Troubled Caledonian Bank amalgamates with Bank of Scotland in 1907 following secret talks

THE Caledonian Banking Company, which had been established in Inverness in 1838 as a joint stock company, merged with the Bank of Scotland in July following a series of secret negotiations.

In its early years, the Caledonian enjoyed considerable growth, establishing branches across the entire north of Scotland and serving customers consisting mainly of farmers, Highland gentry, fishermen, whisky distillers and grain factors. In 1847, it built a new head office in Inverness High Street, to the designs of Mackenzie and Matthews.

But by the 1880s, it started to go into decline due to a series of factors including the collapse of the City of Glasgow Bank.

Its lending and investment controls were not particularly robust and loans advanced to build some Highland distilleries at the turn of the century would probably not have been granted by more conservative banks in Edinburgh and Glasgow. There was a further blow in 1902 when the Scottish India Coffee Company of Madras Province went into liquidation, leaving the Caledonian Bank with a debt of £30,000.

By 1907, its reserves were down to £195,000, with net profits barely above £12,000.

The bank's directors had approached the Bank of Scotland the previous year requesting an amalgamation which was approved in July 1907.

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