200 YEARS OF SAVINGS BANKS: A STRONG AND LASTING BUSINESS MODEL FOR RESPONSIBLE, REGIONAL RETAIL BANKING PERSPECTIVES 63 September 2011 200 YEARS OF SAVINGS BANKS: A STRONG AND LASTING BUSINESS MODEL FOR RESPONSIBLE, REGIONAL RETAIL BANKING The findings, interpretations and conclusions expressed in this paper do not necessarily reflect the views of WSBI (World Savings Banks Institute) or ESBG (European Savings Banks Group). Neither WSBI nor ESBG guarantee the accuracy of the data included in this work. The material in this publication is copyrighted. TABLE OF CONTENTS Foreword 7 Chapter 1: Savings Banks: From an Idea to an Institution 9 Henry Duncan and the Savings Bank Movement in the UK 11 Michael Moss, Professor of Archival Studies, University of Glasgow Savings and Economic Development: Sweden in the 19th Century 27 Enrique Rodriguez, Professor at the Center for Banking and Finance and Senior Vice-President of Swedbank, and Mats Andersson, Archivist, Swedbank Savings Banks in Portugal: Origins and Attributes 49 Pedro Sameiro, Secretary General, Montepio Chapter 2: Savings Banks: A Banking Model Worldwide 57 Why Does the U.S. Have a Weak Mutual Savings Bank Sector? 59 R. Daniel Wadhwani, Assistant Professor, University of the Pacific The First Savings Banks in Latin America: Cuba and Puerto Rico 87 (1840-1898) Angel Pascual Martinez Soto, Professor, University of Murcia Savings Banks in the Asia-Pacific Region: A History 107 of Development Pui-Tak Lee, Research Officer, Centre of Asian Studies, University of Hong-Kong Development and Diffusion of Savings and Savings Banks 125 in China: A Historical Perspective Pui-Tak Lee, Research Officer, Centre of Asian Studies, University of Hong-Kong Do savings banks differ from traditional commercial banks? 141 Prof. Giovanni Manghetti, Chairman, Cassa di Risparmio di Volterra 5 6 FOREWORD This is a report on the “200 Years of Savings Banks: A Strong and Lasting Business Model for Responsible, Regional Retail Banking” conference held in Edinburgh on 10 June 2010. The conference focused on the past, present and future of savings banks. In 1810, Reverend Henry Duncan opened a savings bank in his small parish in Ruthwell (Dumfries, Scotland). Two hundred years later, the Edinburgh conference celebrated the savings bank in Ruthwell as a model for modern savings banks and retail banking institutions that continue to cater to the needs of European citizens, small and medium-sized businesses and local authorities, and have evolved into dynamic financial institutions that represent one-third of the current retail banking sector. Chapter 1 of this report retraces the development of savings banks on the European continent. The article by Prof. Michael Moss, author of a history of savings banks in Scotland, focuses on Henry Duncan and the development of the savings bank model in the United Kingdom. Two case studies of savings banks follow: Prof. Enrique Rodriguez and Archivist Mats Andersson focus on Sweden, and Montepio Secretary General Pedro Sameiro focuses on Portugal. Chapter 2 explores how savings bank ideals and principles have spread all over the world. The institutions assumed different forms but share the notion that banking is a tool for all and not a privilege for the few. The report includes research by R. Daniel Wadhwani, Assistant Professor at the University of the Pacific (USA), on the development of savings banks in North America, followed by Martinez Soto, Professor at the University of Murcia, who writes about the proliferation of savings banks in Latin America, particularly Cuba and Puerto Rico, and in the Philippines. Lastly, Prof. Pui-Tak Lee highlights the development of savings banks in China, Japan and Korea. 7 8 In conclusion, Prof. Giovanni Manghetti reflects on savings banks in the current financial crisis and elaborates on risks and future opportunities. The report aims to stimulate and encourage research on the development of savings and retail banks all over the world. I hope this publication will be a source of inspiration for further research. Chris De Noose ESBG-WSBI Managing Director CHAPTER 1: SAVINGS BANKS: FROM AN IDEA TO AN INSTITUTION 10 [...]... investments but also fuelled the consumption of the first manufactured products For many years, savings banks acted unaware of their importance in capital formation and economic development One could say with some exaggeration that savings banks in Sweden ignored that they acted as banking institutions until 40 years ago But, indeed, savings banks were crucial to the rationalisation and mechanisation of agriculture... the creation in 1948 of the National Health Service and a costly programme of nationalisation of essential services and industries Against this background the whole savings movement had no alternative but to return to the interwar rhetoric of saving for future consumption – for a purpose, particularly the purchase of household goods and for holidays and recreation The Oxford Savings Bank was typical in... deserting their land and new land was being farmed In 1839, the statutes of a new savings bank in southern Sweden declared that loans should be offered to small-scale farmers, making it the first to establish loan-granting as a savings bank service This generated a wave of new savings banks During this period, we also find a particularly interesting reason for the increase in the number of savings banks In... the day of their marriage with the interest and premiums proportional to the amount” With wartime inflation running high, Patrick Colquhoun, a stipendiary magistrate in London, expanded on these ideas by outlining a scheme for a National Deposit Bank for Parochial Savings managed and guaranteed by the government The bank would be a powerful force for social change and “unquestionably give a new and. .. effectively as a form of current account There were those who rejected a Keynesian explanation for a decline in savings ratios during periods of austerity and preferred to blame Edwardian Britain’s extravagant spending on luxuries and amusements 21 Many in the savings bank movement clung to the old rhetoric that for most families thrift was an essential virtue that safeguarded health and happiness Such ideas... Nicholas Goodison, Chairman of the TSB, to write a history of the movement, which was published by Weidenfeld and Nicolson in 1994 as An Invaluable Treasure: A History of the TSB In 2000 he published a history of Standard Life, the Edinburgh life assurance company, which had similar values to those of the savings bank movement He is a member of the board of the National Archives of Scotland and of the Advisory... the reform For a long time, loans with personal securities were the predominant type from savings banks – with the exception of the largest banks, where mortgage loans and loans with other non-personal securities have always been of great importance Because of the saving bank’s philanthropic and patriarchal nature, and because its loans were small, borrowers and guarantors were trusted more than real... region, as a rule, are used in that very region This has enabled savings banks to enter new sectors, in accordance with local needs, to develop local industries, thus helping to improve regional balance From the start, Swedish savings banks operated as independent banks Before the Second World War, and particularly before 1892, strong central governance and uniform performance and credit-granting standards... crisis and liquidity and management problems The government named Skogman head of one of the most important banks, and in 1817 he was appointed secretary of the committee charged with resolving the banking crisis, among other tasks He soon was named minister of finance and trade, and towards 1830 he was undoubtedly the government’s key figure His 1819 paper compared experiences in Scotland and England of. .. of depositors, amalgamated with the Annan Savings Bank that eventually was acquired by the Royal Bank of Scotland 20 By the mid-1880s attitudes were beginning to change, with social commentators and philosophers, such as T H Green, arguing that personal freedom could only be achieved through a degree of state direction and control and by finally laying to rest the notion that the poor had a marginal . 200 YEARS OF SAVINGS BANKS: A STRONG AND LASTING BUSINESS MODEL FOR RESPONSIBLE, REGIONAL RETAIL BANKING PERSPECTIVES 63 September 2011 200 YEARS OF SAVINGS BANKS: A STRONG AND LASTING BUSINESS MODEL. Rodriguez, Professor at the Center for Banking and Finance and Senior Vice-President of Swedbank, and Mats Andersson, Archivist, Swedbank Savings Banks in Portugal: Origins and Attributes 49 Pedro Sameiro,. Cassa di Risparmio di Volterra 5 6 FOREWORD This is a report on the 200 Years of Savings Banks: A Strong and Lasting Business Model for Responsible, Regional Retail Banking conference held in