Banking is old.
Roots in Mesopotamia old.
Some of the oldest banks are still operating today. But as the European Central Bank’s latest “stress test” shows, not all are in the greatest of health.
Here’s a look back at the origin story of the five oldest established banks – where they’ve been, and where they are today:
Just as the Salem Witch Trials were beginning in New England, the sixth oldest bank was being established across the pond in Old England, in 1692. The bank itself, needless to say, went through some tough times during the two World Wars, but in 1963 it became the first British bank to be fully computerized. Today, the Royal Bank of Scotland is its parent company, and like many kids, they’ve found themselves in a lot of trouble lately. In 2012, Coutts was fined for not taking sufficient and necessary measures to detect money laundering activities.
Back in 1690 on London’s Lombard Street, John Freame and Thomas Gould began trading as “goldsmith bankers.” This made them cutting-edge: Goldsmith banking in the late 1600s and early 1700s was, in many ways, the predecessors of the banking industry today. They would store gold in their vaults and issue promissory notes on deposits that even collected interest. In 1967, Barclays was one of the first of the UK’s “high street” banks to offer ATMs. Today, however, Barclays continues to be in the spotlight. Recently, a former British senior banker became the first person to plead guilty to, “a single count of conspiracy to defraud in connection with manipulating the London interbank offered rate, or Libor,” according to the New York Times.
Before street numbers existed, businesses were identified by street signs. Richard Hoare, the founder of the bank, traded at the “Sign of the Golden Bottle” in Cheapside, London. Eighteen years later, he moved the offices to Fleet Street, within London city limits, where it still stands today. Back in 1897, the bank had temporary balconies erected to allow customers and workers at the bank to view Queen Victoria’s Diamond Jubilee parade. Today, for the first time in its history, the bank is being run by its first non-family Chairman in over 300 years, Jeremy Marshall.
This bank was established by a pair of Dutch Protestant brothers, Hans & Paul Berenberg, who were forced to flee Antwerp for their religious beliefs. They settled in Hamburg in 1590, where they would go on to establish a business that is still around today. In order to survive World War II, the bank became a holding company and withdrew from the business of active banking. The Chairman of the bank at the time rejected national socialism and wrote in his journal:
“Better a small and decently led state than such a huge empire which Germany is today, lawless, without integrity and governed by robbers and murderers.”
He helped other businesses and anti-Nazis escape. Eventually, he wrote once again on May 3, 1945, when English soldiers entered Hamburg:
“Now the task is to deal with the consequences of the war and gradually try to help the children in building their future.”
Today, Germany’s oldest private bank has now expanded into the UK. And many people continue to be uneasy about the future of economic growth throughout the eurozone, with Germany at the front and center of the stage.
This picture shows the headquarters of the Monte Dei Paschi di Siena bank in Siena, in the Italian region of Tuscany.
The goal of the oldest bank in the world was, as originally stated: “To form loans to the poor or miserable or needy persons,” according to their company history.
By those standards, I would certainly qualify for a loan from them, but this also may be the reason their books aren’t quite up to par according to the European Banking Authority. Monte dei Paschi di Siena, the oldest bank in the world (think: 1472!), failed their stress this past weekend and were subsequently hit yesterday with major losses on its shares. Now they need to come up with 2.1 billion Euros to meet the ECB’s stress test requirements. Whether or not the Italian public will step in and help prop up the bank’s capital shortfall remains unknown.