Preparing for an international future | RBS Remembers

RBS remembers

Preparing for an international future

The site bought by London County Westminster & Parr's Bank for its Antwerp branch before building work began, 1919


Before the war, Britain tended to focus its international business energies on imports and exports within the Empire. Only one of our constituent banks had taken any significant steps towards trading directly in continental Europe. Even that venture, London County & Westminster Bank (Paris), was only begun in 1913. In fact, some wartime commentators suggested that Britain’s pre-war apathy about Europe had been part of what led to a situation where it couldn’t avoid war.


Great Britain, through the war, has realised once again in her history that she is part of Europe

Michael Sadler, Vice Chancellor of University of Leeds, 1917


The war brought new importance to trading relations with European allies. British companies undertook major supply contracts for allied governments. They also began to see how German companies had been expanding internationally over the past decade, gaining an advantage over Britain’s Empire-focussed insularity.

Assuming the eventual military defeat of Germany, many British companies anticipated picking up new business all over the post-war world, in markets where Germany had previously dominated. Such new business was the only prospect many of them had for sustaining the growth they’d experienced as part of the wartime economy.

As soon as the war ended, these businesses would be looking to their banks to provide cross-border and cross-currency services. British banks knew that they had to be ready. 

London County & Westminster Bank, which had become a leader in this field when it opened its Paris-based subsidiary in 1913, continued to expand overseas, even during the difficult war years. It opened further branches in France in 1917 and 1918, and four branches in Spain between 1917 and 1920. Within weeks of the signing of the armistice it was planning to expand into Belgium. Branches opened in Brussels and Antwerp in 1919.

Many more banks focussed their efforts on providing London-based foreign services. Most of the big London banks already had some kind of foreign department, responsible for handling customers’ international transactions. They began to plan for expanding these departments, broadening the range of services they offered. Young clerks were encouraged to learn foreign languages so that they would be useful in these departments, which had previously tended to depend on foreign staff for language skills. 

Smaller banks, and those based outside London, also had to offer foreign services, or they’d be at a tremendous disadvantage in the post-war world. If a customer had to use another bank for international transactions, he might soon decide that he might as well do all his business with that other bank. To prevent this from happening, banks strove to offer all the services their customers might require. Some set up their own foreign departments. In Manchester, for example, District Bank established a foreign department in 1917, but the resources such an enterprise could absorb were enormous, and the department made huge losses in its first few years.

Other banks considered joint ventures. In Scotland, a foreign exchange bank jointly owned by all the banks was proposed. Even the largest of these banks was much smaller than the biggest in England, and they were all geographically remote from London, the key global financial centre. Individually, they were too small to run their own comprehensive international operations, but they did not want to see customers forced to turn to English competitors.

In 1917 The Royal Bank of Scotland suggested a joint venture, a Scottish Foreign Exchange Bank whose members' combined resources would give it enough influence to operate effectively. Some banks liked the idea, but others were less keen, and their lack of support kept it from going ahead.

Both Commercial Bank of Scotland and National Bank of Scotland - the other two Scottish banks that later became part of today’s RBS - turned down the joint venture idea. Their reasons are not clear in the surviving records, but perhaps both sensed that a more expansive solution was needed. In 1918, each formed an alliance with one of the biggest English banks. Commercial Bank of Scotland reached an agreement to direct all its foreign business through London County Westminster & Parr’s Bank. National Bank of Scotland already had a similar arrangement with Lloyds Bank, and in that year was bought by the English bank. It remained Lloyds-owned for the next 40 years.

For The Royal Bank of Scotland, international business did not really get going until 1926, when it hired Edward Davies as its foreign delegate. Davies was one of the foremost international bankers of his generation, and through his expertise and contacts, the Royal Bank finally managed to take its first significant steps overseas.

Not all suggested joint ventures failed to get off the ground. British Overseas Bank was established in 1919 by a group of eight British banks and one insurance company. It brought together banks in London, including our constituent Glyn, Mills, Currie & Co; Manchester (our constituent Williams Deacon’s Bank); Scotland; Ireland; Canada; Spain; and the Near East. They worked together, ‘firstly for the promotion of mutual interests and secondly for the development of business in fresh fields.’

The bank moved into more markets throughout the 1920s and 1930s, but economic circumstances were exceptionally difficult. The bank struggled, incurring sizeable bad debts in Germany and Eastern Europe in the late 1930s. It was wound up soon afterwards. An enterprise that owed its origins to circumstances arising from the First World War finally met its end a generation later, in the Second World War.


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