Riding on a Roller-Coaster: The Rise and Decline of the Anglo South American Bank

Abstract

The collapse of the Anglo South American Bank in the early 1930s was one of the largest banking failures in Britain between the 1880s and 1970s. This paper examines the firm’s volatile history from its foundation in 1889–1890, with an emphasis on its international expansion in the 1910s and 1920s, before it was forced to appeal to the Bank of England for support in 1931. Its collapse is most obviously explained by its over-commitment to the troubled nitrate industry; most of its non-performing loans and advances related to such firms. However, the problems had begun before that, as a result of the expansionist policy followed by Robert Hose, its chairman and managing director, and the poor integration of his acquisitions. Through the 1920s the bank failed to rationalise its operations, paid high dividends and experienced declining liquidity. It seems clear that management failed adequately to analyse the weaknesses of their strategy, and misplaced their confidence in Chile. Despite the rescue organised by the Bank of England, recovery proved impossible in the conditions of the early 1930s. The bank’s increasing difficulties eventually resulted in the sale of its depleted assets to the Bank of London and South America in 1936.