Eastern Bank Ltd

The Eastern Bank Limited was founded in London as a limited company at the end of 1909 as a new Eastern 'exchange' bank, to help finance trade with the East. As well as the Head Office in London, which exercised close day-to-day control, it had two overseas branches, established in 1910 in Bombay and Calcutta. From the start the Bank had a number of powerful institutional shareholders, including the Eastern trading house, E D Sassoon.

A Baghdad branch opened in 1912, but was closed by the Turks at the start of the First World War. However, as British power increased in the region, the Bank profited greatly from British official support, and from the Banking business of the Government of India. The Baghdad branch was reopened, and further branches in Iraq were opened at Basra (1915), Amarah (1916), Mosul (1919) and Kirkuk (1926). There was also a branch at Hillah from ca.1919 to ca.1925.

Further branches in the Indian sub-continent opened at Colombo, Sri Lanka (1920), Madras (1922) and Karachi (1923). A branch in Singapore opened in 1928.

After the First World War the Bank faced stiff competition in India from older-established British banks, and needed to diversify. It thus became the pioneer of modern banking in the small sheikhdoms on the Arab side of the Gulf, British protectorates which lacked modern financial institutions. The first such branch opened on the island of Bahrain in 1920. This was a logical development because of the Bank's existing strength in Bombay, which had close trading links with Bahrain. The British authorities welcomed this initiative, and the Bank remained the only bank on the island until 1944.

The economy in Bahrain, based on pearl diving, was virtually destroyed in the late 1920s when the Japanese discovered how to make artificial pearls, but was saved in the early 1930s by the discovery of oil in the Gulf. By the late 1930s the Bank was very profitable from meeting the needs of the oil industry.

However the vigour of the 1920s was not followed through, and between 1928 (Singapore) and 1947 no new branches were opened. The effects of this inaction were particularly serious in the Arab Gulf, where the Imperial Bank of Persia (later the British Bank of the Middle East) secured monopoly agreements during the 1940s with the rulers of several important sheikhdoms, in particular Kuwait. Eastern Bank's room for expansion among the Gulf states was thereafter severely limited.

Piecemeal expansion after the Second World War, in areas of South East Asia and the Indian sub-continent in which the Bank already had a presence, led to new branches in Penang, (Malaysia) (1947, closed 1958), with a sub-branch at Butterworth (1948, closed 1957); Kuala Lumpur (1948), Chittagong (East Pakistan, now Bangladesh) (1948, closed 1958); and Cochin (India) (1953, closed 1958). New branches were also opened at Aden (1951), with a sub-branch at Steamer Point (1953, closed 1958), and further branches or sub-branches in the hinterland of Aden at Ma'alla (1963, closed 1968) and Sheikh Othman (1964), and in Yemen at Mukalla (1955) and Seiyun (1962).

A branch was also opened in Beirut (1956), as were sub-branches in Baghdad: at Southgate, also known as Rashid Street (1955); and Alwiyah (1962). Otherwise expansion up to the mid 1960s was confined to the Arab Gulf, including Doha (Qatar) (1950); Sharjah (1958); Abu Dhabi (1961); Al Ain (Buraimi, Abu Dhabi) (1962); and a sub-branch at Muharraq (Bahrain) (1964).

During the 1960s the Bank suffered from political changes in several Arab countries. For example on 14 July 1964 all the branches in Iraq were nationalised, and those at Aden, Mukalla and Sheikh Othman were nationalised on 28 November 1969. At the end of the 1960s, therefore, there was a further spate of branch openings, especially in the Gulf states, which were seen as offering greater political stability: Abu Dhabi (Sheikh Hamdan Avenue sub-branch, 1970); Bahrain (sub-branches at Umm al Hassam, 1967 and East Rifa'a, 1970); Dubai (1967), with a second branch in Dubai at Deira (1968); and Muscat (1968), with a sub-branch at Muttrah (1970). A sub-branch was also opened at Bowbazar in Calcutta (1969).

During the 1930s and 1940s Barclays Bank (DCO) had built up an interest in Eastern Bank's shares. It appears that it did this both as an investment, and to facilitate business with Arab customers, in which Barclays had been handicapped because of its strong Jewish customer base in Palestine. In 1939 the Chairman of Barclays (DCO) joined the Eastern Bank board, and by 1957 Barclays Bank and the Sassoon family between them held 65% of the shares and effectively owned the bank

In 1957 Eastern Bank was seriously weakened by heavy losses in Bombay and Calcutta, much of it the result of business dealings of a single customer, Haridas Mundhra. In the same year Barclays and the Sassoon family sold their controlling interest in the bank to Eastern Bank's old rival, Chartered Bank. Chartered Bank at that time faced increasing difficulties with national governments in its traditional areas of China, India, Burma and Ceylon, and was looking for new areas of business. Eastern Bank's Gulf business was immensely attractive.

Eastern Bank remained a wholly-owned subsidiary of Chartered Bank, but with autonomy, from 1957 until 1971. In that year it was absorbed by Chartered Bank and its name disappeared.

Eastern Bank's sole London branch, and Head Office, was at 9 Fenchurch Avene, 1910; 4 Crosby Square, 1911-24; and at 2-3 Crosby Square, 1925-71.