The () is one of
Scotland's three national
Clearing Bank s and one of the oldest in the
UK , founded in
Edinburgh in
1727 by
Royal Charter .
Today it is the largest
Bank in Scotland, the second largest in the UK and
Europe , and the fifth largest in the world by
Market Capitalisation . Its shares have a primary listing on the
London Stock Exchange .
The bank's recently opened head office is in Gogarburn,
Edinburgh . It has offices throughout
Europe ,
America and
Asia .
The bank traces its origin to the ''Equivalent Society'' which was set up by investors in the failed
Company Of Scotland to protect the compensation they received as part of the arrangements of the 1707
Acts Of Union . The ''Equivalent Society'' became the ''Equivalent Company'' in 1724, and the new company wished to move into banking. The British government received the request favourably as the "Old Bank", the
Bank Of Scotland , was suspected of having
Jacobite sympathies. Accordingly the "New Bank" was chartered in 1727 as the Royal Bank of Scotland.
Competition between the Old and New Banks was fierce, and centred on the issue of banknotes. The policy of the Royal Bank was to either drive the Bank of Scotland out of business or to take it over on favourable terms.
The Royal Bank built up large holdings of the Bank of Scotland's notes, which it acquired in exchange for its own notes, and then suddenly presented them to the Bank of Scotland for payment. To pay for these notes the Bank of Scotland was forced to call in its loans and, in March 1728, to suspend payments. The suspension relieved the immediate pressure on the Bank of Scotland at the cost of substantial damage to its reputation, and gave the Royal Bank a clear space to expand its own business, although the Royal Banks' increased note issue also made it more vulnerable to the same tactics.
Despite talk of a merger with the Bank of Scotland, the Royal Bank did not possess the wherewithall to complete the deal. By September 1728 the Bank of Scotland was able to start redeeming its notes again, with interest, and in March 1729 it restarted lending. To prevent similar attacks in the future, the Bank of Scotland put an "option clause" on its notes, giving it the right to make the notes interest-bearing while delaying payment for six months; the Royal Bank followed suit. Both banks eventually decided that the policy they had followed was mutually self-destructive and a truce was arranged, but it still took until 1751 before the two banks agreed to accept each other's notes.
