Just before Easter, Lloyds announced the closure of 39 more branches across the Lloyds, Halifax and Bank of Scotland Networks. At almost exactly the same time, Barclays and NatWest announced that they were also closing more branches. It can’t just be coincidence that the ‘big four’ banks all make branch closure announcements within days of each other. One could be forgiven for thinking that the announcements are being be co-ordinated by the main banks.
In her letter to the CEOs of Lloyds, NatWest, Barclays and HSBC UK, Ms Harriet Baldwin MP, Chair of the Treasury Select Committee, asked them: “How many bank branches are you [Lloyds, NatWest, Barclays and HSBC UK] intending to close in the next two years?”.
Members won’t be surprised to learn that none of the CEOs answered the question directly.
Mr Charlie Nunn, CEO of Lloyds Banking Group, said:
“We review our network on an ongoing basis but we do not set targets for the number of branches”.
Alison Rose DBE, Group Chief Executive Officer of NatWest Group – who was significantly more open in answering the questions from the Committee – said:
“Recently announced changes will take our network to 655 and we will continue to make changes to our network over the coming years to ensure we have sustainable choices in place for our customers through an appropriate balance of in-person, telephone and digital services”.
Ian Stuart, Chief Executive, HSBC UK Bank, said:
“We have announced 114 branch closures for 2023. We have no plans to close any further branches but will keep this under review and engage LINK, CAUK and the Financial Conduct Authority should our plans evolve”.
Matt Hammerstein, Chief Executive Officer, Barclays, said:
“Barclays will continue to adapt our physical footprint in response to changing customer demands and greater numbers of customers choosing digital channels”.
In our letter to Ms Baldwin, which we sent before she published the responses from the CEOs, we said:
“You asked how many bank branches Lloyds will close this year. You will be fobbed off with the statement that Lloyds keeps its branch footprint under constant review and it’s got no specific plans for branch closures this year. I hope the Committee will treat such a response, which will be the same for Barclays, NatWest and HSBC, with the contempt it deserves. The Committee needs to get the main banks to commit to an audit of their business plans for the next 3 years so that it can verify independently that they have got no plans to close bank branches. Lloyds, HSBC, Barclay and HSBC will refuse and the Committee will be able to draw the appropriate conclusion”.
We understand that banks are private companies with shareholders and are in the business of making money. However, the ‘big four’ banks are in an oligopolistic position [small number of key players control a market] and there must be a community cost of doing business. The ‘big four’ banks still account for 77% of all current accounts with combined profits of £33.5bn for 2022, slightly down from £34.6bn the previous year, but comparing favourably with the pre-financial crisis figure of £35.7bn in 2007. And the ‘big four’ banks also dominate the SME market.
Not so long ago there were hopes that the domination of the ‘big four’ banks might be ended by the ‘challenger’ banks and Fintechs but that’s proved to be a pipe dream. So, unless the Government, of whatever persuasion, plans to force the break-up of the ‘big four’ banks to create more competition, which seems unlikely, the cost of those banks doing business must be that they operate functioning branch networks based on the number of current accounts and SME accounts they have. If that means sharing branches, then so be it. If nothing changes, there won’t be that many branches left in a few years.
We will be writing to all MPs setting out our position on the future of branches. In the meantime, members with any questions on this Newsletter should contact the Union’s Advice Team on 01234 262868 (choose Option 1).
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