Clock, 1961

Britain’s big banks received a wake-up call in the early 1950s. This clock was issued as a promotional item by one of the companies causing the alarm.

As prosperity replaced austerity in post-war Britain, banks began to realise that they were losing business to new firms offering finance through hire purchase. HP was particularly popular with the less well-off, who could use it to buy expensive items such as cars, furniture and electrical goods. Additionally, new opportunities were opening up in larger-scale finance for industry. The companies serving both sectors did so using funding from their banks, but the banks themselves were not directly involved.

Several banks began to see hire purchase as a promising growth area, and became interested in merging with hire purchase providers. For their part, the HP companies saw that the big banks could give them access to many new potential customers. In consequence, cross-sector mergers and alliances became popular. In 1958 North Central Finance, producer of this clock, was acquired by National Provincial Bank. The company has gone from strength to strength ever since, and now operates as Lombard, the asset finance arm of NatWest Group.

all the large banks had acquired stakes in HP companies

Hire purchase flourished in Britain in the interwar years, increasing twenty-fold in volume. By the 1930s it had the formal blessing of the Bank of England, and accounted for 50% of the consumer credit market. HP was still in its infancy, but a whole generation of consumers was growing up barely aware that banks even lent money.

NatWest Group constituent Commercial Bank of Scotland was the first bank to move into HP, when it acquired the Scottish Midland Guarantee Trusts in 1954. It was the pathfinder. A few years later, with inflation under control and sterling steady, Britain’s economy was on the up. Prime Minister Harold Macmillan told us we’d ‘never had it so good’. In 1958 the Chancellor slashed the bank rate and relaxed lending controls, and within a month all the large banks responded to the new conditions by acquiring stakes in – or ownership of – HP companies, which had been flourishing beyond the reach of the government’s restrictions.

National Provincial Bank had been North Central Finance's bank since it was founded in 1861, so it knew its business and profitability well. The two merged in 1958. North Central kept its own identity but advertised its services in every National Provincial branch, thereby gaining access to many more potential customers. North Central went on to develop its business in motor and consumer goods finance and to explore brand-new areas like leasing and factoring. Both businesses thrived on their connection.