| Code | DS/UK/203 |
| Corporate Name | Edward Bates & Sons Ltd |
| Dates | 1839 - 1977 |
| OtherFormsOfName | EBS; Allied Arab Bank (1977 - ) |
| Activity | Edward Bates & Sons (EBS) was founded in 1839 and involved in East India trading and shipping. In 1967 EBS become a wholly-owned subsidiary of Edward Bates & Sons Holdings (EBH). EBS had also requested authorised bank status, but did not gain this until December 1973.
The EBH group failed in May 1976. EBS, the banking subsidiary, had only been operating as a fully authorised bank since 1972, having received an injection of capital and management when the Brandt family sold their minority interest in William Brandts and Sons to Grindlays. EBH suffered losses in the Welfare Insurance Company which had been an early acquisition and was affected by a loss of confidence in the early stages of the secondary banking crisis. As a result, EBH had been obliged to sell the best of its shipping loans to Barclays Bank. The losses from Welfare had been largely made good by an injection of capital by the First Arabian Corporation.
The Bank of England became concerned about the quality of the shipping and property portfolios early in 1976 and matters came to a head in the spring of that year when its statutory accounts were being prepared. An investigation conducted by Hambros showed the group to be insolvent and again the Bank gave support to maintain confidence in the UK and overseas, in the light of the Arab shareholding. The Bank's support was in the form of a loan facility but it was understood that by giving the facility and allowing the company to continue to trade, the Bank would make good any asset deficiency. It was agreed that the First Arabian Corporation would meet its obligation to the extent of 25% of the deficiency, although this obligation was actually met by another company owned by Sheikh Kamel Adham.
Day to day control of the group was put immediately into the hands of Price Waterhouse, with assistance from Hambros Bank, and they began running down EBH's affairs. It was decided that in the interests of public, particularly Arab, confidence, a solution should be found which would allow the banking company to continue to trade. Long negotiations to form a new shareholding group followed and it was eventually agreed that the Bank would establish and own a realisation company, EBS Investments Ltd (EBSI), which would acquire all the assets and liabilities of the group which the new shareholders did not wish to retain. EBSI eventually purchased the majority of the loan book of EBS and all the other subsidiary companies of EBH group. EBH was put into liquidation after the institutional holders of its loan stock issue agreed to accept a part repayment of their claims. The banking company, EBS, was acquired by a group of new shareholders, the principal of whom were Barclays Bank, H E Mahdi Tajir and Sheikh Kamel Adham, and the company was renamed Allied Arab Bank.
By 1983, the realisation programme had been brought to a successful conclusion and the Bank began to consider proposals for the staged winding up of EBSI's subsidiaries and eventually EBSI itself. |
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