British Linen Bank

The British Linen Company (later the British Linen Bank) was established in Edinburgh by a royal charter from George II, in 1746. The Company was empowered to carry on the Linen Manufactory in all its branches" and was granted limited liability. The word 'British' in its title was an attempt to deflect the suspicion aroused by all things Scottish, after the Jacobite Rebellion of 1745.

The Company's key promoters were the 3rd Duke of Argyll; Lord Milton; the Earl of Panmure; and George Middleton, a London banker. Its nominal capital was £100,000. This sum was not increased until 1806, when it was doubled.

Although its initial aim was to promote the linen industry, the Company moved into banking in the late 1760s, and began issuing its own notes. In 1765, it was formally accepted as a bank by the Royal Bank of Scotland. But recognition from Bank of Scotland was only achieved in 1771.

The great strength of the British Linen was its spread of agents throughout the country. This was the result of its earlier involvement in the linen trade. By 1780, it had a total of nine agencies, or branches.

In 1837, the Company acquired the business of the Paisley Banking Company (the only bank ever taken over by the British Linen Company). The Cashier of the Paisley Banking Company, Arthur Welsh, became the Paisley agent of the British Linen Company and his brother, David Welsh of Collin, W.S., later went on to become a director. The Paisley Bank's three remaining branches (in Glasgow, Irvine and Stranraer) were taken over or merged with existing British Linen Company branches.

The Company moved to a new head office at the turn of the 19th century. In 1808, it acquired the Dalhousie mansion at No. 38 St. Andrew Square. Seventeen years later, numbers 39 and 40 were also purchased, a reflection of the increase in business and staff numbers. Although the depression of 1837 brought a temporary halt to prosperity, the British Linen did not suffer as much as other banks.

The bank continued to grow throughout the 19th century. In fact, other than a temporary trade paralysis in the late 1850s (following the collapse of the Western Bank), the British Linen Company survived relatively unscathed. On 11th June 1906, it formally changed its name to the British Linen Bank.

By the early 20th century, Scotland had become over-banked: eight different companies, each with extensive branch networks, served only 4.8 million people. A series of amalgamations between Scottish and English banks took place between 1917 and 1926. In 1919, the British Linen became a wholly-owned subsidiary of Barclays Bank. This gave the British Linen increased foreign connections, and its total assets leapt from £29 million to £36 million in two years. As with all the Anglo-Scottish banking 'affiliations', the British Linen Bank retained its board of directors in Edinburgh, its own separate structure and its note issue.

The 1950s and '60s saw another wave of Scottish bank mergers. On 9th May 1969, Bank of Scotland struck a deal with Barclays to take over the British Linen Bank. The merger was concluded on 1st March 1971.

The amalgamation document, however, secured the legal continuance of the British Linen Bank as a separate Scottish company. In 1977, permission was granted for its resumption as the merchant banking arm of Bank of Scotland. It continued as such until September 1999.

From the guide to the British Linen Bank, 1746-1974, (Lloyds Banking Group Archives (Edinburgh))