Dictionary of Sydney

The Dictionary of Sydney was archived in 2021.

Bank of New South Wales

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Bank of New South Wales

Although Sydney Town was initially set up as a gaol, its nature gradually changed as convicts served out their sentences and more free settlers began to arrive: it became more of a 'frontier town' and gradually various institutions of trade and commerce began to emerge.

Due to changing economic imperatives, one of the earliest needs was for a bank, to finance overseas trade and to fund local economic activity. With no stable monetary system, such things as rum, promissory notes, British Treasury bills, foreign coins, and barter had all been used as currency; this encouraged financial instability.

Aware of the need to have a stable financial institution to underpin the emerging economy, in February 1817 Governor Macquarie signed a charter of incorporation which establish the Bank of New South Wales. This was Australia's first financial institution – and it still operates today, although with a changed name.

The commercial establishment

The Bank's shareholders, and first board of directors, included many of the infant colony's commercial and administrative establishment: Macquarie's secretary John Thomas Campbell, D'Arcy Wentworth, and William Redfern were among them. It leased premises in Macquarie Place, Sydney, from Mary Reibey, an ex-convict turned businesswoman, and opened for business on 8 April 1817. By 1822 the bank had moved to more salubrious premises in George Street

It did not however, act as a savings bank, and although it had lent in mortgages from the beginning, this lending function was minimal, because of the uncertainty of the status of the land titles offered as security. In its early years it was often disparagingly referred to as 'the convicts' bank', because so many of its shareholders were ex-convicts, including Redfern, Wentworth and Reibey. It was also criticised for not doing enough to assist the expansion of the colony, particularly lending to landowners.

But it survived competition from the 1820s and the impact of the depression of the 1840s, an event that devastated the colonial economy. Then, after gold was discovered in New South Wales and Victoria in 1851, the bank began a major expansion, setting up agencies and gold-buying agents on every new diggings and in the emerging country towns. From a single office in Sydney in 1850, it grew to a network of 37 branches in Australia and New Zealand by 1861. It set up its first 'branch' in Sydney on the corner of George Street West (Broadway) and Regent Street in Chippendale in 1860. With cautious management in the period of the 'long boom' from the early 1860s till the late 1880s, the bank prospered, despite a massive increase in competition from dozens of new banks, all able to take advantage of the bountiful economic conditions.

However, with the depression of the 1890s, many of these banks collapsed, and the various colonial economies went into a downward spiral, only emerging from the chaos towards the end of the first decade of the twentieth century. The bank continued its growth, despite the intervention of the Commonwealth government into the banking field, opening the Commonwealth Bank in July 1912. The new bank offered both savings and general (trading) bank business, with the security of a Commonwealth government guarantee, at a time when no other institution in Australia was involved in both of these traditionally separate areas of banking.

Towards Westpac

The Bank of New South Wales successfully rode out the Depression of the 1930s, which saw more Australian banks collapse, and went on, in the postwar era, to adapt to the changing demands of increasingly globalised banking. One response was to continue a pattern of expansion by merger which had begun in 1927, and when the bank merged with the Victorian-based Commercial Bank of Australia Ltd in 1982, it also took the opportunity to change its name to Westpac Banking Corporation: Westpac was a shortened form of Western Pacific, a name that the board thought more truly reflected its prominent place in this region. Since the Bank had been incorporated in 1850 under its own 'Bank of New South Wales Act' (separate from companies legislation), the new name required an amendment to the old Act.

The Bank of New South Wales (Change of Name) Act in 1982 created Westpac, which, by its increase in size through merger, consolidated its position as Australia's biggest banking group. In the intervening years, and despite deregulation and increased global competition in financial markets, Westpac today is one of the 'four pillars' of the Australian banking system, largely due to the Commonwealth government's restrictions on entry of foreign banks.


Westpac website, 'Our history', http://www.westpac.com.au/internet/publish.nsf/Content/WICP+our+proud+history, viewed 18 February 2009