Early challenges

The 1820s were a challenging time, beginning with a serious loss in 1821 when it was discovered that the Bank of NSW's Chief Cashier, Francis Williams, had stolen half its subscribed capital, none of which was ever recovered.

There was criticism for not doing enough to assist the expansion of the colony, particularly lending to landowners. Although it had lent in mortgages from the beginning, this lending function was not directly mentioned in the Bank's charter and the practice would have been limited, because of the uncertainty of the status of the land titles offered as security.

The Bank also suffered the taunts of Macquarie's political enemies, mainly free settlers, who did not agree with his reformist practice of placing emancipist convicts in positions of authority. Bank Director William Redfern had been transported for his role in the mutiny of the North Sea Fleet at the Nore anchorage in 1797, whilst his fellow Director D'arcy Wentworth was tried twice, although acquitted, for highway robbery.

Many other ex-convicts, like Mary Reibey, were shareholders. The Bank of New South Wales was thus nicknamed disparagingly by some as 'the convicts bank', although 'supported by the farmers, merchants, shop keepers, mariners, soap-boilers, tanners, butchers, bakers, gardeners, cedar-gatherers and craft builders of the Colony' it also acquired the more popular title of the 'people's bank'.

In 1826, a rival bank (The Bank of Australia) was established to provide competition. By 1843 this rival had collapsed (along with many others during the banking crisis of the 1840s), a victim of over-lending. The Bank of New South Wales continued, thanks to the trust and confidence of its customers and the community, and the integrity of consistent financial discipline in its management.