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First bank in the world and the oldest bank in the world
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It is generally accepted that the first bank in the world was established at the peak of the Italian Renaissance in Siena in the fifteenth century. At that time Sienna was part of the Republic of Florence which was one of the most powerful financial centers in Italy. The oldest bank is called Banca Monte dei Paschi di Siena and in its original form was created in 1472.
However, there is some disagreement about which is the oldest bank in the world, for two reasons. On one hand, the definition of ‘banking’ is an important separator, since the current format of commercial banking was preceded by merchant banking in the early days of European finance by several centuries. Strictly speaking, the oldest bank in the world, without distinguishing between commercial and merchant banks, is the Berenberg Bank in Hamburg. Founded in 1590 in what was then the German part of the Holy Roman Empire, it is the oldest bank of any kind operating continuously with the same legal identity. Interestingly it has been owned and controlled continuously by the same family from the time of its foundation – more than 400 years!
Because of the change in the structure of banking during the two centuries following the founding of the Siena bank, Banca Monte dei Paschi di Siena was reformed into its current form in 1624. For this reason, there is some disagreement as to whether Berenberg or Banca Monte dei Paschi di Siena should be ranked as the first bank in the world.
The 5 oldest merchant banks established after the foundation of Berenberg in 1590 came inside a small window of just 25 years starting in 1664. This was the period in which England established itself as the major power in the world, colonizing North America, Ceylon, Southern Africa and establishing the major trading routes under the control of its Navy. So of the 5 oldest banks in the world, three are English banks. First was established in 1664, known as Child & Company. The bank still exists, as a subsidiary of the Royal Bank of Scotland. Following that in England came C. Hoare & Company, in 1672. It is the oldest privately owned bank. Last of the five is Barclays Bank, founded in 1690. It still operates under that name and is one of the major UK commercial banks to this day.
In 1668, the Kingdom of Sweden established Sveriges Riksbank, which still operates to this day, but in the form of the Swedish central bank, and it ranks as the oldest central bank in the world. In 1674, another bank in the Holy Roman Empire was created in the Free City of Frankfurt, known as the Metzler Bank.
Banking as we know it today really got started in the period when Italy, especially the Italian republics of Genoa, Florence, Milan, Naples, Rome and Venice, which were established in the Middle Ages, became the powerhouses of European commercial finance and trade in the fifteenth century.
Depending on your definition of what a bank is, there is can be some disagreement as to whether the oldest bank in the world was the Banca Monte dei Paschi di Siena, established in Sienna in 1472, or was the Berenberg Bank, founded in 1590 in Hamburg, which was then the German part of the Holy Roman Empire, that had conquered the Italian republics.
So, the argument about which is the oldest bank in the world, compared to which was the first bank, depends on your definition of what is a ‘bank’. What is now generally understood as a bank is a commercial bank that offers financial services to the general public and to companies.
Commercial banking was preceded by merchant banking in the early days of European finance by several centuries. Strictly speaking, the oldest bank in the world, without distinguishing between commercial and merchant banks, is the Berenberg Bang, while the kudos of the first bank can go to Banca Monte dei Paschi di Siena.
Seventeenth Century banks
The next batch of banks established after the foundation of Berenberg in 1590 came inside a small window of just 35 years starting in 1664. This was the period in which England established itself as the major power in the world, colonizing North America, Ceylon, Southern Africa, India and establishing the major trading routes under the control of its Navy.
Child & Co. was established in the UK, starting as a goldsmith-banker in 1664 and is generally regarded as the third oldest bank in the world and is the oldest bank still operating in the country. It actually predated the Bank of England which was incorporated by Parliament in 1694.
C Hoare & Co is a small private bank and the second oldest located in the United Kingdom. It was founded in 1672 and is still owned and managed by the same family who are descendants of the founder.
In 1674, a bank was created in the Free City of Frankfurt in the Holy Roman Empire, known as the Metzler Bank. To this day, Metzler Bank operates as a merchant bank providing stockbroking and consultancy services to high-end wealthy customers and corporations.
Most well-known bank in this group is Barclays, founded in 1690 as another goldsmith-banking partnership. It still operates under that name. Barclays operates in over forty countries (mainly the former English empire lands). It is the fifth largest bank in Europe by total assets and employs over 80,000 people.
In 1692 Coutts Bank was founded in London by a Scottish goldsmith-turned-banker. Coutts currently is owned by the NatWest banking group and forms part of its wealth management division servicing high net wealth customers.
Bank of Scotland was established by the Parliament of Scotland in 1695 to create a stable banking system in the Scottish Kingdom to support Scottish business, and with a monopoly on public banking in the country. Unlike the Bank of England, it was prohibited from lending to the government without parliamentary approval. In 2008, because of the banking sector’s implosion, the bank had to be rescued, and is now a part of Lloyds TSB Group.
So of these old 17th century banks, five out of six are English banks. It is even possible to add one more bank to the list, which is the Madras Bank, established by British traders in India in 1683. In 1843 the bank merged with the Bank of Madras and it presently trades as the State Bank of India.
Looking wider than banks providing services to the public, there is the Sveriges Riksbank, established in 1668 by the Parliament of the Kingdom of Sweden as a way to limit the power of the King. It still operates to this day, but in the form of the Swedish central bank, and it ranks as the oldest central bank in the world.
After that comes the Bank of England, founded in 1694. Widely known as the Old Lady of Threadneedle Street (the location of its original headquarters), it is the central bank of the United Kingdom and is the model on which most modern central banks have been based.
First bank in the world
The first recorded bank in the world was the Bank of Babylon, which was established in ancient Mesopotamia in the 18th century BC. The Bank of Babylon was a temple that served as a financial institution, and it was responsible for the issuance of loans and the storage of valuable items. The ancient Greeks also had financial institutions that functioned as banks, such as the Temple of Apollo at Delphi, which accepted deposits and issued loans.
The modern concept of a bank, however, developed in medieval Italy with the creation of the Medici Bank in 1397. This bank was the first to offer banking services to the general public and to engage in a wide range of financial activities, such as currency exchange, lending, and money transfer.
History of banking
The history of banks dates back to ancient civilizations, where people used to deposit their valuable items with temples or palaces for safekeeping. These institutions gradually evolved over time and developed into the banks we know today.
The concept of banking as we know it today can be traced back to the Renaissance period in Italy, where the Medici family, who were merchants and bankers, played a significant role in the development of modern banking practices. The Medici bank, which was founded in 1397, was the first bank to use double-entry bookkeeping and to issue letters of credit, which were important innovations that allowed the bank to expand its operations and increase its reliability.
In the 17th and 18th centuries, banks began to emerge in other parts of Europe, such as the Bank of Sweden and the Bank of England, which were established in 1668 and 1694, respectively. These banks played a crucial role in financing wars and other government activities, as well as in supporting trade and commerce.
In the 19th and 20th centuries, banks continued to evolve and expand their operations, with the advent of new technologies such as the telegraph, which allowed for faster communication and easier transfer of funds. Today, banks play a vital role in the global economy, providing a range of financial services including loans, deposits, and investments.
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