Bank of Scotland

Formed by an Act of Parliament in 1696, the Bank of Scotland is the UK's oldest surviving commercial bank in the UK. The Bank of England was formed 2 years earlier but it was established to raise war funds whereas the Bank of Scotland was formed to support commercial businesses at a time when Scotland was economically very weak. The first Governor of the Bank was John Holland.

The Bank of Scotland was the first European bank to issue paper money for cash. It nearly became bankrupt within a decade following the implementation of the Darien Scheme, an attempt by the Kingdom of Scotland to increase trade with the Far East by setting up a colony in New Caledonia. Thousands of people invested in the Darien Company, which was created to raise funds for expeditions. English investors were subsequently banned from investing and required to sell their shares. Two expeditions were sent and both were a disaster, with 1 ship out of 16 returning, 2,000 lives lost as well as £500,000. The Scottish economy went into meltdown and this probably triggered the Acts of Union with England in 1707 and the bailing out of its economy.

The 1950s saw several mergers and acquisitions with other banks, including the Union Bank of Scotland. In 1971 it merged with the British Linen Bank and in 2001 the Bank of Scotland merged with the Halifax to create HBOS.

HBOS was severly hit by the financial crisis that exploded in 2008 and was taken over by the Lloyds Banking Group in 2009.

The Bank of Scotland still retains the right to issue pound sterling banknotes, which are equal in value to those issued by the Bank of England.