Why is Lloyds Bank set to cut up to 100 ADDITIONAL branches?
Big high street banks Lloyds and Barclays are set to announce a series of branch closures in the coming days as they continue to desert the high street and persuade customers to do their banking digitally rather than ‘in person.
It is understood that Lloyds could announce the cut of 60 to 100 branches, which represents the first of a wave of closures this year across all of its retail brands. Barclays is expected to announce the closure of up to 20 branches.
A banking expert told the Mail on Sunday that big banks will then cut another 200 after Easter and another 400 will be cut before the end of the year. If correct, he will confirm last month’s Mail on Sunday report that some 800 bank branches will be closed this year.
Slogan: Lloyds TV adverts will ring hollow for customers as cuts bite
News of the impending cuts follows HSBC’s decision last week to cut 69 branches – one in seven of its high street outlets – between July and October this year.
HSBC says its network downsizing is the result of a customer preference for mobile and digital banking. Less than half of the bank’s customers, she adds, “actively” use its branch network.
Analysts believe the cuts at Lloyds will disappoint many customers who depend on a local branch and who genuinely believe the bank’s (outrageous) claim in adverts that it will always be on their side. But they also say the closures are long overdue in financial terms. Although the bank announced the closure of 48 branches in October last year, it has been nowhere near as aggressive as its rivals in taking an ax to its branches – branded Lloyds, Halifax or Bank of Scotland.
Currently, the bank has just under 1,500 outlets, three times as many as HSBC and nearly double the number of Barclays and NatWest.
Derek French, a retired NatWest banker and longtime campaigner for shared branches or banking centers, says Lloyds is “over-branching,” so news of impending branch cuts doesn’t surprise him.
“The bank is under new management,” French says, “and I’m sure they’ll want to tackle a bloated network as soon as possible.”
Charlie Nunn, the new boss of Lloyds, is busy restructuring its business and retail operations. With a focus on offering insurance and investment products to clients with salaries over £75,000 – the affluent mass market – it is understood that the case for a branch network twice bigger than its rivals has become untenable.
Barclays has steadily reduced its branches. Last year it eliminated 63 and two more closed earlier this year. It has just under 800 branches. Already this year, more than 100 branch closures have been announced. Last month The Mail on Sunday exclusively revealed NatWest’s decision to cut 32 branches across its NatWest and Royal Bank of Scotland brands.
Like HSBC, NatWest said the closures were the result of customers shifting to mobile and online banking “because it’s faster and easier for people to manage their financial lives.”
This month we were the first newspaper to report on the Nationwide Building Society’s decision to serve notice on four London branches. On Friday, its Cheshunt branch in Hertfordshire was added to the list of closures.
This year’s wave of closures represents the first big test for a system just introduced by banks, designed to ensure that branch closures do not cause irreparable damage to local communities.
The voluntary scheme was designed by the Access to Cash Action Group, a committee led by ‘cash champion’ Natalie Ceeney and set up by the banking industry trade association UK Finance. This means that when a bank announces branch closures, it must provide ATM network operator Link with details of the communities affected.
Using an algorithm designed by the banks, it looks at specific communities that will be left without a bank – and assesses whether they will end up with insufficient access to cash as a result of the shutdown.
For example, a shutdown could force certain sections of society – the elderly and cash-generating businesses like independent retailers – to travel to another city or town to do their banking.
In such cases, Link can ask the banks to finance the setting up of a common bank which the customers of all the banks can use – the bank being managed by a third party such as La Poste.
Alternatively, Link can recommend less expensive solutions such as installing a free cash machine or improving existing post office facilities – for example, an additional counter so that more customers can be served.
The effectiveness of this new regime remains uncertain. Although it’s still early days, Link confirmed he was only investigating three of the 107 closures announced so far this year – NatWest’s closures in Headingley, Yorkshire, and Swanley in Kent; and HSBC’s planned closure of its Clifton branch in Bristol. Banking sources believe a number of new banking hubs will be sanctioned by the end of the year, bringing the total to around 20.
Two – in Cambuslang near Glasgow and Rochford, Essex – are already operational while five others have been given the green light before Link begins monitoring work. These are being installed in Acton, West London; Brixham, Devon; Carnoustie, Angus; Knaresborough, North Yorkshire; and Syston, Leicestershire. Still, some say the rollout of shared branches is blocked by the strict rules the banks have imposed on Link.
It can only intervene in communities that the algorithm, designed by the banks, identifies as deserving of further investigation. Banking experts believe that the algorithm was put in place to minimize the costs that banks have to pay.
John Howells, chief executive of Link, said shared branches would be a big “step forward” for some communities that would otherwise be left without a bank. But he admits the voluntary nature of the scheme set up by UK Finance and Ceeney is not fit for purpose.
For the scheme to be effective, Howells says it needs regulatory support and then oversight by the Financial Conduct Authority.
The regulator could then require banks to set up shared branches where they deem it necessary. The government has promised supportive legislation for the past two years, but has so far failed to deliver. Details could, however, be included in the Queen’s Speech, which is due in May.
Derek French says the news of the branch closures is ‘not a surprise’. “HSBC’s network goes down to 441,” he says. “It should be around the new normal for all major banks. This involves a lot of branch pruning to come in the weeks and months to come. He also says his call for the creation of 50 banking hubs as soon as possible seems “highly unlikely”.
On Friday, Lloyds said: “Any potential closures of our brands will go through the independent assessment process, which is an important step in maintaining access to money for people and businesses who need it.”
Barclays said: “We continue to review and adjust our branch footprint to ensure it reflects the way our customers increasingly choose to bank.”
Bank listening? Now HSBC is ‘deaf’ to customers
Axis: Patricia Keane counts with HSBC
HSBC’s planned branch closures have gone like a leaden balloon in the towns of Amersham-on-the-Hill and Beaconsfield in Buckinghamshire. Six miles apart, the two towns will lose their HSBC branches in August.
Patricia Keane, company director and HSBC customer, doesn’t mince words about Beaconsfield’s closure. The 65-year-old says: “It’s disgusting behavior.
“I understand why branches are closed to make more money for the banks. But when customers are then forced to hang on the end of a phone for 45 minutes listening to messages about how much they appreciate our custom, the banks lose all credibility.
“This one-stop-shop bank seems to be deaf and could lose loyal customers like me.”
Colin Muttitt, an assistant at the neighboring Rug Gallery, offers a practical solution: a banking center from which all banks can operate.
He says, “There is plenty of free space in the NatWest branch. Why not allow HSBC to share it – and indeed Barclays and Lloyds as they inevitably close their branches?
Simon Prior, owner of the Smiles fish and chip shop opposite the HSBC branch, says banks seem oblivious to the damage they are inflicting on businesses when they close shop. He says, “The banks hold all the cards so they can do whatever they want. They are oblivious to our needs.
The HSBC branch in Amersham-on-the-Hill sits at the end of a busy shopping street, occupying a dilapidated building that looks more like part of a 1970s municipal development ready for demolition. In the window, a poster has been pasted explaining to customers that the branch will be closed for two days during the Easter holiday period. He fails to mention that the branch is closing permanently on August 23.
Mechanic Gareth Hallam, 44, is apoplectic about the shutdown. He uses it regularly to deposit money into his account.
He says: ‘I’m so unhappy that HSBC is leaving this high street. All the banks tell us we want to bank online, but I don’t. David Eaglestone-Bowmaker, a 59-year-old chef, says, “What about older people who depend on money for their daily needs? This closure is a selfish act of greed.
Its own bank Santander closed its Amersham branch in June 2019 and TSB followed in June 2020. Once HSBC is gone, only Barclays and NatWest will remain.
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