David Limond Murdoch was born in Ayr, Scotland, on 2 November 1825, the son of Agnes Todd and her husband, Alexander Murdoch, a lawyer. On 3 January 1848 at Glasgow David Murdoch married Eliza Murdoch. The couple travelled to Australia where David worked with the Bank of New South Wales. In 1856 he became manager in their branch at Bathurst, New South Wales, where he gained valuable experience in pastoral financing and gold buying. He was promoted in 1859 and transferred to Geelong, combining the post with that of acting sub-inspector of Victorian branches.
Early in 1861 the Wales decided to enter the New Zealand market, then served by the Union Bank of Australia and the Oriental Bank Corporation. The Oriental subsequently withdrew and offered its business and premises to the Wales. In May 1861 Murdoch was dispatched to New Zealand where, as manager of the Auckland branch and inspector for the Wales throughout the entire country, he was responsible for taking over those Oriental accounts he regarded as sound.
One Auckland account is said to have troubled him greatly: that of Thomas Russell, lawyer, land speculator and company promoter. When Murdoch hesitated in taking over the account, Russell threatened to found a bank of his own. Murdoch thought such an idea 'harebrained', but Russell, encouraged by local sentiment that favoured a purely New Zealand bank, persisted. On 29 July 1861 the Bank of New Zealand was incorporated in Auckland with Russell as a director.
Murdoch continued to manage the Wales in New Zealand for a further two years. He then requested a year's leave of absence so that his wife, Eliza, might return to England to regain her health. When this was refused he transferred to Melbourne, exchanging positions with the inspector in Sydney at the end of 1863. In the middle of 1864 he resigned, moving to Auckland to take up the position of inspector with the Bank of New Zealand, the institution he had inadvertently helped to create.
Despite their earlier differences Murdoch soon established a close rapport with Russell. When the general manager of the bank retired in 1868 Murdoch took over as chief executive, although he did not gain the title of general manager until 1877. He was also appointed colonial managing director of the New Zealand Loan and Mercantile Agency Company, a London-based company that he and the BNZ directorate founded in 1865 to raise funds for reinvestment in New Zealand.
He aggressively chased business, entering deposit rate agreements with other banks and then breaking them when circumstances dictated – behaviour that gained him a reputation for great 'tortuosity'. In 1872 Murdoch visited Melbourne to open the BNZ's first Australian branch. Further rate skirmishing ensued and in 1875 a second branch was opened in Sydney. In Murdoch's first 10 years as chief executive the BNZ attracted more than half of all domestic deposits. Murdoch was equally active in searching out profitable lending opportunities. Here the BNZ worked in tandem with the Loan Company, making advances on real estate in an environment of generally rising prices.
As a prominent banker Murdoch naturally became friendly with a number of leading businessmen, especially those on the colonial board of the BNZ. Apart from Russell he was on intimate terms with Frederick Whitaker, J. T. Mackelvie, John Logan Campbell, James Williamson, Josiah Firth and others. During the 1870s and 1880s Murdoch became heavily involved with these men – the so-called limited circle – in a number of more or less speculative companies. Thus he found himself on the boards of mining enterprises, a frozen-meat works, and several land development companies, one of which proposed to drain the notorious Piako swamp.
The prosperous 1870s encouraged the hitherto cautious Murdoch to support land development companies and fledgeling industrial concerns. However, prices collapsed in the depression that set in by the end of the decade. Rather than let his friends in the limited circle and other old customers fail, Murdoch was tempted to arrange additional financing. He often accepted as collateral property and securities of fictitiously high valuation.
From an early date Murdoch, with the support of Russell, had apparently refused to take instruction from the London boards of either the BNZ or the Loan Company. In 1883 there was the suggestion from London that Murdoch might retire. This did not eventuate although some of his duties were assumed, albeit with misgivings, by his deputy, John Murray. Murdoch's liberal lending policies and his unwillingness to confide in London increasingly worried Murray. By 1887 the two had fallen out, and with massive losses being incurred Murray insisted that the true state of the bank's balance sheet be revealed. Murdoch reluctantly acquiesced, subsequently being summoned to England to explain matters to the London board. In May 1888 his retirement was announced and in the following year he severed his ties with the Loan Company.
Murdoch retired under a cloud. The massive losses sustained by the BNZ, which ultimately resulted in its de facto bankruptcy, were largely blamed on the general manager. Indeed, his connections with the limited circle and his actions relating to the Loan Company gave rise to charges of partiality bordering on fraud. Murdoch indignantly repudiated such charges, confessing only to a want of judgement.
In retirement Murdoch led an active life. He and Eliza Murdoch were keen gardeners, and for many years their friend J. T. Mackelvie had sent them seeds from England to plant in the flowerbeds of their elegant Italianate home, Prospect, on the slopes of Mt St John. Murdoch became chairman of the Mackelvie Trust, in which capacity he was instrumental in the completion of the Auckland Art Gallery and the display of the Mackelvie collection. He was also a foundation member of the Cornwall Park Trust.
David Murdoch died at his residence on 5 June 1911. His wife, Eliza, had died on 3 September 1901 and there were no surviving children. The bulk of his £145,000 estate passed to his brother's children and grandchildren in Scotland.