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The need for a new bank

The bank’s foundation was rooted in the banking crisis of 1857 during which both of the Isle of Man’s banks – Bank of Mona (est.1849) and Dumbell & Howard (est.1853) – stopped payment. The island’s residents were shocked by the vulnerability of its existing banks and discussions were held about the wisdom of establishing a new and safer bank. The supporters of this idea realised that a better bank had to be founded on limited liability principles, so that shareholders could not be held responsible for the company’s debts beyond the value of the shares they owned.

The bank's promoters

Unfortunately the Isle of Man did not yet have a law which allowed the establishment of limited liability companies, but those that supported the idea of a new bank were determined to push through the necessary legislation. In 1862 the British parliament passed an Act allowing limited liability. William Callister, a member of the House of Keys, and Mark Hildersley Quayle, previous acting governor, influenced the island’s new governor, Henry Loch, to follow its example and introduce legislation in 1864 which would also allow the formation of limited liability companies on the Isle of Man.

Callister did not wait for the new law to be passed. Instead, on 27 January 1865, he presided over a meeting with four other would-be bank promoters – Mark Hildersley Quayle, William Moore, Henry Noble and Samuel Harris – held at lawyer Harris’s Douglas offices. There it was agreed ‘that the meeting is of opinion that it is desirable forthwith to establish an Insular Bank with limited liability’ and ‘that such bank be called the Isle of Man Banking Company Ltd.’ Additionally the five men decided that the company would have a capital of 120,000, divided into 12,000 shares, a head office in Douglas and branches in a number of towns across the island.

New legislation

The new company law had, however, met with strong opposition in the House of Keys and for a while it seemed the measure might be defeated. Undaunted, Quayle wrote to the other promoters suggesting that the new bank was instead established in Liverpool under the English Act until Manx legislation was passed. In the event this did not prove necessary. By May it was clear that a slightly amended bill would certainly be passed by the Manx legislature. The new Isle of Man Companies’ Act finally became law on Tynwald Day, 5 July 1865.

Setting up a bank

Meanwhile, the promoters had been busy making preparations to set up their new bank. There was much to be done. A provisional committee was formed, articles of association prepared and a prospectus issued inviting applications for shares that would be allotted as soon as the limited liability act was passed and the company incorporated. One of the promoters, Samuel Harris, offered a home for the new bank in property he owned on Athol Street.

The share issue for the proposed bank was quickly oversubscribed. The 227 subscribers who were fortunate enough to be allocated shares were mostly local people who supported the idea of an island bank; men and women of standing and influence, landowners, farmers, trades people, businessmen, clergy, ship owners, doctors and lawyers. On 11 August 1865 Callister wrote to a fellow promoter: ‘There never was such a body of shareholders, connected with the Isle of Man, united together before’. The subscription list, published in local newspapers, did much to increase local confidence in the new bank.

Final preparations

The promoters realised the issue of banknotes would also be crucial to the new bank’s success. Not only was note issue profitable, but the circulation of notes across the island would act as a fine advertisement and increase awareness of the new bank. The design of the notes, featuring a view of Douglas harbour and the triune, was carefully considered and the printing of 30,000 notes was ordered.

In August advertisements were placed in newspapers as far afield as Manchester, Edinburgh and Carlisle to attract a professional manager to run the new bank. In the event a Douglas man, John Karran, was selected. Later a cashier, ledger keeper and three clerks were also appointed.

Meanwhile, true to the original intention of opening branch offices to serve communities across the island, arrangements were made to open branches in Ramsey, Castletown and Peel by appointing agents and identifying suitable premises.

Registering the company

On 26 October 1865 Isle of Man Banking Co was finally registered as a limited company under the new Manx Companies Act. John Karran, its new manager, hurried to the very first meeting of the bank’s board on that same day, clutching a copy of the just-issued certificate of incorporation. The bank was in fact the very first company to be recorded on the island’s register of limited companies and still retains that original certificate of incorporation. William Callister, who had played such a prominent role in the bank’s foundation, became the bank’s first chairman, and held that position for the next 7 years.

Open for business

On 1 November 1865 we opened our doors for the first time and served our very first customers. The bank’s arrival had been eagerly awaited and on the opening day alone we received deposits of 3,000 (worth over 250,000 today) from islanders opening bank accounts with us. Thereafter our bank went from strength to strength.

So it was that the vision and determination of just a handful of Victorian Manxmen created an enduring banking institution that has become so important a part of Isle of Man life.