Clydesdale Bank plc

Last updated

Clydesdale Bank plc
Company type Subsidiary
Industry Banking, financial services
Founded1838;186 years ago (1838)
Successor Midland Bank   OOjs UI icon edit-ltr-progressive.svg
Headquarters Glasgow, Scotland, UK
Key people
James Pettigrew (Chairman)
David Duffy (Chief Executive Officer)
Services Retail banking
SME banking
Revenue £ 1.004 billion (2015) [1]
Increase2.svg £(308) million (2015) [1]
Increase2.svg £(249) million (2015) [1]
Total assets Increase2.svg £ 38.7 billion (2015) [1]
Total equity Unknown
Number of employees
c. 8,703 (2018) [1]
Parent Virgin Money UK plc
Divisions B
Subsidiaries
Website www.cbonline.co.uk

Clydesdale Bank plc is a retail and commercial bank in Scotland. It was formed in Glasgow, Scotland in 1838 and now trades as Virgin Money.

Contents

With its immense and international growth in commercial and industrial clients, including Sir Robert McAlpine & Sons, and their extensive credit requirements it sought investment by a larger consortium. Consequently it was purchased by Midland Bank, the largest bank in the world at this stage, in 1920. Much later the Clydesdale became part of the National Australia Bank Group (NAB), between 1987 and 2016. Clydesdale Bank was divested from National Australia Bank in early 2016, with its new holding company, CYBG plc, trading on the London and Sydney stock exchanges. In June 2018, it was announced that CYBG would acquire Virgin Money for £1.7 billion in an all-stock deal, and that the Clydesdale and Yorkshire Bank public brands would be phased out in favour of retaining Virgin's brand, including the renaming of CYBG plc to Virgin Money UK plc.

The public marketing name 'Virgin Money' is used by all the operating divisions of Virgin Money UK plc, whose headquarters are at 177 Bothwell Street, Glasgow. It is the UK 's sixth largest bank.

As with two other banks of Scottish origin, namely the Bank of Scotland and the Royal Bank of Scotland, the Clydesdale Bank retains the right to issue its own banknotes.

History

Establishment

In March 1838, an advertisement appeared for a new joint stock banking company in Glasgow, the Clydesdale Banking Company. It was to be "chiefly a local bank – having few branches – but correspondents everywhere" though it was conceded that a branch in Edinburgh would be necessary. The Bank duly opened for business in both cities in May 1838. [2] Checkland described the Bank as the creation of "a group of Glasgow businessmen of middling order, liberal radicals…who were active in the government and charities of the city." [3]

The driving figure behind the formation of the bank was James Lumsden, a stationer by business, a councillor, police commissioner and, later, Lord Provost of Glasgow. Another member of the founding committee, Henry Brock, became the Bank's first manager. Brock came of a merchant family, was an accountant and one of the founders of the Glasgow Savings Bank. Despite the declaration in the advertisement, in the year after formation the Bank opened three Glasgow branches as well as its first country branches in Campbeltown and Falkirk; a further seven had been opened by 1844. These were supplemented by the acquisition of the Greenock Union Bank; formed in 1840, it had four branches in the Glasgow hinterland. [2]

Expansion

A former branch of Clydesdale Bank in Leith Clydesdale Bank, Leith.JPG
A former branch of Clydesdale Bank in Leith
The Clydesdale Bank/Banca Dhail Chluaidh Stornoway branch bearing a bilingual sign in English and Gaelic Did you know the Gaelic for Clydesdale Bank, well you do now (28485664293).jpg
The Clydesdale Bank/Banca Dhail Chluaidh Stornoway branch bearing a bilingual sign in English and Gaelic

Following the purchase of the Greenock Union, there was little change in the structure of the Bank and there were still only 13 branches in 1857. In that year, Clydesdale became the first Scottish bank to produce a printed balance sheet, and it showed assets of £2.7 million and net profits of £70,000. The public disclosure of its strength stood it in good stead, for only months later the Western Bank of Scotland closed its doors, followed the next day by the first closure of the City of Glasgow Bank. Clydesdale gained not only customers but 13 branches from the Western. A few months later came the acquisition of the Edinburgh and Glasgow Bank, which had been weakened by the same economic disturbances. The Edinburgh & Leith Bank, as it was originally, had been formed in 1838 "for the benefit of the 'industrious middle classes'" and it had bought the Dumfries-based Southern Bank of Scotland in 1842 and the Glasgow Joint Stock Bank in 1844, the latter leading to the change of name to Edinburgh & Glasgow Bank. Poor lending in the 1845–47 period, particularly to Australia, dogged the Bank for the next ten years and it was eventually taken over by the Clydesdale for a nil consideration; Clydesdale retained 19 of its 27 offices. Five years later, in 1863, Clydesdale acquired the more successful Eastern Bank of Scotland, like Clydesdale, also founded in 1838. Based in Dundee it was to have two separate offices and boards, one in Dundee, the other Edinburgh. Before opening for business it acquired the Dundee Commercial Bank to serve as its Dundee office. Difficulties with the two boards working together led to the Edinburgh bank being wound up and the Eastern became an essentially Dundee bank; its acquisition gave Clydesdale its first interests north of the River Tay. [2]

Much of the growth in the Bank's network had come from acquisitions and the management remained cautious regarding direct branch expansion. However, in 1865, a committee was formed to look at prospects and 16 branches were opened in two years. In 1874 the Clydesdale went south of the border and opened three branches in Cumberland but this was seen as following existing trade rather than making a specific attempt to enter the English market. Indeed, Clydesdale was one of the last Scottish banks to acquire a London office (1877). In 1878, the City of Glasgow Bank failed for the second time, leading again to an increase in Clydesdale's deposits and the acquisition of nine of the Glasgow branches. The scale of the collapse led to further debate on the desirability of limited liability and, following legislation in 1879 (allowing fixed uncalled liability on shares), Clydesdale Bank registered as a limited liability company in 1882. [2]

Reid described the period 1890–1914 as "the tranquil years", [2] but that did not preclude steady expansion of the branch network – from 92 to 153. [4] That was to mark the end of Clydesdale's independent existence.

The Midland Era

In 1917 the bank was approached by London City and Midland (later Midland Bank) and, although initially resisted, Clydesdale Bank was sold in 1920. However, it continued to operate independently and was always referred to as an affiliate, not a subsidiary. The Glasgow banks suffered more than others in the depressed economy of the inter-war period and from being the largest lender in Scotland in 1920, it fell to fifth place by 1939. Despite this, the Bank continued to open branches, particularly in areas enjoying export growth, and the network increased from 158 in 1919 to 205 in 1939. [4]

Midland had also acquired the North of Scotland Bank in 1923 but the Aberdeen management had fiercely resisted any attempt to merge with Clydesdale. However, the changed competitive market after the Second World War meant that the two banks could not remain separate and in 1950 they were amalgamated to become the Clydesdale and North of Scotland Bank (soon shortened to Clydesdale Bank). Clydesdale had 189 branches and the North of Scotland 161, covering 221 towns between them. Of the eight Scottish banks, Clydesdale had been the third-largest by deposits, the North being the smallest. The merged bank became Scotland's largest in terms of deposits, advances and branches. However, by 1969, mergers elsewhere had reduced the number of Scottish banks to three with Clydesdale now being the smallest. Midland needed to rationalise the enlarged Clydesdale but faced resistance. Midland also needed additional capital and its solution to both challenges was to sell Clydesdale (along with Midland's Irish subsidiaries) to National Australia Bank in 1987. [4]

National Australia Bank Group

A Clydesdale Bank branch in Kilmarnock Clydesdale Bank, Kilmarnock.jpg
A Clydesdale Bank branch in Kilmarnock

In 1989 National Australia Bank bought the Clydesdale bank for £420 million. Fred Goodwin, an accountant working for Touche Ross, worked on the acquisition. In 1995 Goodwin, with little direct banking experience, was appointed deputy CEO of the Clydesdale until 1997. During this period Goodwin earned the nickname "Fred the shred" for his aggressive manner in dealing with staff. [5]

In September 2013 the bank was fined £8.9 million after miscalculating the mortgage repayments of more than 42,000 customers. [6]

In March 2015 the House of Commons Treasury Select Committee said in a conduct report that they had evidence that the Clydesdale Bank had mis-sold unregulated tailored business loans and that the bank's own internal review of the mis-selling had serious shortcomings and lacked transparency. [7]

In April 2015 the Clydesdale was fined £20.7 million the largest of its type imposed by the Financial Conduct Authority for the mis-selling of PPI insurance. [8] [9]

CYBG plc

National Australia Bank confirmed in October 2014 that it planned to exit the UK, and was considering a number of options for Yorkshire and Clydesdale Banks, including a possible stock market listing. [10] In October 2015, NAB confirmed it would float Clydesdale Bank and Yorkshire Bank on the London Stock Exchange (LSE) in February 2016 through an initial public offering, [11] with an aim of raising £2 billion. [12] [13] The bank's newly formed holding company CYBG plc began conditional trading on the LSE and the Australian Securities Exchange on 3 February, and began trading unconditionally from 8 February. [14] The flotation share price of 180p meant that the National Australia Bank made an estimated loss of £2 billion on the sale and had to make provisions of around £1.7 billion to cover claims for mis-selling of products. [15]

In March 2016 CYBG announced the closure of 28 branches as a cost saving move. [16] The following month, CYBG announced the closure of a further 9 Clydesdale branches and 17 Yorkshire Bank branches. [17]

Virgin Money

In June 2018, CYBG plc announced it would acquire Virgin Money for £1.7 billion in an all-stock deal. Almost one in six employees are expected to lose their jobs in the takeover, which will result in retail customers being migrated to the Virgin Money brand over three years. [18] The acquisition of Virgin Money was completed on 15 October 2018. [19] In June 2019, CYBG plc announced its plans to consolidate its businesses under the Virgin Money brand. Clydesdale Bank, Yorkshire Bank and B, which exist as trading divisions of Clydesdale Bank plc will begin to use the Virgin Money name in late 2019 with full use planned by early 2021. [20] In preparation for rebranding, the existing Virgin Money plc was merged into the existing Clydesdale Bank plc on 21 October 2019. [21]

See also

Related Research Articles

<span class="mw-page-title-main">Halifax (bank)</span> British bank

Halifax is a British banking brand operating as a trading division of Bank of Scotland, itself a wholly owned subsidiary of Lloyds Banking Group.

<span class="mw-page-title-main">HSBC</span> British multinational bank group

HSBC Holdings plc, originally The Hongkong and Shanghai Banking Corporation, and known locally as HongkongBank in Hong Kong, Canada and Australia during the early 1980s to late 1990s, is a British universal bank and financial services group headquartered in London, England, with business links to East Asia and a multinational footprint. It is the largest Europe-based bank by total assets, ahead of BNP Paribas, with US$2.953 trillion as of December 2021. In 2021, HSBC had $10.8 trillion in assets under custody (AUC) and $4.9 trillion in assets under administration (AUA).

<span class="mw-page-title-main">Clydesdale Bank</span> Commercial bank in Scotland

Clydesdale Bank is a trading name used by Clydesdale Bank plc for its retail banking operations in Scotland.

<span class="mw-page-title-main">Yorkshire Bank</span> Retail bank in the United Kingdom

Yorkshire Bank is a trading name used by Clydesdale Bank plc for its retail banking operations in England.

<span class="mw-page-title-main">Lloyds Bank</span> British retail and commercial bank

Lloyds Bank plc is a British retail and commercial bank with branches across England and Wales. It has traditionally been considered one of the "Big Four" clearing banks. Lloyds Bank is the largest retail bank in Britain, and has an extensive network of branches and ATMs in England and Wales and offers 24-hour telephone and online banking services.

<span class="mw-page-title-main">Trustee Savings Bank</span> British financial institution

The Trustee Savings Bank (TSB) was a British financial institution that operated between 1810 and 1995 when it was merged with Lloyds Bank. Trustee savings banks originated to accept savings deposits from those with moderate means. Their shares were not traded on the stock market but, unlike mutually held building societies, depositors had no voting rights; nor did they have the power to direct the financial and managerial goals of the organisation. Directors were appointed as trustees on a voluntary basis. The first trustee savings bank was established by Rev. Henry Duncan of Ruthwell in Dumfriesshire for his poorest parishioners in 1810, with its sole purpose being to serve the local people in the community. Between 1970 and 1985, the various trustee savings banks in the United Kingdom were amalgamated into a single institution named TSB Group plc, which was floated on the London Stock Exchange. In 1995, the TSB merged with Lloyds Bank to form Lloyds TSB, at that point the largest bank in the UK by market share and the second-largest by market capitalisation.

<span class="mw-page-title-main">Midland Bank</span> Company

Midland Bank Plc was one of the Big Four banking groups in the United Kingdom for most of the 20th century. It is now part of HSBC. The bank was founded as the Birmingham and Midland Bank in Union Street, Birmingham, England in August 1836. It expanded in the Midlands, absorbing many local banks, and merged with the Central Bank of London Ltd. in 1891, becoming the London City and Midland Bank.

<span class="mw-page-title-main">HSBC Bank USA</span> US subsidiary of multinational bank

HSBC Bank USA, National Association, an American subsidiary of the British banking group HSBC, is a bank with its operational head office in New York City and its nominal head office in McLean, Virginia. HSBC Bank USA, N.A. is a national bank chartered under the National Bank Act, and thus is regulated by the Office of the Comptroller of the Currency (OCC), a part of the U.S. Department of the Treasury. The company has 22 branch locations.

<span class="mw-page-title-main">Virgin Money UK</span> UK-based bank and financial services company

Virgin Money is a banking and financial services brand operating in the United Kingdom.

<span class="mw-page-title-main">Royal Bank of Scotland</span> Scottish bank

The Royal Bank of Scotland is a major retail and commercial bank in Scotland. It is one of the retail banking subsidiaries of NatWest Group, together with NatWest and Ulster Bank. The Royal Bank of Scotland has around 700 branches, mainly in Scotland, though there are branches in many larger towns and cities throughout England and Wales. The bank is completely separate from the fellow Edinburgh-based bank, the Bank of Scotland, which pre-dates the Royal Bank by 32 years. The Royal Bank of Scotland was established to provide a bank with strong Hanoverian and Whig ties.

Williams & Glyn's Bank Limited was established in London in 1970, when the Royal Bank of Scotland merged its two subsidiaries in England and Wales, Williams Deacon's Bank Ltd. and Glyn, Mills & Co. In 1985, Williams & Glyn's was fully absorbed into the Royal Bank of Scotland and ceased to trade separately.

<span class="mw-page-title-main">HBOS</span> United Kingdom banking and insurance company

HBOS plc is a banking and insurance company in the United Kingdom, a wholly owned subsidiary of the Lloyds Banking Group, having been taken over in January 2009. It was the holding company for Bank of Scotland plc, which operated the Bank of Scotland and Halifax brands in the UK, as well as HBOS Australia and HBOS Insurance & Investment Group Limited, the group's insurance division.

<span class="mw-page-title-main">Commercial Bank of Scotland</span> Scottish commercial bank

The Commercial Bank of Scotland Ltd. was a Scottish commercial bank. It was founded in Edinburgh in 1810, and obtained a royal charter in 1831. It grew substantially through the 19th and early 20th centuries, until 1958, when it merged with the National Bank of Scotland to become the National Commercial Bank of Scotland. Ten years later the National Commercial Bank merged with the Royal Bank of Scotland.

<span class="mw-page-title-main">National Bank of Scotland</span> Bank based in Edinburgh, Scotland

The National Bank of Scotland was founded as a joint stock bank in 1825. Based in Edinburgh, it had established a network of 137 branches at the end of its first hundred years. In 1918 the bank was bought by Lloyds Bank, although it continued to operate as an independent institution until 1959, when it merged with the Commercial Bank of Scotland to become the National Commercial Bank of Scotland. Ten years later the National Commercial Bank merged with the Royal Bank of Scotland.

<span class="mw-page-title-main">TSB Bank (United Kingdom)</span> British retail bank

TSB Bank plc is a British retail and commercial bank in Edinburgh, Scotland. It has been a subsidiary of Sabadell Group since 2015.

<span class="mw-page-title-main">Virgin Money</span>

Virgin Money is a financial services brand used by two independent brand-licensees worldwide from the Virgin Group. Virgin Money branded services are currently available in Australia and the United Kingdom. The brand formerly operated in South Africa and the United States.

Virgin Money UK plc is a holding company that owns Clydesdale Bank plc, which in turn trades as Clydesdale Bank, Yorkshire Bank and Virgin Money in the United Kingdom. It was formed as CYBG plc by National Australia Bank (NAB) in February 2016, in advance of the divestment of its UK business through a stock market flotation. It is listed on the London Stock Exchange and Australian Securities Exchange; it is also a constituent of the FTSE 250 Index.

James Neilson Pettigrew who is currently the chairman of the AIB Group Plc, RBC Global Asset Management UK Ltd,and Scottish Ballet. Until recently, he was the chairman of Virgin Money & CYBG PLC, the owners of Clydesdale Bank, Yorkshire Bank and the digital app based current account provider, B. CYBG PLC was formed as part of the demerger with National Australia Bank in early 2016. From 2016-2019, he was Chairman of Scottish Financial Enterprise (SFE), the representative body for Scotland's financial services industry, from 2016-2019. He was also co-chair for the Financial Services Advisory Board (FiSAB) with the First Minister, and was on the advisory board of TheCityUK. and chaired Dundee Heritage Trust.

References

  1. 1 2 3 4 5 "Annual report and consolidated financial statements 2019". Virgin Money UK plc.
  2. 1 2 3 4 5 J M Reid, The History of the Clydesdale Bank 1838–1938 (1938)
  3. S G Checkland, Scottish Banking a History 1695–1973 (1975)
  4. 1 2 3 Munn, Charles (1988). Clydesdale Bank, The First One Hundred & Fifty Years Our Bank.
  5. Brinded, Lianna (6 March 2015). "The sorry history of the near-destruction of investment banking at RBS". Business Insider.
  6. "How Clydesdale failed customers". Money Marketing. 26 September 2013.
  7. "Conduct and competition in SME lending report published". UK Parliament.
  8. Milligan, Brian (14 April 2015). "Clydesdale Bank fined £20.7m over PPI failings". BBC News.
  9. "Clydesdale Bank fined". FCA. 14 April 2015.
  10. "NAB bank flags Clydesdale and Yorkshire sale in UK exit". BBC News. 30 October 2014. Retrieved 5 November 2014.
  11. Slater, Steve (28 October 2015). "Clydesdale could be target or challenger bank consolidator after IPO". Reuters. Retrieved 4 November 2015.[ dead link ]
  12. Partington, Richard; David, Ruth (24 November 2014). "National Australia Said to Hire Morgan Stanley for U.K. Unit IPO". Bloomberg Business. Retrieved 14 March 2015.
  13. Armstrong, Ashley (3 January 2015). "Flurry of floats expected as election looms". The Telegraph. Retrieved 14 March 2015.
  14. Taverner, Charlie; Fedor, Lauren (3 February 2016). "Clydesdale Bank share price trades above opening offer as conditional trading starts on IPO after 24-hour delay". City A.M. Retrieved 7 February 2016.
  15. "Offloading Glasgow-based Clydesdale Bank triggers hefty charge for former owner". Herald Scotland.
  16. "Clydesdale Bank to axe 16 Scots branches". Scotsman newspaper online.
  17. "Clydesdale Bank to close branches". BBC News. 13 April 2016.
  18. "Virgin Money bought by CYBG for £1.7bn". BBC News. 18 June 2018. Retrieved 18 June 2018.
  19. "CYBG completes €1.9bn takeover of Virgin Money". The Independent. 15 October 2018. Retrieved 15 October 2018.
  20. "Launching the new Virgin Money". CYBG. 19 June 2019.
  21. "Clydesdale and Virgin Money are becoming one bank". Virgin Money UK.