This week I have taken a trip down banking memory lane reading a book that perhaps I should have read when I tried to study for my Chartered Institute of Banking exams in the late 1980’s.
Unfortunately I didn’t get very far with my studies so I never had the opportunity to display the letters ACIB after my name on my business card. However, my career has offered me many opportunities to get involved with elements covered in this book in a way that I never imagined.
Two paragraphs in the book bring back vivid memories of running down Lombard Street clutching a outsized cheque (Bankers Payment) trying to get to Threadneedle Street before the door to the banking hall at the Bank of England was closed firmly shut at 3.10pm.
After all, there was no benefit in being ‘long’ at the Bank overnight and being ‘short’ was something my superiors definitely wanted to avoid.
So, if all the Walks messengers were ‘out on the walks’ or in The Swan then the youngest (and male) bank clerk took the cheque off the typist, found two signatories and then promptly set off for Threadneedle Street as fast as they could.
I recall standing in the banking hall at the Bank (Of England) with a very large value Bankers Payments begging a clerk from another clearer to accept my payment and pay it into the Bank.
If his bank was ‘short’ and needed the money it was readily accepted but if his bank was already ‘square’ at the Bank then he often wasn’t that interested! After all a ‘long’ balance at the Central Bank was a missed overnight investment opportunity.
The ability to consider a Bankers Payment (similar to a cheque) as ‘good’ money was solely down to a magical ‘T’ after the sort code in the top right hand corner of the cheque – for example 20-00-00 T / the magical ‘T’ that unlocked a same day paper clearing system.
The Elements of Banking book explains this better than I can:
Prior to CHAPS being introduced in 1984 this was the only way to settle Sterling payments with same day value. Bankers Payments processed via the Town Clearing and considered ‘good money’ when settled at the end of the day.
As CHAPS begun to establish itself the use of Bankers Payments declined and the Town Clearing was eventually closed down.
I do however remember that the non RTGS version of CHAPS often went down so we often reverted to issuing Bankers Payments drawn on a Town Sort Code.
I also remember that our own payments system often went down and we also lost power to our payments floor reasonably often. On these occasions we typed bankers Payments using manual typewriters and I am sure I remember candles providing light on at least one occasion.
Sounds Dickensian? Well it was 1985!
I also remember being on a special payments desk for the Big Bang in October 1986. We had arranged to process non Town cheques for various stockbrokers who couldn’t understand why we put their cheques through the normal cheque clearing as they expected funds straight away. In the end I seem to recall that we credited the accounts on receipt and we received value later – perhaps credit risk hadn’t been invented then!
In the end CHAPS saw off the Town clearing – find out more about the role of a bank clerk when CHAPS was the new (payment) kid on the block at https://northeypoint.com/2019/05/14/payments-in-the-1980s-1-inbound-chaps/
These are my recollections as a (very) junior bank clerk over thirty years ago so apologies if I have recounted something incorrectly. I do remember a very strong culture of always doing the right thing and upholding the City mantra of ‘my word is my bond’ – this is a saying that I have based a whole payments career on, despite the antiquated payment methods we did consider ourselves to be payment professionals.