Midland Bank

Midland Bank plc is one of the leading deposit banks in the United Kingdom. Following its heyday in the first half of the 20th century, when it was the largest bank in the world, Midland flirted with disaster in the 1980s due to an ill-conceived international expansion and then recovered some of its luster after its acquisition by HSBC Holdings plc. The Birmingham & Midland Bank was founded in 1836 as a joint-stock company. The leading figure among its founders was Charles Geach, a 28-year-old Bank of England clerk stationed in Birmingham who quit his job to become the new institution's general manager, which he remained until his death in 1854. Midland's starting capital was a very modest £28,000, but the bank quickly proved to be a successful enterprise. It prospered until 1851, when it acquired Bates & Robins, a Stourbridge private bank. In 1862 it added Baker & Crane, another private bank. These two acquisitions marked the beginning of a long series of amalgamations that would turn Midland into a banking powerhouse by the early years of the next century. Despite its early success, Midland remained a relatively small institution for the next 20 years, its operations limited to Birmingham and the immediate area. But the bank expanded in the 1880s, beginning with the acquisition of Union Bank of Birmingham in 1883. Amalgamation with Coventry Union Banking Company and Leamington Priors & Warwickshire Banking Company followed in 1889, as well as Derby Commercial Bank, Leeds & County Bank, and Exchange & Discount Bank, Leeds in 1890. Edward Holden became Midland's general manager in 1891, and it was under his guidance that the bank experienced its greatest rise in stature. Perhaps the most momentous decision of his career as the head of Midland was also one of his earliest: in 1891, Midland acquired Central Bank of London. In one leap, the bank transformed itself from a provincial institution with a presence limited to the industrial Midlands to one with nationwide ambitions and a strong presence in the financial capital of the world. Midland moved its headquarters to London that year and renamed itself London & Midland Bank (it would drop the first half of the name in 1923, giving it its current form). Midland also took an increased interest in foreign loans and underwriting during this time. After assuming the title of managing director in 1898 and delegating much of his authority to senior executives, Holden traveled to North America and became convinced that his bank ought to do more overseas business. His straightforward manner won him friends in the American banking community, and he once considered opening Midland branches in New York and Chicago. At Holden's instigation, Midland opened a foreign exchange department in 1905 and was the first British deposit bank to do so. His London colleagues criticized the move as unconventional, but it proved so successful that all of Midland's major competitors eventually followed suit. The bank's traveler's check business and its installation of branch offices on Cunard ocean liners in 1920 both stemmed from this interest in foreign business. Sir Edward Holden (he had been made a baronet in 1909) died in 1919. He had started out as a bank clerk and worked in the banking business all of his life; it was a sign of the stature that Midland Bank had achieved during Holden's reign that his successor as chairman was a Cambridge graduate who had served as first lord of the admiralty, home secretary, and chancellor of the exchequer in the liberal government of Prime Minister Henry Asquith. The Rt. Hon. Reginald McKenna left politics in 1917 to become Holden's heir apparent, but remained an outspoken authority on economic matters all of his life and was a noted ally of John Maynard Keynes. Under McKenna, Midland stopped its practice of expansion through acquisition, but only because treasury regulations in the 1920s made mergers virtually impossible. The purchase of North of Scotland Ba