £200,000.

 

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Expansion

Although the initial aim of the company was to promote the linen industry, from the late 1760s, it moved towards banking and began issuing notes.  In 1765 the British Linen Company was accepted by the Royal Bank of Scotland as a bank.  Recognition by Bank of Scotland came in 1771.

Its great strength was its spread of agents throughout the country, developed as a result of the company's earlier involvement in the linen trade.  By 1780 there were nine agencies (branches) in total.

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Developments in the 19th century

The British Linen Company moved to a new head office at the turn of the 19th century.  In 1808 the company acquired the Dalhousie mansion at No. 38 St. Andrew Square and in 1825 numbers 39 and 40 were also purchased, reflecting the increase in business and number of staff.  The depression of 1837 brought a temporary halt to prosperity, though the British Linen Company did not suffer in this as much as other banks.

The growth of the bank continued throughout the 19th century. In fact, other than a temporary paralysis in trade in the late 1850s following the collapse of the Western Bank (along with the suspension of the City of Glasgow Bank), the British Linen Company survived most economic depressions relatively unscathed.  On 11th June 1906 the company formally changed its name to the British Linen Bank.

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The 20th century

By the early 20th century, banking in Scotland had become too concentrated: eight banks served only 4.8 million people.  A series of amalgamations between English and Scottish banks took place between 1917 and 1926 and in 1919 the British Linen Bank became a wholly-owned subsidiary of Barclays Bank.  The connection gave the bank increased foreign connections and total assets leapt from £29 million in 1918 to £36 million two years later.  As with all the Scottish-English banking "affiliations" (as they were known), the British Linen Bank retained a board of directors in Edinburgh, a separate structure and note-issue.

The 1950s and '60s saw another wave of Scottish bank mergers and on 9th May, 1969 Bank of Scotland finalised a deal with Barclays Bank resulting in the takeover of the British Linen Bank by Bank of Scotland.  The merger was finally concluded on 1st March, 1971.

The amalgamation document however secured the legal continuance of the British Linen Bank as a separate Scottish company, and in 1977 permission was granted for the resumption of the British Linen Bank as the merchant banking arm of Bank of Scotland, a role which it continued to play until September 1999.

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Further information

• 'The history of the British Linen Bank' by Charles A Malcolm ( T. & A. Constable, 1950)
• 'Bank of Scotland a history 1695-1995' by Richard Saville (Edinburgh University Publishing, 1996)
• 'Bank of Scotland 1695-1995: a very singular institution' by Alan Cameron (Mainstream, 1995).
• Archival records relating to the British Linen Bank are held by HBOS Group Archives.
• Records and artefacts relating to the British Linen Bank are on display in the Museum on the Mound  in our Corporate Headquarters

To return to the Bank of Scotland family tree click here.
To return to the Corporate History page click here.

 

 

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