The Oldest Bank in the World

Banking goes back at least to the first civilization in Babylon, when the priesthood engaged in lending to the citizens. Of course, there were likely types of banking before this, but they would not tend to fall under the modern definition of a bank. Various organizations have engaged in lending and protecting money on behalf of everyday people. Even the Knights Templar, the famous armed forces of the Crusades, offered services to pilgrims that enabled them to keep their money secure. The oldest bank in the world which is still in operation, however, is the Banca Monte dei Paschi di Siena of Siena Italy. It has been in operation since 1472.

The Banca Monte dei Paschi di Siena has been in continuous operation since its founding, over 500 years ago. The organization originally functioned as something of a charity, distributing loans to the poor and taking land as collateral against those loans. This bank is a very active one in Italy today. It has almost 2,000 branches throughout the country and almost 5 million people rely on the bank for their needs.

The Banca Monte dei Paschi di Siena wasn’t formed based on the commercial model of banking common today. The charging of interest has always been controversial among religious communities. In the era when the Banca Monte dei Paschi di Siena was founded, the Catholic Church was the dominant political force in Europe and, oftentimes, various orders of monks were the advocates of the poor. The Franciscans were the impetus behind the establishment of the bank and originally intended it as in institution that would make loans to the poor without charging interest. Today’s banks, of course, are commercial institutions and work to make a profit for their services. The Banca Monte dei Paschi di Siena of today is a commercial organization and one of the most successful banks in Europe.

The world would have to wait over 100 years before another bank similar to those of the modern model was founded. The Barenberg Bank of Hamburg, Germany was founded in 1590 and is running strong today. At the time of its founding, Hamburg was a major hub of business and was enjoying a booming economy. This economy drew people from all over Europe, including the founders of the bank, the Berenberg brothers. Hans and Paul Berenberg were businessmen, cloth traders who imported and exported from Hamburg. Their bank is located all over Europe today and is the oldest private bank in Germany.

London is one of the most important business centers in the world and, not surprisingly, it is home to the third oldest bank in the world, as well. C. Hoare & Co. has been in operation as a private bank since 1672. The bank has survived as a family-run institution since its founding. It is well known for its distinctive symbol, the vessel used by smiths to mint gold coins before paper currency became the norm.

Those familiar with US history will remember the era of “wildcat” banks that dominated the economic system before a regulated currency system was put into place. Throughout history, banks had produced their own currency which may or may not have been redeemable at a particular business or even at another bank. The Bank of Scotland, formed in 1695 in Halifax, was among the first to print such currency. This bank was founded specifically for the people and remains in business today, despite early attempts to drive it out of business by the Royal Bank of Scotland and the Bank of England. The company merged with Halifax Bank in 2001 and is now known as Halifax Bank of Scotland or HBOS for short.

The United States is one of the most powerful economies in the world and its banking history starts with The Bank of New York, founded in 1784. Alexander Hamilton, a former President, was involved in the bank’s creation. The bank opened on the heels of retreating British troops in Lower Manhattan.

The Bank of New York is intertwined with American history in many regards. The New York Stock exchange is often used as the barometer of economic health worldwide. Of the uncountable numbers of stocks that have been traded since the stock exchange’s founding in 1792, the Bank of New York was the very first. The bank merged with Mellon Financial Corporation in 2007 but remains in operation today.

Banking is one of the oldest commercial endeavors practiced by modern societies. While these banks may constitute some of the world’s oldest, the tradition of lending money, for profit or without profit, is much older. A bank’s function, in many regards, is to allow these services to be utilized by anyone, a true market innovation compared to when such transactions were only the purview of nobility.