Trustee Savings Banks in the UK 1810-1995
The Early Years
Set up a bank. Open it between 1pm and 2pm once a week. Do not allow
customers to deposit more than £20 a year. And fine them if they do not deposit
regularly. This may sound like an unlikely business model, but it was how many
of the early savings banks operated. Unlike commercial banks, these were
charitable organisations set up ‘for the advantage of the labouring classes and
the lower orders of society’ to encourage ‘habits of industry, economy and
sobriety among the poor and labouring population’.
It is generally accepted that the savings bank movement began in Scotland in
May 1810, when the Revd Henry Duncan first opened the doors to his parish bank
in Ruthwell, Dumfriesshire. He firmly believed that the poor should be
encouraged to help themselves, by savings for times of ill health, unemployment
and old age.
There had been earlier attempts to encourage the working classes
to save, such as Priscilla Wakefield’s Female Benefit Club in Tottenham, set up
in 1798. However, what set Duncan’s bank apart was that it was run along
business lines: it wasn’t reliant on donations from charitable benefactors in
order to survive.
Rev. Henry Duncan, Founder of the savings
The Ruthwell example was quickly followed elsewhere in Scotland. The idea soon spread south of the border into England and Wales, and, by 1817, over 80 savings banks had been set up.
In Scotland, savings banks could earn interest on their funds by depositing
them with joint-stock and chartered banks. This, however, was not the case in
England and Wales. The situation was resolved in 1817, when Rose’s Act was
passed. This Act allowed the funds of English and Welsh savings banks to be
deposited with the Government, in an account at the Bank of England. The
account was administered by the Commissioners for the Reduction of the National
Debt. In return, the banks received an attractive rate of interest, part of
which was passed on to depositors. The Act had an immediate impact - by 1818,
over 465 savings banks had opened across the UK.
Extract from York County Savings Bank
minute book, 1817.
Trustee and Customers
Although the early banks were run along business lines, they still relied
heavily on the support of their trustees. These trustees, who gave their time
voluntarily, oversaw the running of the bank. They were upstanding members of
the local community, who often came from the ranks of the aristocracy, landed
gentry or clergy.
The customer base of the savings banks was also very different to that of
their commercial counterparts. The banks were aimed at what were termed the
‘industrious poor’ - many of the depositors were artisans, labourers, small
farmers, and servants. They also attracted large numbers of women and children,
unlike the high street banks.
Expansion of the trustee savings bank movement ground to a halt in the second
half of the 19th century. In 1861 the Post Office Savings Bank Act was passed.
Within a year, more than 2,500 Post Office savings banks had been established.
Many of these were in direct competition with existing TSBs: within ten years,
more than 200 of these had been forced to close.
A few years later, in 1886, the movement was rocked once again, this time by
a major fraud. The actuary at Cardiff Savings Bank was found to have embezzled
£30,000. This amounted to a massive 15% of total deposits. The Bank’s trustees
handled the investigation poorly, and enraged depositors by refusing to repay
the money in full. The crisis escalated, with the whole savings bank movement
coming under intense scrutiny.
Sheffield Savings Bank c. 1860
Co-operation and Collaboration
Following the Cardiff fraud, it became clear that a greater degree of
co-operation among the banks was needed. Until now, individual savings banks
had been run independently of one another, each one being very much a local
concern. The first step towards unity was taken in 1887, with the establishment
of the Trustee Savings Bank Association. The Association had two aims: to
protect the interests of depositors, and to increase co-operation among savings
War-Time Savings & Branch Expansion
The savings bank movement continued to expand during the First World War. This
was largely due to the Government’s attempts to persuade people to save more to
support the war effort. During both world wars, savings banks acted as agents
for the sale of government stocks. War savings certificates and defence bonds
also proved popular with depositors.
In 1947 a savings bank mutual assistance scheme was established. This
allowed the richer savings banks to support projects to set up new banks and
lend money to other banks who wanted to expand. Fifty-nine new offices were
opened as a result.
Over the next 35 years, savings banks continued to expand their branch
network and merge with each other. As a result of this consolidation, by the
beginning of the 1970s their numbers had been reduced to 73.
In 1971 the Government set up the Page Committee. Its remit was to review the workings of the savings banks. The TSB Act of 1976 was passed, based on recommendations contained in the Page Report. The Act allowed the savings banks to offer the same range of services as their commercial rivals for the first time.
The Act also created an entirely new regional structure. The 73 savings banks merged into 20 (later 16) regional institutions. These institutions were overseen by the newly created TSB Central Board. The Board took over the regulatory and supervisory powers previously exercised by the National Debt Commissioners and Inspection Committee.
TSB Advert, 1946
Flotation and Beyond
Taking advantage of their new freedoms, the TSBs expanded their facilities
and services. Further reorganisation was needed to keep pace with this growth.
In 1983 the remaining 16 savings banks merged into yet larger regional
groupings: TSB England & Wales, TSB Scotland, TSB Northern Ireland and TSB
Channel Islands. Two years later another TSB Act permitted the group to
restructure, in preparation for its flotation on the London Stock Exchange.
This took place in 1986, and TSB Group plc was created. However, developments
did not stop there. A year later a network of estate agencies was set up, and
Hill Samuel Bank and Target Life were acquired.
1995 marked another milestone in the Group’s history, when it merged with
Lloyds Bank to form Lloyds TSB Group. It produced, what was at the time, one of
the largest forces in UK domestic banking.
The archives of TSB Group, savings banks in England and Wales, TSB Association
and Hill Samuel are held at:
Lloyds Banking Group Archives
2nd floor, 48
London EC1Y 4XX
Tel.: +44 (0)20 7860 5754
The archives of Archives of Scottish savings banks are held at:
University Archive Services
University of Glasgow
Tel.: +44 (0)141 330 5515
The Savings Banks Museum is at: