Bank branch closures trigger high street alarm bells

When the shutters come down on the Barclays branch in Bexley in a fortnight’s time, the south-east London suburb will be left without a high street bank.

Nine customers used the branch “regularly” over the last 12 months without interacting with the bank in any other way, Barclays told locals as it prepared for the closure, which was delayed by six months because repairs to a local bridge hindered access to the alternative branch.

It is a situation repeated across the UK, as banks scramble to save costs to bolster profits just as historic low interest rates are punishing their profitability and customers migrate to smartphones and the internet to access their accounts.

In Dinas Powys, just outside Cardiff, the NatWest branch is also the last remaining on the high street – it would have closed in August if it were not for problems at the designated alternative branch. NatWest, which is owned by the bailed-out Royal Bank of Scotland, pointed to a 56% fall in transactions at the branch since 2011.

Local Plaid Cymru councillor Chris Franks said there were concerns for local business people – not just individuals – about how they can pay in cash. “The irony is not lost on people that the public purse has paid a fortune for these banks and they are now abandoning taxpayers,” said Franks. RBS argues it reviews each branch on a case-by-case basis.

About 1,500 communities have already been left without a bank on their high street, according to the Campaign for Community Banking Service (CCBS), which predicts an inexorable decline in the number of branches.

One of the findings of the Competition and Markets Authority (CMA) investigation into high street banking competition published earlier this month, was that a branch network was no longer a barrier to entry for challengers to the “big four” – Lloyds Banking Group, Royal Bank of Scotland, HSBC and Barclays.

“Previous reviews have found the authorisation process for banks, the cost of IT and access to branches as barriers to entry or expansion in retail banking. We no longer find this to be the case,” the CMA said.

Along with Santander, the big four have closed an estimated 1,700 branches in the last five years.When bailed-out Lloyds, the owner of Halifax and Bank of Scotland (HBOS), announced 200 unit closures last month it said use of branches had fallen by 15% year on year.

Some new branches have appeared. Metro Bank was, in 2010, the first startup to open on high streets for more than a century and now has 41 branches. Both Lloyds and RBS were forced to carve out branch networks as a penalty from the EU for their taxpayer bailouts. The network created – TSB – is owned by Sabadell and now has 598 branches compared with 631 when it started. RBS has abandoned attempts to spin out its 300 branches of Williams & Glyn and is looking for a trade buyer.

However, Age UK, the charity which works with older people, is concerned. Journeys to branches are getting longer and for some older people not ready to embrace digital, there are other consequences. “Small business will also take fright of having to go long distances to a bank,” a spokesman for Age UK said. That could prompt an exodus of other businesses from high streets.

“We’re asking [older] people to lead more independent lives in the community and then cutting it away,” the Age UK spokesman said.

Last year, the industry was forced to agree to a “protocol” that requires them to publish impact statements with information about counter usage, regular customers and location of the nearest alternative bank, cash machine and Post Office. This is currently under review, with the outcome expected in the autumn.

Nick Kennett, financial services director at the Post Office, said that when each branch closes, discussions are held about the services the Post Office can offer over its 11,500 counters. Customers of different banks at present have access to different services. He is working on a standardised service, by January, that means when each bank closes, cash withdrawals, deposit enquiries and deposit services are available for customers and small businesses to get small change.

Campaigners against branch closures have long argued that branch sharing would be a solution. Derek French, who has run the CCBS since 1998, is now closing the website down. While he agrees with analysis by the consultancy CACI, cited by the CMA, that it is possible that just 600 branches will “deliver effective nationwide customer coverage in five years’ time”, he thinks there will still be a need for banking services through other outlets.

The banks themselves argue that branches will remain. Barclays said: “The number of physical Barclays branches will reduce overall but our branch network and the colleagues who work in them remain a vital part of our offering”.