Ireland Bank Mergers & Acquisitions (Bank of Ireland)

Photo: Bank of Ireland College Green. Following the dissolution of the Irish Parliament in 1801, the Bank of Ireland bought the former Parliament House in 1803 for £40,000.  Photo taken during my trip to Ireland in May 2013.

The Governor and Company of the Bank of Ireland

In 1783, a Royal Charter was granted to a group of prominent Dublin merchants and aristocrats led by the La Touche family to establish the Bank of Ireland, which was based on the joint-stock model of the Bank of England (founded 1694) and the Bank of Scotland (founded 1695).  The La Touches were Huguenots (French Protestants) who fled to Holland in the 1680s in search of religious freedom.  A certain David Digues (also spelt Digges) La Touche joined the army of English King William of Orange and fought in the Battle of the Boyne in Ireland against Catholic King James II.  Following William of Orange ’s victory, David Digues La Touche decided to stay in Ireland and launched a fabric weaving business, which became very successful and the family was elevated to the Anglo-Irish Protestant establishment in Ireland.

In 1713, the family founded private bank David La Touche & Son. and it immediately became a trusted banking firm because of its strong financial backing and the La Touche name.  The family’s expertise in finance was so well regarded that another David La Touche, a grandson of David Digues La Touche, was elected the first governor of the Bank of Ireland in 1783.  In addition, a few other La Touche family members were amongst the biggest subscribers to the new bank’s shares.

Emulating the Bank of England and Bank of Scotland model, the Bank of Ireland was appointed the banker to the Irish government and Irish Treasury.  A major function of the bank was the issuance of the Irish Pound and Guinea banknotes.  Another main activity of the bank at the time was to discount trade bills of exchange for importers and exporters.  In the areas of banknote issue, the bank was allowed a special monopoly status in Ireland by the British parliament until 1821, after which other join-stock banks could issue their own notes provided that they not maintain any offices or branches within a 50-mile radius from Dublin, the most important market in the nation.  It wasn’t until 1845 that all monopoly powers of the Bank of Ireland were removed and other note-issuing banks could compete in Dublin.  As only the most wealthy families had bank accounts at the time, accepting deposits from ordinary citizens was not an important business of the bank during the first 75 years of the bank’s history.

Ireland at the time was a British colony but with a sort of “home rule” (i.e. governed by a local Dublin parliament that was controlled by the Anglo-Protestant ruling class known as the Protestant Ascendancy).  The decades following the bank’s founding were turbulent times in Ireland.  After over a century of harsh oppression by the English administration, the Irish rebelled in 1798.  Even though Britain quickly suppressed the unrest, it was spooked by the uprising and the wave of revolutions in the United States (1776) and France (1789 – 1799).  In 1801, the Parliament of Ireland was dissolved, and Ireland became part of the United Kingdom of Great Britain and Ireland.  From this point on until 1922, Ireland was governed directly by the British Parliament.  In 1803, the government sold the now vacant Parliament House in Dublin’s College Green to the Bank of Ireland for £40,000 (GBP).  Today, this Bank of Ireland College Green is a major landmark and has become a tourist attraction in Dublin.

In 1825, Bank of Ireland’s first offices outside of Dublin opened in Cork, Waterford, Clonmel, Newry, Belfast, Londonderry (now also known as Derry) and Westport.  By 1830, the bank’s network had expanded to Armagh, Limerick, Sligo, Wexford and Galway.

The Irish people suffered greatly during the infamous Great Potato Famine between 1845 and 1849, when blight (fungus) decimated the potato crop -- pretty much the sole food source for a vast majority of the Catholic tenant-farmers.  Unable to grow their cash crop and food, the destitute farmers were evicted from their rented farms.  A million people died of starvation and illness during the famine, and another one million fled Ireland for Britain, the United States, Canada, Australia and New Zealand.   Ironically, as primarily the government banker and the bank for the wealthy Protestant landowners, Bank of Ireland didn’t suffer much from the otherwise devastating famine.

In 1860, a special act prohibiting the Bank of Ireland from lending money on the pledge of land (i.e. to make mortgage loans) was repealed, and the bank launched a new line of business.  In 1864, the bank began to pay interest on deposits for the first time in its history, in order to attract more capital in the form of deposits.  By 1883, the bank had 58 branches across Ireland.

The second half of the 19^th century was turbulent times for Ireland.  A massive increase in the supply of wheat, corn and meat from the U.S., Canada, Argentina, Australia and New Zealand beginning in the 1870s caused global grain and livestock prices to tumble, and agriculture became much less profitable for both the Irish farmers and the landowners.  A grass-root movement by the tenant farmers to withhold rent payments and to boycott their landowners by refusing to work for them and deal with them in any manner became known as the “Land War,” which was surprisingly effective in hurting the fortunes of the Protestant landowners.

Then in 1885, Munster Bank, a major bank based in Cork in southern Ireland, suffered a devastating bank run following allegations of frauds committed by its directors.  Munster Bank’s collapse caused panics across Ireland.  As a quasi-central bank, the Bank of Ireland advanced emergency funds to some of banks in distress.  Munster Bank itself was re-structured into the Munster and Leinster Bank, which in 1966 became part of the Allied Irish Banks.

The English had had a long history of oppressive rule against the Irish Catholics.  In the 1650s, the English confiscated a vast majority of the arable land in Ireland from the Catholics for themselves; in the 1720s, the Catholics lost their rights to buy land, to vote in elections and to hold public office in local town councils and in the Irish Parliament; during the 18^th century, Britain erected trade barriers on Irish exports; in the 1840s, Britain turned a blind eye to the starving Catholic farmers during the Potato Famine.  Even though various Emancipation Acts eventually restored the Catholics’ rights to buy land, to vote and to stand as Members of Parliament (MP) by 1829, the Catholics were too poor to buy the land back from the Protestant landed gentry, plus the dissolution of the Irish Parliament back in 1801 ensured that it’s the British parliament, dominated by the majority English and Scottish MPs, that would determine the governance and affairs of Ireland, not the Irish MPs.

It was under such context that throughout the 19^th century, Irish nationalism swelled and political parties and socialist labour groups were formed with the initial aim to press for Home Rule (i.e. to re-establish an independent Parliament in Ireland).  But as the British Parliament and House of Lords kept rejecting or delaying successive Home Rule Acts between 1886 and 1914, the nationalists became increasingly militant.  Their goal was no longer just Home Rule, but full independence from Britain. The result was first the Easter Rising in 1916, then the Anglo-Irish War (1919 to 1922).

In December 1921, following two-and-a-half years of terror, violence and destruction in Ireland, the nationalists and the British government agreed to a truce and signed the Anglo-Irish Treaty, which in December 1922 officially partitioned Ireland into the Irish Free State (gaining independence from Britain) and Northern Ireland, which opted to remain part of the United Kingdom.  Bank of Ireland was immediately appointed as the banker to the new Irish Free State government.

Earlier, in the midst of the Anglo-Irish War, the provisional Irish parliament (known as the Dáil) had founded the National Land Bank in 1919 whose mandate was to offer state-sponsored mortgage loans to the Catholic tenant farmers to acquire land from the gentry landowners.  In 1923, this land purchase scheme was transferred to the Irish Land Commission, removing the primary function of the National Land Bank.  In 1926, Bank of Ireland acquired the remnants of National Land Bank and renamed its National City Bank Ltd.

Ireland very controversially opted to stay neutral during World War II. Had Ireland gone to the European battlefront, it almost certainly would have come under the command of British army.  After finally gaining independence from centuries of harsh British rule, the Irish simply weren’t willing to listen to London so soon again.  Its escape from the war devastation, however, didn’t mean Ireland had an easy time in the 1950s.  On the contrary, Ireland’s protectionist, agricultural-based economy fared poorly in the post-war industrial and consumerism recovery.  Its economy was in such poor state that many disheartened young people left the country, and Ireland’s population suffered a net loss during the decade.  Amidst this decade of doom and gloom, the Bank of Ireland in 1958 took over the Hibernian Bank, which was founded in 1825 with backing from the Catholic community.

The 1960s were somewhat kinder to Ireland, as its economy finally became more competitive after years of economic reform.  As for the Bank of Ireland, it gained significant market share when it acquired the Irish operations of National Bank Ltd. in 1966. National Bank started out as the London-based National Bank of Ireland in 1836, and counted Daniel O’Connell, the first Irish Catholic to ever win a seat in the British House of Commons, as one of the bank’s founders.  In 1856, National Bank of Ireland was renamed National Bank Ltd. and by then had established a significant presence in England also in addition to its core Irish business.  By the 1960s, it became increasingly politically unacceptable for a major Irish bank to be based in and controlled from London, and the decision was made to split up the bank.  National Bank’s Irish operations were sold to the Bank of Ireland, whereas its British operations were sold to the National Commercial Bank of Scotland.

In 1966, the Bank of Ireland established an asset management subsidiary as well as an investment bank division.  Meanwhile, to streamline its operations and governance, all three sister banks Bank of Ireland, National Bank of Ireland and Hibernian Bank were consolidated into the Bank of Ireland Group in 1969.

The bank then set out to provide overseas support for its clients in the 1970s, opening an office in New York in 1971, then in London in 1972, and Frankfurt in 1974.  The bank also established offshore banking subsidiaries in Jersey, the Isle of Man and the Cayman Islands.

Banking automation came rather late for the Irish banking sector, and Bank of Ireland’s first PASS ATM machines were only installed in 1980.

Bank of Ireland began aggressive expansion into other financial services in the 1980s, beginning with its 1984 acquisition of the investment shares of ICS Building Society (a mutually-owned mortgage lender), and the 1987 establishment of Lifetime, a life insurance subsidiary.  Also in 1987, it acquired a small British bank and transformed it into the Bank of Ireland Home Mortgages Ltd., launching the bank’s mortgage loan business in Britain.

Then in 1988, Bank of Ireland bravely entered the U.S. retail market when it bought the First NH Banks Inc. (of New Hampshire) for USD $370-million, gaining over 50 branches.  The bank’s expansion in the New England region continued when in 1991, it acquired the bankrupt Amoskeag Bankshares and the BankEast Corporation, both of New Hampshire, with a combined network of 56 branches.  The two banks had become insolvent due to heavy real estate loan losses and had been taken over by the FDIC.  In 1994, the bank’s U.S. unit First NH, by now the largest bank in New Hampshire, bought Great Bay Bankshares for USD $53-million.

Between 1988 and 2006, Bank of Ireland also owned a majority stake in Davy Stockbrokers, Ireland’s largest securities underwriter and asset manager.

Recent transaction(s):

• In 1996, Bank of Ireland merged its U.S. unit First NH Banks of New Hampshire into the Royal Bank of Scotland’s Citizens Financial Group in exchange for a 23.5% stake of the enlarged Citizens Financial.
• In 1997, Bank of Ireland acquired the freshly de-mutualized Bristol & West Building Society of Bristol, southwest England.  South-western England historically and culturally has close ties with Ireland.
• In 1999, Bank of Ireland briefly held talks to acquire British bank Alliance & Leicester plc for Eur 8-billion (USD $8.34-billion).  However, the talks ended without a deal.
• Also in 1999, Bank of Ireland sold its 23.5% stake in Citizens Financial Group back to the Royal Bank of Scotland for USD $763-million.  The sale marked the exit of Bank of Ireland from the U.S. retail market.
• In 2005, Bank of Ireland’s British retail bank Bristol & West sold its savings and investment business, as well as its branch network to Britannia Building Society.  Bank of Ireland retained Bristol & West’s mortgage lending business.
• Following the Irish (and global) housing market bust and credit crisis that started in 2008, the Irish government in February 2009 injected Eur 3.5-billion (USD $4.92-billion, GBP 3.26-billion) into Bank of Ireland’s perpetual preference shares with an annual yield of 8%. The government gained voting rights of 25% of the bank. Bank of Ireland planned to raise Eur 1.5 billion from a rights issue to redeem part of the government’s holdings, limiting the state holding to 15%.
• In July 2011, Bank of Ireland completed a Eur 5.2 billion capital increase.  The Irish state’s stake in the bank fell to 15% from 35%.  A consortium led by Canadian re-insurer Fairfax Financial and American investor Wilbur Russ injected Eur 1.05 billion into the bank.  After the capital increase, the old shareholders were left with 31% of the bank, the bondholders owned 19%, the Irish state, 15%, and the new consortium, a 35% stake.

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Ireland Bank Mergers & Acquisitions (Allied Irish Banks)

Photo: Two older Northern Irish (British) pound banknotes issued by the former Provincial Bank of Ireland and Allied Irish Banks. The Irish Republic’s currency was the Irish punt between 1938 and 1998, and the Euro since 1999. Northern Ireland, as part of Great Britain, uses the British Pound Sterling.


Allied Irish Banks, plc (AIB Group)

Allied Irish Banks was formed in 1966 through the three-way merger of the Provincial Bank of Ireland, the Royal Bank of Ireland and the Munster and Leinster Bank. All three founding members were established long before Ireland gained independence from Britain in 1922.


The Provincial Bank of Ireland

Of the three, the Provincial Bank of Ireland was the oldest, having been founded in 1825. Despite its Irish focus, the bank was backed by Scottish investors and had its head office in London.  The Provincial Bank pioneered branch banking in Ireland, and forced the incumbent and much larger Bank of Ireland to quickly follow suit to establish offices outside of Dublin. 

Long an innovative bank, the Provincial was also one of the parties that pushed for the creation of a clearing house in Dublin in 1845. The clearing house was a centralized place where bills of exchange and cheques were swapped and cleared and balances settled amongst the banks. In the second half of the 19th century, the Provincial Bank became closely associated with the burgeoning linen industry in Ireland.

Some 31 years after Ireland gained independence from Britain, the Provincial Bank of Ireland finally relocated its head office from London to Dublin in 1953.


The Royal Bank of Ireland

The Royal Bank of Ireland opened for business in 1836 and initially served mostly the wealthy Protestant merchants. The name “Royal” obviously dated from a time when the entire Ireland was a part of the United Kingdom of Great Britain and Ireland. Following the establishment of the Irish Free State in 1922, a civil war broke out between the pro-Anglo Irish Treaty forces and those against it. It was during this divisive and violent time that Royal Bank of Ireland exchanged its own Northern Irish business for Belfast Banking Company's operations in the Irish Free State.

Interestingly, as the Big Four on the Irish Isle today all started long before Ireland became independent, they have always operated in both the north and the south. Hence, Allied Irish Banks and Bank of Ireland, both based in Dublin, also operate in Northern Ireland. Similarly, Ulster Bank and Northern Bank, both based in Belfast, have major operations in the Republic. The Irish may not agree on religions and politics, on money matters the border doesn't seem to affect their choice of bank. It should be pointed out, however, that Ulster Bank is part of The Royal Bank of Scotland Group whereas Northern Bank is now a subsidiary of Denmark's Danske Bank.


The Munster and Leinster Bank

The Munster and Leinster Bank can loosely trace its origins to the establishment of the Munster Bank in 1864 in Cork.  The southern Irish bank expanded quickly and gained a foothold in Dublin in 1870 when it acquired prominent private bank David La Touche & Son. The La Touches were Huguenots (French Protestants) who fled to the Netherlands in the 1680s and migrated to Ireland with Protestant King William of Orange during the Battle of the Boyne.  The La Touche family established a flourishing weaving business in Dublin and branched into the private banking business in 1713.  The family became major backers of founding of the Governor and Company of the Bank of Ireland in 1783.  In 1870, the family sold their Dublin-based private bank David La Touche & Son to Munster Bank.

In 1885, Munster Bank suffered a devastating bank run following allegations that the bank made un-recoverable loans to its directors.  Following Munster Bank's collapse, the government brokered (but financed by private investors) the creation of Munster & Leinster Bank in 1885, taking over the deposits and branch network of the bankrupt Munster Bank. With its extensive branch network in rural Ireland, Munster and Leinster was the average folks’ choice of bank.


Allied Irish Banks

Despite the creation of Allied Irish Banks in 1966, the Royal, the Provincial and the Munster and Leinster continued to operate under their own names for some years. By 1971, they operated more than 280 branches in Ireland and another 46 in Northern Ireland.

In 1977, Allied Irish Banks opened a branch in New York. Six years later, it acquired a 43% stake in American regional bank First Maryland Bancorp, which operated the First National Bank of Maryland. AIB’s stake in First Maryland was raised to 49% in 1988 at which point the Irish bank launched an offer to fully privatize First Maryland.

In 1990, Allied Irish Banks formally adopted the abbreviation AIB, though in legal matters “Allied Irish Banks” remains in use.

Recent transaction(s):

• In May 1991, AIB purchased TSB Northern Ireland from TSB Bank plc (the former Trustee Savings Bank, see entry under Lloyds Banking Group). Following the purchase, Allied Irish changed the name of its Northern Ireland division to First Trust Bank.
• In December 1991, AIB acquired York Bank & Trust Company in Pennsylvania. The enlarged First Maryland now had branches in Pennsylvania, Delaware and Washington DC.
• Between 1995 and 1997, AIB bought 60.1% of Polish bank Wielkoposki Bank Kredytowy.
• In 1999, AIB bought 80% of another Polish bank Zachodni from the Polish state treasury.
• Also in 1999, AIB acquired 24.9% of Keppel TatLee Bank of Singapore.
• In 2001, AIB’s Polish holdings were combined to form Bank Zachodni WBK, the 5th largest bank in Poland, in which AIB had a 70.5% stake.
• Also in 2001, AIB sold its stake in Singapre's Keppel TatLee Bank to Oversea-Chinese Banking Corp (OCBC).
• In February 2002, AIB's U.S. unit Alltrust Financial discovered that currency trading losses totalling USD $750-million had been run up by a rogue trader named John Rusnak. Mr. Rusnak apparently hid the losses by falsifying bank records. The resulting scandal caused Allied Irish's share prices to tumble. Later in 2002, AIB decided to merge (sell) its Alltrust Financial unit with Buffalo-based M&T Bank in exchange for a 22.5% stake in M&T, plus USD $865-million in cash. The whole deal put a value of about USD $3.1-billion on Alltrust Financial.
• In 2007, AIB bought AmCredit for Eur 40-million. AmCredit was a mortgage lending specialist in the Baltic region and operated 13 outlets across Latvia, Lithuania and Estonia.
• In 2008, AIB bought 49.99% of Bulgaria's Bulgarian-American Credit Bank AD (BACB) for Eur 216-million (USD $318-million). BACB specialized in providing secured financing to small- and medium-sized enterprises. It had four offices and a mobile staff of 130 employees to cover another 15 cities.
• Following the collapse of the U.S. housing market in 2007, losses from the collateralized debt obligations (CDOs) soared to billions of dollars around the world, and the inter-bank credit market froze during the summer of 2008. As funding sources dried out, some of the world’s largest banks were on the verge of collapse, including Citigroup, Wachovia, Washington Mutual, HBOS (Halifax-Bank of Scotland), Royal Bank of Scotland, Fortis and all three of Iceland’s commercial banks. Ireland’s Allied Irish Banks, Anglo-Irish Bank and Bank of Ireland were no exception and certainly would have gone down without state aid.
• On 2008-09-30, the Irish government had to offer a sweeping guarantee covering all deposits and loans at six major Irish banks (including AIB) to prevent a panic run on the banks. The unconditional state guarantee would be effective at least until the end of September 2010.
• In December 2008, the Irish government announced plans to recapitalize the three largest Irish banks for Eur 5.5-billion. The government offered AIB Eur 3.5-billion (USD $4.92-billion, GBP 3.26-billion) in return for perpetual preference shares with an annual yield of 8%. The purchase gave the government a 25% indirect stake of AIB.
• In mid 2009, the Dublin government announced the creation the National Asset Management Agency (NAMA) to take the bad loans off the books of distressed Irish banks. NAMA planned to buy between Eur 20-billion to 25-billion of AIB’s bad loans at a significant discount. The resulting loan loss would require AIB to raise more capital from the Irish state or private investors.
• In September 2009, NAMA unveiled plans to pay a number of Irish financial institutions Eur 54-billion (USD $79.5-billion) to unload Eur 77-billion (USD $113.4-billion) of bad loans from their books. The financial institutions would record losses of 30% of the loans. However, as the poor quality of the loans was revealed in 2010, the Irish government significantly lowered the percentage that it offered to take over the bad loans during 2010.
• In March 2010, the Central Bank of Ireland published its Prudential Capital Assessment Review (PCAR), which required AIB to raise Eur 7.4-billion in addition to the proposed sales of AIB’s bad loans to NAMA, as well as the proposed sales of AIB’s Polish and American operations. The amount of additional fresh capital requirement was further raised to Eur 9.8-billion in November 2010.
• In April 2010, AIB transferred its first tranche of bad loans to NAMA. AIB received Eur 1.9-billion for loans with a book value of Eur 3.3-billion, representing a “haircut” of 42%.
• In July 2010, AIB transferred its second tranche of bad loans to NAMA. AIB received Eur 1.4-billion for loans with a book value of Eur 2.73-billion, representing a “haircut” of 49%.
• In September 2010, AIB sold its 70.4% stake in Poland’s Bank Zachodni WBK S.A. and 50% stake in BZWBK AIB Asset Management to Banco Santander for Eur 3.09-billion (USD $3.97-billion). Bank Zachodni WBK was Poland’s No. 3 bank and had 512 offices. The sale generated Eur 2.5-billion of tier 1 capital for the troubled Irish bank.
• In October 2010, AIB sold its 22.4% stake in U.S. regional bank M&T Bank Corp. for USD $2.07-billion (Eur 1.5-billion). The sale raised AIB’s tier 1 capital by Eur 900-million.
• Between 2010-06-30 and 2010-11-16, a total of Eur 13-billion (UD$ 18-billion) of deposit was withdrawn from AIB, mainly due to wary corporate and institutional clients transferring their cash away from the debt-crippled bank.
• Between November and December 2010, AIB transferred two more bad-loan portfolios to NAMA. AIB received Eur 5.1-billion for loans with a book value of Eur 12.5-billion, representing a “haircut” of 59%.
• On 2010-12-23, the Irish government injected Eur 3.7-billion (USD $4.85-billion) into AIB to raise its stake from 18.6% to 49.9%. The government also planned to exercise its Eur 3.5-billion of convertible non-voting stock in the bank in early 2011, raising its ownership to 92.8%, effectively nationalizing Ireland’s largest bank. AIB still needed to raise another Eur 6.1-billion by the end of February 2011 to meet its Eur 9.8-billion fresh capital requirement. As part of the restructuring, AIB’s stock listing would move from the Irish Stock Exchange’s main board to the Enterprise Securities Market as of 2011-01-26.
• In February 2011, Allied Irish Banks (AIB) paid Eur 3.5-billion (USD $4.81-billion) to acquire Eur 8.6-billion (USD $11.78-billion) in deposits and Eur 12.2-billion (USD $16.78-billion) in NAMA bonds held by Anglo Irish Bank. The purchase price basically represented the value differential between the total deposits and the NAMA bonds. In addition, AIB also bought Anglo Irish's Isle of Man unit for Eur 200-million. The government-brokered deposit sale was a major step to wind down the bankrupt Anglo Irish Bank, which lost Eur 12.7-billion in the 15 months ending on 2009-12-31 and another Eur 17.6-billion in fiscal 2010 from non-performing commercial real estate loans.
• In June 2021, AIB agreed to pay EUR 4.1-billion in cash to acquire EUR 4.2-billion of corporate and commercial loan book from NatWest Group's Ulster Bank unit. NatWest had decided to exit the Republic of Ireland market. The purchase price represents 97.63% of the par value of the loan portfolio.
• In June 2022, AIB further agreed to pay EUR 5.4-billion to acquire EUR 5.7-billion of performing tracker mortgages (representing 47,000 loans) from NatWest Group's Ulster Bank subsidiary. The purchase price represents 95.15% of the par value of the loan portfolio.
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Great Britain Bank Mergers & Acquisitions (NatWest Group up to 2000)

Photo: NatWest's office at the heart of the City (of London) at No. 1 Princes Street. NatWest has been a subsidiary of the Royal Bank of Scotland Group since 2000.

[Limited-coverage page] NatWest has been a subsidiary of the Royal Bank of Scotland Group since 2000. In July 2020, however, The Royal Bank of Scotland Group adopted a "new" old name NatWest Group. Events after 2000 are listed under the here.

National Westminster Bank plc (NatWest Group) 

The creation of National Westminster Bank was announced in 1968 when two of Britain's then Big Five, National Provincial Bank and Westminster Bank, agreed to merge. When the combination was completed in 1970, the resulting bank was the 5th largest in the world. In 2000, however, NatWest was taken over by the Royal Bank of Scotland Group but it continues to operate under its own identity in England and Wales.

National Provincial Bank Ltd. 

In 1833, Thomas Joplin and other investors founded the National Provincial Bank of England after five years of preparation. The bank’s mandate was to provide banking services in England and Wales outside of London, so it could issue its own banknotes. At the time, the Bank of England enjoyed a monopoly in issuing banknotes within a 65-mile perimeter of London. National Provincial did maintain a purely administrative head office in the British capital. 

From 1834 onwards, branches were opened in Gloucester, Birmingham, Boston and many other towns. By 1865, through the acquisitions of many private and joint-stock rivals, the bank already operated 122 branches across England and Wales. Soon it became clear that London was too important a market for the bank to avoid and a London branch was opened, requiring the bank to surrender its privilege to issue banknotes. 

In 1880, National Provincial restructured itself as a limited liability company and modified its name to the National Provincial Bank of England Ltd. By 1900, further expansion increased the number of branches to around 200. 

In 1917, National Provincial acquired 50% of Lloyds Bank (France) Ltd., renaming it Lloyds & National Provincial Foreign Bank Ltd. in 1919, with branches in London, France, Belgium and Switzerland. In 1918, National Provincial merged with the Union of London & Smiths Bank Ltd., which had more than 230 branches. The new bank with 700 branches adopted the cumbersome name of National Provincial & Union Bank of England Ltd. In 1920, the bank acquired London private bank Coutts & Co., which was founded in 1692 and today continues to offer wealth management services under its own brand as part of the Royal Bank of Scotland Group. 

In 1924, the bank’s name was simplified to National Provincial Bank Ltd. It continued to expand during the inter-war years and after World War II by acquiring other banks domestically. In 1954, it divested its stake in Lloyds & National Provincial Foreign Bank back to Lloyds Bank. National Provincial acquired the Isle of Man Bank Ltd. in 1961, which continues to trade under its own name today. In 1962, National Provincial took over District Bank, the seventh largest London clearing bank with a substantial branch network in Northern England and the northern Midlands counties. National Provincial kept the District Bank identity until its merger with Westminster Bank in 1970. At the time of the amalgamation, National Provincial and District Bank together had a network of about 2,200 branches. 

Westminster Bank Ltd. 

Westminster Bank can trace its roots to the London & Westminster Bank and the London & County Bank. London & Westminster was the older of the two and was officially founded in 1834 in the City. As its name suggested, the bank’s main activities focused on central London but it also acted as the City agent to various country and foreign banks. By 1905, the bank had a network of 35 branches. 

London & County Bank was created in 1836 in Southwark as the Surrey, Kent & Sussex Banking Company. Southwark was a borough in the county of Surrey at the time, but is now part of London. Just one year after its founding, the bank moved its head office to the City and in 1839, adopted the name London & County Banking Co. The bank grew rapidly during the second half of the 19th century through a series of acquisitions. By 1875, London & County had a network of 150 branches in London and Southern England, the most of any British bank. 

In 1909, London & County and London & Westminster decided to combine into the London, County & Westminster Bank. London & County’s network of more than 260 branches in London and south and east of London was merged with London & Westminster’s 37 London branches. In 1917, the bank expanded outside of southern England and acquired Belfast-based Ulster Bank, gaining 170 branches in Ireland. Ulster Bank had been weakened by the political and social upheavals gripping Ireland following the Easter Rising of 1916. In 1918, National Provincial merged with Parr’s Bank of Warrington and London (with 235 full branches) to become the London County Westminster & Parr’s Bank. The new entity now operated 700 branches. 

London County Westminster & Parr’s sensibly shortened its name to Westminster Bank in 1923. Throughout the 1920s, Westminster acquired more banks in Nottinghamshire, Yorkshire and Guernsey. By 1968, Westminster had a network of 1,400 branches across Britain, Ireland and Northern Ireland. 

National Westminster Bank Ltd. 

In 1968, National Provincial Bank (including its subsidiary District Bank) and Westminster Bank (including subsidiaries Isle of Man Bank and Ulster Bank) agreed to amalgamate into the National Westminster Bank. The new bank adopted the three arrow-heads logo, which is still in use today. When the merger was completed in 1970, the bank had 3,600 branches, though branch consolidation reduced that number to 3,200 by 1979. 

In 1972, National Westminster introduced Access, the bank’s first credit card. Throughout the 1970s, the bank actively participated in financing oil exploration in the North Sea, as well as created an international division. In 1979, National Westminster bought National Bank of North America, which had 141 branches in New York State, marking the bank’s first retail network in the United States. 

Soon after the British financial services industry was deregulated in 1986, National Westminster entered the securities business by buying up stock-brokers and underwriters. In 1988, the bank’s U.S. unit acquired New Jersey’s First Jersey National Corp. Following this purchase, National Westminster Bancorp’s network totalled 340 branches in New York and New Jersey. 

In 1991, a major restructuring programme saw the bank’s various private banking businesses combining under the Coutts & Co. brand. Coutts & Co. had been part of National Provincial Bank since 1920. Then in 1992, NatWest Markets was created to handle the group’s corporate and investment banking products. 

In 1993, the bank launched NatWest Life to embark on the life insurance business. NatWest sold its American retail bank National Westminster Bancorp to Fleet Financial in 1995 for GBP 2.3-billion (USD $3.6-billion) to focus on its British operations. In the same year, the name NatWest Group was officially adopted.

NatWest’s fortune took a dramatic turn in 1999 that eventually culminated in the loss of its independence. The events all began in September 1999 when NatWest announced a friendly deal to acquire U.K. insurer and unit trust (mutual fund) manager Legal & General plc for GBP 10.7-billion. To many analysts and institutional shareholders, however, swallowing up and integrating Legal & General was the last distraction NatWest needed when the bank’s core business was already underperforming. NatWest's share prices promptly tumbled by 26% over the next few weeks. 

Two days after NatWest's share collapse, on 1999-09-24, the Bank of Scotland launched a surprise GBP 21.0-billion (USD $34.3-billion) hostile bid to take over NatWest. 

By early October 1999, NatWest’s CEO Derek Wanless had lost the board of directors’ confidence and resigned. The bank also abandoned its offer for Legal & General. Throughout October, NatWest announced cost-cutting plans to eliminate 1,650 jobs and to sell off Ulster Bank, fund management arm Gartmore, NatWest Equity Partners and Greenwich NatWest in the hope of persuading its shareholders to vote against selling out to the Bank of Scotland. 

NatWest’s struggle to remain independent became even more complicated on 1999-11-29, when The Royal Bank of Scotland (RBS) joined the foray and announced its own hostile bid for the embattled bank. Throughout December and January (2000), both Bank of Scotland and RBS jockeyed for shareholders’ support (from both their own and those of NatWest) and raised their respective bids to over GBP 25.6-billion (USD $41.7-billion). In early February, RBS secured a GBP 500-million financing from its own institutional shareholder Spanish banking giant Banco Santander Central Hispano (now Banco Santander). With the additional cash infusion from BSCH, RBS was able to increase the cash portion of its bid for NatWest, and won over the major shareholders of NatWest. 

On 2000-02-11, NatWest finally gave up its fight and recommended its shareholders to accept the offer from RBS. By this time however, the value of the offer had fallen back to GBP 21.0-billion due to a fall in RBS share prices. What began as a seemingly ordinary takeover bid for Legal & General ended up with NatWest losing its own autonomy. 

Interestingly, both Bank of Scotland and RBS were rather smaller than NatWest. So even RBS in the end "took over" NatWest in a cash-and-share purchase, the former shareholders of NatWest actually ended up owning 62% of the newly-enlarged Royal Bank of Scotland Group, with the former RBS shareholders owning the remaining 38%. Click here to return to the Index page.