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Banks And Cable Close To Branch Closure Pact

(c) Sky News 2015
 

Vince Cable will next week announce a deal with the major high street banks that will set out new guidelines for the controversial closure of hundreds of branches across the country.

Sky News understands that the Business Secretary and the British Bankers' Association (BBA) are close to agreeing a final 'protocol' that will require lenders to give 12 weeks' notice of planned closures and publish a community impact assessment in each case.

However, the agreement will fall short of some community campaigners' hopes that banks would agree not to close the final branch in rural locations amid forecasts that as many as 500 outlets could shut across the country during the next year.

Sources said that Mr Cable was keen to unveil the deal before Whitehall goes into purdah towards the end of the month ahead of the General Election.

It will include a commitment from banks that they will consult on the provision of alternative banking services such as a new ATM, credit unions and Post Office branches, which Mr Cable has said will become an increasingly important element of the UK's banking infrastructure.

The new protocol will come into effect in May - sooner than had been expected - meaning that scores of branches already earmarked for closure by Lloyds Banking Group and Royal Bank of Scotland (LSE: RBS.L - news) will be affected.

An independent review of the agreement with the banks will take place after 12 months to see if it is providing the necessary assistance to affected communities, a banking source said.

Officials at Mr Cable's department are understood to have been attempting to extract more eye-catching commitments from the banks in recent weeks.

Figures compiled by community banking campaigners suggest that half of the UK's bank branches have shut since 1989.

Lloyds alone has said that it will close 200 branches by the end of 2017, although this move will be partly offset by 50 new sites to be opened by the taxpayer-backed bank.

Sky News revealed in January that Mr Cable had been keen for banks to make a binding commitment not to close branches when they were the last one remaining in a local community.

However, the chief executives of the big lenders made clear their belief that rapid technological changes - with customers now performing billions of transactions remotely each year - had rendered such a pledge obsolete.

Responding to Mr Cable late last year, Antony Jenkins, Barclays (LSE: BARC.L - news) ' chief executive, said the bank "aimed to leave no community without the ability to transact - meaning that, if we do choose to close a branch, we work closely with the local community to determine if there are other ways to support its day-to-day banking needs".

Ross McEwan, chief executive of RBS, said the bank had seen a 30% decline in branch usage since 2010, adding that it would be spending £1bn to improve physical and digital banking infrastructure for customers.

The BBA declined to comment on Wednesday.