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Midland Bank/temp History of The Midland Bank Birmingham Midland Bank opened for business in Union Street, Birmingham, England, in August 1836 and was the inspiration 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 homeland 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 banks 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, Bakerand 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. 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 by 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 Midlands 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. 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).At the same time, the bank 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. Midlands 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 banks branch network. Until 1974, Midlands 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 Midlands 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 Dsseldorf, 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 KGaA, 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.
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. The most important innovation during this period was the launch of First Direct in 1989. First Direct pioneered the revolutionary concept of telephone banking, with a person-to-person service available 24 hours a day, 365 days a year. It now offers internet banking as well and serves more than one million customers. First Direct is today the most recommended bank in the United Kingdom. In 1992, HSBC Holdings plc acquired full ownership of Midland Bank. It was one of the largest acquisitions in banking history, giving HSBC the major foothold in Europe that it needed to complement its existing business in Asia and the Americas. Midland was renamed HSBC Bank in 1999 as part of the adoption of the HSBC brand throughout the Group.
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