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Monday, 17 January, 2000, 18:15 GMT
Royal Bank of Scotland: A history

Royal Bank of Scotland HQ's The bank's Edinburgh HQ dates back to 1825


Royal Bank of Scotland is now worth more than 9bn and includes in its assets a railway company and 900 branches across the world.

Battle for Natwest
It may seem a long way from its Edinburgh beginnings in 1727.

But the bank maintains that the one element consistently evident in its operation has been its willingness to innovate.

The evidence ranges from its claim to have invented the overdraft in 1728, to its banking joint ventures with Virgin and Tesco in the 1990s.

Royal Bank of Scotland at a glance
22,000 staff
650 branches
75bn assets
9.2bn market value
Joint ventures Virgin and Tesco banks
Citizens Bank in the US
The Royal Bank of Scotland was founded as a corporation by grant of a Royal Charter under the Great Seal of Scotland. It had 111,347 and authority to 'exercise the rights and powers of banking'.

It opened for business in December of that year in Ship Close, Edinburgh.

In 1728 it introduced a 'cash account' which allowed a merchant of good standing, backed by a bond of friends, to borrow more than he had deposited.

Glasgow move

These accounts are seen as the forerunner of the overdraft.

In its first 50 years or so, the focus of its activities remained the issuing of bank notes.

RBoS dealers in London The Royal Bank maintains a strong London presence
Expansion took a significant step forward in 1783 when it opened its first branch in Glasgow, where it had long been involved in financing the tobacco trade.

In 1819 RBoS moved its HQ from the congested old town to St Andrew Square in the New Town of Edinburgh, occupying from 1825 a Georgian town house which remains its registered office.

The 19th Century saw expansion with new branches opened and the acquisition of parts of Western Bank after its collapse in 1857 and of Dundee Banking Company in 1864. A London office was also established.

Growth by merger

The end of the First World War saw a period of widespread consolidation amongst banks.

RBoS was in the front line, growing in London by buying Drummonds Bank(est. 1712) in Charing Cross and later taking over Deacon's Bank, which had a large network of branches across the North West of England.

Both World Wars took their toll on staff and operations as young men signed up. There was also strict control of foreign exchange and lending priorities, while the proportion of women workers grew rapidly.

Relatively small scale growth in the 1950s and 1960s saw the opening of new branches in Scotland and London and the introduction of the personal loan.

In April 1969 a fresh wave of banking mergers saw RBoS merge with National Commercial Bank of Scotland, which itself had three years earlier taken over the English and Welsh branches of the National Bank.

Takeover target

The following year RBoS's three London clearing banks, Glyn, Mills & Co, Williams Deacons Bank and The National Bank, combined to form William & Glyn's Bank.

During the 1970s the Royal Bank became what it describes as the first clearing bank to introduce a house purchase loan scheme for customers.

It also claims to have pioneered hole in the wall cash machines, creating a network in Scotland which was rapidly established as the busiest in the world.

Back in 1983 it had a taste of the sort of pressure NatWest is now feeling, as its proud independence came under threat.

The two pronged takeover attacks by Standard Chartered bank and Hongkong and Shanghai Banking Corporation failed.

Direct hits

But the threat galvanised the bank into merging the Williams & Glyn's Bank business with the Royal Bank, and setting up an innovative telephone based insurance company, subsequently to become known as Direct Line.

In 1988 it moved across the Atlantic in force, acquiring Citizens bank of Rhode Island and forged an alliance with Banco Santander of Spain.

During the 1990s it has sold off its merchant bank interests and refocused on its personal and corporate customers.

Direct Line and other telephone and now internet based services have helped earn the bank's current executives a good reputation in the City.

It has also gained a huge share of the UK insurance market in a short term, and revolutionised how other companies do business.

The bank has already gained a foothold south of the border by its collaboration with Tesco, essentially running its in-store banking business, replacing NatWest who was Tesco's initial partner.

These ventures, as well link ups with the likes of Virgin, have been acclaimed as successes and stand in clear contrast to the often doomed innovations and diversifications undertaken by the board at NatWest.

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