| Administrative History | Until the late 17th century, banking in Scotland was a small-scale affair, carried out locally. The Bank of Scotland was founded in 1695 and the Royal Bank of Scotland shortly afterwards in 1727, both in Edinburgh. Because of this centralisation, regional banks, backed by the Edinburgh banks, were quickly set up to cope with growing industrialisation, and the British Linen Bank was the first of these to set up a branch network, backed by the Royal Bank, in the mid 18th century. Co-operation over the production of banknotes helped the stability of the banking system, and allowed it to grow healthily through the Industrial Revolution, particularly in Glasgow where the Union Bank of Scotland, the Western Bank of Scotland, the Clydesdale Bank and the City of Glasgow Bank were all founded in the 1830s, with a view to revolutionising the banking system. The Scottish system was far in advance of the English system and attempts to control it were resisted fiercely. Late in the 19th century the Western Bank and the City of Glasgow Bank crashed spectacularly, and the heyday of Scottish banking seemed to have passed: expansion into England, however, particularly with London's rapid expansion as a financial centre, gave the major banks a new lease of life, despite protest from the English banks. The Scots, however, restricted themselves and did not form branch networks, a state which remained stable until the late 20th century. At that time the English banks, now consolidated into more powerful entities, took over some of the Scottish banks, notably the Clydesdale, but did not interfere much in their running. In recent years the takeovers have more generally operated in the other direction, with the remaining Scottish banks, the Bank of Scotland and the Royal Bank of Scotland, taking over English banks and building societies. Apart from the recent development of merchant banks in Edinburgh and the dwindling of the old savings banks, only the Bank of Scotland and the Royal Bank of Scotland remain as Scottish banks, while the Clydesdale, which retains its identity, was sold by the Midland Bank along with other banks to the National Australia Bank in 1988. |