Founding and growth

By early 1931, the Government Savings Bank was in financial trouble in the midst of the Great Depression, and on 22 April 1931 the Bank suspended payments after a drain on its cash resources. On 15 December 1931, the majority of the Government Savings Bank was amalgamated into the Commonwealth Savings Bank.^[1] The Rural Bank and Advance Homes Departments of the Government Savings Bank were not taken over by the Commonwealth Savings Bank, and continued to operate.^[2][3] In late 1932, the NSW Government led by Assistant Treasurer Eric Spooner introduced legislation to reconstitute what remained of the Government Savings Bank into a new "Rural Bank of New South Wales", with a specific mandate to support primary industries and not to operate as a traditional general lending bank, governed by a board of three commissioners.^[4][5][6]

On 23 December 1932, the Rural Bank of New South Wales Act, 1932 was passed by the NSW Parliament,^[7] and on 1 July 1933 the new institution and board of commissioners commenced operations to replace the old Government Savings Bank. The former chairman of the GSB, William O'Malley Wood, was appointed president and commissioner, with Clarence McKerihan and Henry Rogers appointed as commissioners.^[8][9][10]

On 19 December 1947, the NSW Parliament passed the Rural Bank of New South Wales (General Banking) Act, 1947, which merged the Rural Bank Department, the Advances for Homes Department, and the Personal Loans Department, into a General Bank Department, and authorised the bank to operate as a regular trading bank.^[11][12][13] On this change, the Premier of NSW, Jim McGirr, commented:

"The primary object of this important legislation is to widen the scope of the bank's functions in order to place it on an equal footing with other banks in this State. The measure is in accordance with the Government's policy of fostering an institution that has in the past provided a valuable service to the people and has assisted in implementing various governmental schemes."^[14]

State Bank

On 2 November 1981, the State Bank Act came into effect, which reconstituted the Rural Bank as the "State Bank of New South Wales", governed by a board of seven directors, and changed the mandate to that of a standard commercial bank.^{[15][16][17][18]} The bank's slogan for many years was "We do more for you personally".^[19] On the change of the Rural Bank to the State Bank, a former bank employee, Bruce R. Turner, later recalled:

In line with its motto, the [Rural] bank's customers were put first at every stage. For instance, if a customer thought he or she had been charged a fee unfairly, the branch staff had the delegation to make an assessment and waive the fee if the circumstances warranted.
As the 1980s progressed, the State Bank's stewardship changed and the business transformation accelerated. The bank's balance sheet became more highly leveraged, profitability became the key driver, and customer service standards started to decline. Many of the branch staff were the same, but a new culture was being framed. Delegations for local staff to make local decisions were wound back (including delegations to waive and refund unfair fees and charges).^[19]

The bank was 'corporatised' in 1990, under the State Owned Corporations Act 1989 (NSW) and the State Bank (Corporatisation) Act 1989 (NSW). On 14 May 1990, the existing State Bank was dissolved, and all of its assets and business undertaking were vested in an incorporated State Bank, limited by shares.^[20]

Privatisation and merger

On 23 November 1994, the NSW Government sold the bank to Colonial Mutual, a financial services company, through the State Bank (Privatisation) Act 1994.^[21] Although initially retaining the State Bank name, the bank then changed its name to Colonial State Bank in 1996.^[22][23][24] In 2000, it too was taken over, this time by the Commonwealth Bank of Australia.

Rural Bank, 1933–1981

The board of the Rural Bank consisted of three (later five) commissioners appointed by the Governor on the advice of the Premier for a term of seven years, with one of the commissioners appointed as president/general manager. A deputy president could also be appointed to fill in during a long period of absence of the president.^[7]

State Bank, 1981–1994

From 2 November 1981, the board of the State Bank consisted of seven directors appointed by the Governor on the advice of the Premier, with one of the directors appointed as managing director.^[15]