The Bank of Scotland plc is a commercial and clearing bank based in Edinburgh, Scotland. With a history dating to the 17th century, it is the oldest surviving bank in what is now the United Kingdom, and is the only commercial institution created by the Parliament of Scotland to remain in existence. It was also the first bank in Europe to print its own banknotes. The Bank of Scotland continues to print its own sterling banknotes under legal arrangements which allow some UK banks to issue currency.

On 17 September 2007 The Governor and Company of the Bank of Scotland became Bank of Scotland plc, as part of the HBOS Group Reorganisation Act 2006.

Since 19 January 2009 the Bank of Scotland has formed part of the Lloyds Banking Group, following the merger of HBOS plc with Lloyds TSB. Bank of Scotland owns a 50% stake in Sainsbury's Bank - the other 50% being owned by J Sainsbury plc.

The Governor and Company of the Bank of Scotland was established by an Act of the Parliament of Scotland on 17 July 1695,^[1] the Act for erecting a Bank in Scotland, opening for business in February 1696. Although established soon after the Bank of England (1694), the Bank of Scotland was a very different institution. Where the Bank of England was established specifically to finance defence spending by the English government, the Bank of Scotland was established by the Scottish government to support Scottish business, and was prohibited from lending to the government without parliamentary approval.^[1] The founding Act granted the bank a monopoly on public banking in Scotland for 21 years, permitted the bank's directors to raise a nominal capital of £1,200,000 Pound Scots (£100,000 Pound Sterling), gave the Proprietors (shareholders) limited liability, and in the final clause (repealed only in 1920) made all foreign-born Proprietors naturalised Scotsmen "to all Intents and Purposes whatsoever".^[1] John Holland, an Englishman, was one of the bank's founders.^[1] Its first chief accountant was George Watson.^[2]

The Bank of Scotland was suspected of Jacobite sympathies^[1] and as a result the Bank's monopoly ended in 1716, and its first rival, the Royal Bank of Scotland was formed by Royal Charter in 1727.^[1] This led to a period of great competition between the two banks as they set to drive each other out of business.^[1] Although the "Bank Wars" ended in around 1751,^[1] competition soon arose from other sources, as other Scottish banks were founded throughout the country.^[1] In response, the Bank of Scotland themselves began to open branches throughout Scotland. The first branch in London opened in 1865.^[3]

The bank also took the lead in establishing the security and stability of the entire Scottish banking system, which became more important after the collapse of the Ayr Bank in 1772.^[4] The Western Bank collapsed in 1857, and the Bank of Scotland stepped in with the other Scottish banks to ensure that all Western Bank's notes were paid.^[5]

In the 1950s, the Bank of Scotland was involved in several mergers and acquisitions with different banks. In 1955, the Bank merged with the Union Bank of Scotland.^[6] The Bank also expanded into consumer credit with the purchase of Chester based, North West Securities (now Capital Bank).^[7] In 1971, the Bank agreed to merge with the British Linen Bank,^[7] owned by Barclays Bank. The merger saw Barclays Bank acquire a 35% stake in the Bank of Scotland, a stake it retained until the 1990s. The merchant banking division of the Bank of Scotland was relaunched as British Linen Bank (now known as HBOS Treasury Services).

In 1959 Bank of Scotland became the first bank in the UK to install a computer to process accounts centrally.^[7] At 11 am on 25 January 1985 the Bank introduced HOBS (Home and Office Banking Services), an early application of remote access technology being made available to banking customers. This followed a small-scale service operated jointly with the Nottingham Building Society for two years but developed by Bank of Scotland. The new HOBS service enabled customers to access their accounts directly on a television screen, using the Prestel telephone network.

The arrival of North Sea Oil to Scotland in the 1970s allowed the Bank of Scotland to expand into the energy sector. The Bank later used this expertise in energy finance to expand internationally. The first international office opened in Houston, Texas, followed by more in the United States, Moscow and Singapore. In 1987, the Bank acquired Countrywide Bank^[7] of New Zealand (later sold to Lloyds TSB in 1998). The Bank later expanded into the Australian market by acquiring the Perth-based Bank of Western Australia.^[7]

A controversial period in the Bank's history was the attempt in 1999 to enter the United States retail banking market via a joint venture with evangelist Pat Robertson. The move was met with criticism from civil rights groups in the UK due to Robertson's controversial views on homosexuality. The Bank was forced to cancel the deal when Robertson described Scotland as a "dark land overrun by homosexuals".^[8]

In the late 1990s, the UK financial sector market underwent a period of consolidation on a large scale. Many of the large building societies were demutualising and becoming banks in their own right or merging with existing banks. For instance Lloyds Bank and TSB Bank merged in 1995 to create Lloyds TSB.^[9] In 1999, the Bank of Scotland made a takeover bid for the NatWest Bank.^[10] Since the Bank of Scotland was significantly smaller than the English-based NatWest, the move was seen as an audacious and risky move. However, the Royal Bank of Scotland tabled a rival offer, and a bitter takeover battle ensued, with the Royal Bank the victor.^[11]

The Bank of Scotland was now the centre of other merger opportunities. A proposal to merge with the Abbey National was explored, but later rejected.^[12] In 2001, the Bank of Scotland and the Halifax agreed a merger to form HBOS ("Halifax Bank of Scotland").^[13] The headquarters was to stay in Edinburgh, and both bank's brands would continue to be used.

In 2006, HBOS secured the passing of the HBOS Group Reorganisation Act 2006, a private Act of Parliament that would allow the group to operate in a more simplified structure. The Act allowed HBOS to make the Governor and Company of the Bank of Scotland a public limited company, Bank of Scotland plc, which became the principal banking subsidiary of HBOS. Halifax plc transferred its undertakings to Bank of Scotland plc, and although the brand name was retained, Halifax then began to operate under the latter company's UK banking licence.

The provisions in the Act were implemented on 17 September 2007.^[14]

In 2008, HBOS Group agreed to a merger with Lloyds TSB.^[15]

Lloyds TSB stated that it will keep the Bank of Scotland as a brand name, and retain its Scottish head office in Edinburgh. Lloyds TSB Scotland and Bank of Scotland branches in Scotland are expected to merge, and significant job losses are expected.^[16]

The new group will begin trading on 19th January 2009 as the Lloyds Banking Group.

Although the Bank of Scotland today is not a central bank, it retains the right (along with two other Scottish commercial banks) to issue pound sterling banknotes to this day. These notes are equal in value to notes issued by the Bank of England, the central bank of the United Kingdom.

The Bank of Scotland was the first bank in Europe to successfully issue paper currency redeemable for cash on demand (which was an extremely useful facility given the poor state of the Scottish coinage at the end of the seventeenth century). Following the Acts of Union in 1707, the bank supervised the reminting of the old Scottish coinage into Sterling.

The right to issue banknotes was extended to other banks after 1716 when the Bank of Scotland's monopoly was allowed to lapse.^{[citation needed]} Up until the middle of the nineteenth century, privately owned banks in Great Britain and Ireland were permitted to issue their own banknotes, and money issued by provincial Scottish^[17], English, Welsh and Irish banking companies circulated freely as a means of payment.^[18] While the Bank of England evenutally gained a monopoly for issuing banknotes in England and Wales, attempts to restrict Scottish banks from issuing notes were met with popular opposition.

In 1826, there was outrage in Scotland at the attempt of the United Kingdom Parliament to prevent the production of banknotes of less than five pounds face value. Sir Walter Scott wrote a series of letters to the Edinburgh Weekly Journal under the pseudonym "Malachi Malagrowther" which provoked such a response that the government was forced to relent and allow the Scottish banks to continue printing £1 notes. For this reason Sir Walter still appears on all Bank of Scotland notes.^{[citation needed]}

Bank of Scotland's previous note issue was in 1995, known as the Tercentenary Series as they were issued in the year of the three hundredth anniversary of the foundation of the bank. Each denomination features Sir Walter Scott on the front, and on the back are representations of industries that Scotland excels in:

• £5 note featuring a vignette of oil and energy
• £10 note featuring a vignette of distilling and brewing
• £20 note featuring a vignette of education and research
• £50 note featuring a vignette of arts and culture
• £100 note featuring a vignette of leisure and tourism.

These notes continue in circulation and are gradually being replaced by the 2007 series.

Bank of Scotland began issuing a new series of banknotes in the Autumn of 2007, which feature the common theme of Scottish bridges.^[19] It will take at least three years for the current issue of Bank of Scotland notes to be phased out of circulation. In keeping with the bank's tradition, the front of the notes depict an image of Sir Walter Scott; the image on the 2007 series is based on the portrait of Scott painted by Henry Raeburn.^[20]

While the colours and sizes of all of the new notes are the same as previous designs, text on the notes is larger than before. The raised, large denomination also acts as an aid for the partially sighted. 'Cornerstones' have been added to the new notes. These are watermark patterns on all corners of the notes, which will improve their durability.

Some new security features have also been added to the new design. These include a metallic security thread embedded in every banknote, which contains the numerical value of the note and the note's bridge image. A new hologram and foil patch has been introduced on the front of the £20, £50 and £100 notes, which features the Bank of Scotland logo and the numerical value of the note.

• £5 note features Brig o' Doon
• £10 note features Glenfinnan Viaduct
• £20 note features Forth Bridge (railway)
• £50 note features Falkirk Wheel
• £100 note features Kessock Bridge

Although it had a presence in every major Gaelic community, the Bank of Scotland was still operating exclusively in English in the early 1970s. In 1972, Gaelic activist Iain Noble persuaded the bank to issue him with its first Gaelic (actually bilingual) cheque-book. These have since become popular, and the Royal Bank soon followed suit. Today the bank advertises itself in the Highlands and Hebrides under the Gaelic title Banca na h-Alba, although the forthcoming new issue of notes does not include any Gaelic^{[weasel words]}

The Bank has several subsidiaries and brands:

• Halifax (England, Wales and Northern Ireland, used for mortgages and savings in Scotland)
• Banco Halifax Hispania
• Birmingham Midshires
• Intelligent Finance
• Sainsbury's Bank (50%)
• Bank of Scotland Corporate (including Capital Bank)
• Bank of Scotland Investment Services
• Bank of Scotland Private Banking
• HBOS Financial Services Ltd
• HBOS Insurance & Investment Group Ltd
• HBOS Treasury Services plc
• Halifax Ireland
• Bank of Scotland (Netherlands)

1. John Holland 1696-1697
2. David Melville, 3rd Earl of Leven 1697-1728
3. Alexander Hume, 2nd Earl of Marchmont 1728-1740
4. Charles Hope, 1st Earl of Hopetoun 1740-1742
5. Colonel John Stratton 1742
6. John Hay, 4th Marquess of Tweeddale 1742-1762
7. Hugh Hume, 3rd Earl of Marchmont 1763-1790
8. Henry Dundas, 1st Viscount Melville 1790-1811
9. Robert Dundas, 2nd Viscount Meville 1812-1851
10. James Alexander, 10th Earl of Dalhousie 1851-1860
11. John Campbell, 2nd Marquess of Breadalbane 1861-1862
12. George Hamilton-Baillie, 11th Earl of Haddington 1863-1870
13. John Hamilton Dalrymple, 10th Earl of Stair 1870-1903
14. Alexander Hugh Bruce, 6th Baron Balfour of Burleigh 1904-1921
15. William John Mure 1921-1924
16. Sidney Herbert, 16th Baron Elphinstone 1924-1955
17. Sir John Craig 1955-1957
18. Steven Bilsland, 1st Baron Bilsland 1957-1966
19. Henry Alexander Hepburne-Scott, 10th Lord Polwarth 1966-1972
20. Ronald John Bilsland Colville, 2nd Baron Clydesmuir 1972-1981
21. Sir Thomas Neilson Risk 1981-1991
22. Sir David Bruce Pattullo 1991-1998
23. Sir Matthew Alistair Grant 1998-1999
24. Sir John Shaw 1999-2001
25. Sir Peter Burt 2001-2003
26. George Mitchell 2003-2006
27. Dennis Stevenson, Lord Stevenson of Coddenham 2006- 2007

Bank of Scotland sponsored the Scottish Premier League from its inception in 1998 to season 2006/2007 when it declined to renew the deal in favour of investing in grassroots sport instead.

• British banknotes
• List of banks
• Royal Bank of Scotland
• William Paterson (banker)

• Bank of Scotland
• history, from the HBOS website
• museumonthemound.com Official page of the company's museum
• rankofscotland.co.uk A website dedicated to those who have complaints with Bank of Scotland.