Caledonian Banking Company (1838-1907)
Early history
Former head office of the Caledonian Bank, High Street, Inverness
The Caledonian Banking Company was established as a joint-stock company in Inverness in 1838, with a nominal capital of £125,000. The Gaelic motto used on its banknotes - Tir nam Beann, nan Gleann, s'an Gaisgeach - translates as "Land of Mountains, Glens and Heroes".
Between 1838 and 1845 the bank established 20 branches in the Moray Firth, Caithness and Wester Ross areas of the Highlands. Its expansion eastwards, however, caused friction with the Aberdeen-based North of Scotland Bank, which saw the Caledonian as encroaching on its patch.
The main customers of the Caledonian Bank consisted of farmers, Highland gentry, fishermen, whisky distillers and grain factors, along with summer visitors. The head office on Inverness High Street was built in 1847 to the design of Mackenzie and Matthews.
Turbulent Times
The Bank continued to enjoy relative growth until the collapse of the City of Glasgow Bank in 1878. The Caledonian Bank held £400 of the City of Glasgow Bank's stock as security. The latter did not have limited liability and so shareholders were responsible for all liabilities. Panic set in and the Caledonian Bank was forced to close its doors, temporarily, on 5th December 1878. The Bank of Scotland agreed to tide over the Caledonian Bank, and this assistance, along with the realisation that the City of Glasgow Bank liability stood at only £11,000, enabled the Caledonian Bank to reopen its doors for business in August 1879.
The rot however had set in, and the bank's decline became increasingly evident around the turn of the century. In 1896 it had liabilities of £1,223,000 and net profits of only £14,000. By 1907, the Bank's reserves were down to £195,000 with net profits barely over £12,000.
Caledonian Bank £1 note (1904) and £100 note (1883)
The final years
Two other factors finally put the nail in the coffin. Firstly, the bank's lending and investment controls were not stringent enough. Some of the famous Highland distilleries that were built around the turn of the century would not have been possible had the more stringent banking attitudes of the Edinburgh and Glasgow banks prevailed. Secondly, the failure of the Scottish India Coffee Company of Madras Province, which went into liquidation in 1902, left the Caledonian Bank with a debt of £30,000.
Unable to recover, the Caledonian Bank directors approached Bank of Scotland for an amalgamation in 1906, which the proprietors duly agreed to at a special meeting in 1907.
Further information
• 'Scottish Banking a History, 1695-1973' by S. G. Checkland (Collins, 1975)
• '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 material relating to the Caledonian Bank and the Scottish India Coffee Company is held at HBOS Group Archives.
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