More than 500 bank branches close since pandemic struck

·3 min read
Banks closed sign
Banks closed sign

UK towns have lost 529 bank branches since the start of the pandemic despite the City watchdog urging lenders to hold back on cuts during the Covid crisis, it has emerged.

Since the first national lockdown was imposed on March 23 last year, banks have gone on to close 529 branches, according to Which?.

The closures have come despite the Financial Conduct Authority urging lenders to delay shutting branches where possible, “particularly where this could impact vulnerable customers”.

Banks did pause branch closures and job cuts during the first lockdown last spring but most had resumed those plans by the end of the summer.

Barclays, NatWest, Lloyds, HSBC, Co-op Bank and TSB are among the lenders to have announced cutbacks as the pandemic accelerated the shift to online banking.

Gareth Shaw, head of money at Which?, said he expected closures to “ramp up” as restrictions eased because the pandemic “put the proverbial foot down” on the shift to online while guidance from the FCA will have stopped some closures from happening last year.

“The case for keeping those branches open is not as strong [now],” he said.

Scotland has faced 90 bank branch cuts since last spring’s lockdown, making it the worst affected region after London.

The battle to preserve remaining branches was high on MPs’ agenda even before the pandemic in the face of concerns that vulnerable customers who do not use online banking were being cut off from their money.

Since 2015, 4,188 branches have closed across the country, with the South East suffering the biggest reduction in branches.

Mr Shaw added that Scotland will be the first part of the UK where half its bank branches have closed with the total set to hit 532 by the end of the year.

It was vital to ensure “people aren’t left behind” as banks shift their focus to online banking, he added. Which? had found last year that banks never reversed a decision to close a branch after consulting with the community.

Derek French, the bank branch campaigner and former NatWest banker, said: “We are on the tip of an iceberg as Covid will further accelerate the increase in closures we are already experiencing, and now it is larger communities in the frame, and adequate substitutes are not in place.”

City minister John Glen MP last week confirmed that a consultation for cash legislation will be launched this summer with the aim of ensuring people can access cash withdrawals “within reasonable travel distances”.

Natalie Ceeney, who chaired the influential Access to Cash review, and the Federation of Small Businesses said measures were needed more quickly to stop Britain becoming a cashless society after further delays to legislation.

“We can’t allow the cash infrastructure to just disappear while we wait for legislation,” she said. “The cash infrastructure is at crisis point ... the pandemic has made a lot of the current cash infrastructure unviable and yet we’ve got over 5m people in Britain who rely on cash.”

Craig Beaumont of the FSB said legislation was taking too long to appear: "Action must come soon to protect competition and consumer choice, and prevent irreversible damage.”

The biggest banks set up a working group chaired by Ms Ceeney last week as they waited for the legislation. The lenders promised to take steps to ensure cash was available for small businesses and vulnerable groups.

A Treasury spokesman said it was taking action to maintain access to cash. “We’ve already legislated to make it easier for businesses of all sizes to offer cashback without a purchase, and earlier this week we outlined the next stage in delivering on our pledge of legislation to protect access to cash for those who need it.”