Midland Bank
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| Midland Bank plc | |
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| Slogan | The listening bank |
| Fate | Acquired by HSBC Holdings plc |
| Successor | HSBC Bank plc |
| Founded | Birmingham in 1836 |
| Defunct | 1999 |
| Location | London, England, UK |
| Industry | Banking |
| Products | First Direct |
Midland Bank was one of the Big Four banking groups in the United Kingdom. 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. After a period of nationwide expansion, including the acquisition of many smaller banks, the name Midland Bank Ltd was adopted in 1923. By 1934 it was the largest deposit bank in the world. In 1992, it was taken over by HSBC Holdings plc.
The Midland Bank was famous for its golden griffin logo, surrounded by golden dots on a blue background, and for its slogan "the listening bank", written by the advertising executive Rod Allen. Advertisements for the bank appeared in the popular Theme Park computer game. The Midland Bank was rebranded as HSBC Bank in 1999 as part of the adoption of the HSBC brand throughout the group.
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[edit] History of The Midland Bank Birmingham
Midland Bank opened for business in Union Street, Birmingham, England, in August 1836 and was the brain-child of its first manager, Charles Geach. Having left a secure appointment at the Bank of England to take up the challenge of commercial banking, Geach had the business support and capital backing of leading merchants and manufacturers in Birmingham.
The town and its region were the heartland of the Industrial Revolution and the new bank began business in a thriving, but highly competitive local economy. In the 1830s and 1840s, Midland occupied an important niche in Birmingham business, particularly in the discounting of bills of exchange for its customers. Links with local industrial and commercial concerns were especially strong and, by the 1850s, the bank’s customers included railways, iron founders and engineering concerns, utilities and municipal corporations.
Midland established its first branches by acquiring utilities and municipal corporations like Stourbridge Old Bank in 1851 and Nichols, Baker and Crane of Bewdley in 1862. Both firms had been pioneers of banking in the West Midlands: the origins of the Stourbridge bank can be traced back to 1762 and the Bewdley bank dated from 1777.
[edit] Acquisitions and development in its first 50 years
Midland steadily enlarged its business in Birmingham and the surrounding region. From the 1880s, it expanded its customer base by opening new branches and acquiring other banks. Its most important initiative was the decision to move into the wider national market. This was achieved in 1891 by the acquisition of the Central Bank of London (which gave Midland a seat in the London Clearing House) and, in 1898, by taking over the City Bank (which provided a London head office).
By 1918, with deposits of £335 million, it ranked as the largest bank in the world. The key figure in this remarkable advance was Edward Holden, Managing Director from 1898 to 1908 and Chairman and Managing Director from 1908 until his death in 1919. He oversaw more than 20 bank amalgamations between 1891 and 1918, and opened new branches throughout England and Wales.
Holden also encouraged the development of Midland’s international business; it was the first British bank to set up a foreign exchange department and, by 1919, it was acting as London bank to some 650 correspondent banks throughout the world. From 1907, these correspondents included The Hongkong and Shanghai Banking Corporation.
After the First World War, the leading British banks entered an agreement with the government that they would not attempt further amalgamations without Treasury approval. As a result, Midland turned its attention to expanding its branch network, adding new banking services, mechanising its systems (from 1928) and advertising its activities.
[edit] Post-war recovery and international alliances
The ending of credit restrictions in 1958 brought renewed competition into British banking. Midland responded by extending its branch network and by introducing a series of innovative services, including personal loans (1958), personal cheque accounts (1958) and cheque cards (1966).
The bank also diversified its interests away from traditional commercial banking. Forward Trust, which was acquired in 1958, emerged as a leader in instalment finance, leasing and factoring services.
Midland’s purchase in 1967 of a share in Montagu Trust, the owner of Samuel Montagu & Co. Limited, was the first association between a British clearing bank and a London merchant bank. Samuel Montagu, with its own distinguished history dating back to 1853, became a wholly owned subsidiary in 1974 and is now part of HSBC's private banking business.
Further diversification followed in 1972, when Midland was the leading member of the consortium that acquired the Thomas Cook travel business. After becoming sole owner in 1977, Midland sold its interest in 1992, but the link is maintained by offering Thomas Cook services through the bank’s branch network.
Until 1974, Midland’s overseas business relied upon its traditional links with correspondent banks and, in the 1960s, membership of a number of consortia of European and international banks. From 1974, the emphasis switched, first to opening branches or representative offices in the major financial centres of the world and, second, to acquiring international subsidiaries. Of these initiatives, the purchase of a majority share in Crocker National of California, USA, in 1981 proved to be a serious setback to Midland’s fortunes. After a series of heavy losses by the Californian bank, Midland took full ownership in 1985 and then sold Crocker to Wells Fargo the following year.
Midland Bank enjoyed greater success with investment in Germany, where the focus of activity was Trinkaus & Burkhardt KGaA, a private bank with a long history of its own. In 1785, Christian Gottfried Jaeger founded a trading company in Düsseldorf, which eventually passed to his nephew, Christian Gottfried Trinkaus. Trinkaus developed the firm into a bank and gave it his own name. In 1972, C G Trinkaus merged with the banking house Burkhardt & Co, which had been founded in Essen in 1841, and operations were extended to Luxembourg and Switzerland. Midland Bank acquired a controlling interest in 1980 and, today, as HSBC Trinkaus & Burkhardt AG, the company enjoys a leading position in both commercial and investment banking. Through the acquisition of Samuel Montagu & Co, Midland had also gained a majority share in Guyerzeller Bank AG (now HSBC Guyerzeller Bank AG) in Switzerland.
[edit] Midland joins the HSBC Group
The Hongkong and Shanghai Banking Corporation acquired a 14.9 per cent equity interest in Midland Bank in 1987, and a strong working relationship developed. In 1989 First Direct was established and was at the forefront of telephone banking, with person-to-person service available 24 hours a day, 365 days a year.
In 1992, HSBC Holdings plc acquired full ownership of Midland Bank. At the time it was one of the largest acquisitions in banking history, and gave HSBC, which moved its headquarters to London, accepting primary banking supervision by the Bank of England, the major foothold in Europe that it needed to complement its existing business in Asia and the Americas. Midland Bank was renamed HSBC Bank in 1999 as part of the adoption of the HSBC brand throughout the Group. The former head office of the London, City and Midland Bank, (later one of the major City branches of Midland Bank) at 5, Threadneedle Street, is now a bar, with its magnificent banking hall as a rather muted centrepiece.
The final head office of the Midland Bank, opposite the Bank of England in Poultry and Princes Street, was sold in 2006 to a Russian tycoon and the banking hall on the ground floor and huge underground deposit vaults were vacated by HSBC in 2007. The Lutyens-designed building built between 1921 and 1939, symbol of the 1930s pride of the biggest bank in the world, is destined to become a hotel.
