Banks Lukewarm Over Shared Branches Proposal

Britain's biggest banks are plotting a rearguard action against a Government proposal that could force them to share branches in areas affected by future closures.

Sky News understands that Andrea Leadsom, a Treasury Minister, suggested at a meeting with industry executives on Tuesday that communal branches could help to assuage concerns about the disappearance of physical banking services in rural communities.

But speaking after the summit, bank executives said the idea would be difficult to implement and that they favoured an alternative proposal that would involve them instead negotiating new commercial arrangements with the Post Office network.

The meeting, which was convened by Vince Cable, the Business Secretary, made some progress towards an industry-wide 'protocol' over branch closures, with a firm agreement expected in the coming weeks.

Mr Cable said: "As banks scale back their branches, I want over-the-counter banking services to still be available to all those for whom internet banking is not an option, such as the elderly, vulnerable people or those in remote areas.

"We made good progress at today’s meeting towards a workable protocol, agreed between the banks, the Post Office and consumer groups, governing any future branch closures."

Sources close to the talks said that the banks were likely to sign a deal that would involve commitments to assessing the impact of branch closures on vulnerable customers and small business clients.

Lenders would also be obliged to assess the provision of alternatives for customers, such as standalone cash machines, a mobile banking service that would visit rural communities, and working with local Post Offices to ensure the efficient transfer of customers to its network.

Sky News revealed the plan for Tuesday's talks earlier this month, following growing concern about the number of branches closing across the UK amid declining footfall and growing use of digital banking services.

Lloyds Banking Group alone has announced that it will close 200 branches by the end of 2017.

The acceleration of branch closures comes amid a wider debate about financial inclusion, with major banks under political pressure to continue serving unprofitable customers even as regulators demand that they hold more capital to protect them in the event of another industry crisis.

The new protocol being led by the British Bankers' Association would cover all branch closures, not just those which are the last outlet in a local community, sources said in Tuesday.

Anthony Browne, BBA chief executive, said his members were "determined that no customer is left behind".

"That’s why they are drawing up this protocol to ensure that when some branches do need to close there are adequate services in place to ensure that everyone can still manage their finances."

Consumer groups including Which? also attended the talks, and were said to be pressing for a firmer agreement than some of the banks were willing to sign up to.

The Post Office declined to comment on the meeting, but insiders said its plan to rebrand its financial services business, reported by Sky News on Sunday, reflected a growing opportunity that would be provided by doing more business with the major high street banks.

With 11,500 branches - more than the five biggest high street banks combined, the Post Office offers products including insurance, mortgages, savings accounts and foreign exchange, some of which are provided through a partnership with Bank of Ireland.