Hundreds of bank branches set to close

Banks abandon pledge to protect communities

Updated: 
Treasury Select Committee report

More than 500 banks across Britain are set to close because the main high street chains have dropped a commitment to protect branches in small communities.

According to a draft document leaked over the weekend, banks will be able to close unprofitable branches, giving customers just three months' notice.

Business secretary Vince Cable had been trying to persuade the banks to retain the commitment to keep open 'the last bank in town'. However, the leaked draft guidelines from the British Banking Association (BBA) contain no such policy.

"Decisions on branch closures are ultimately commercial decisions," reads the document, obtained by the Sunday Times.

"After a bank has decided to close a branch, the firm will engage with key local stakeholders to understand the potential impact on the community."

Where the last branch in an area is lost, the document suggests, local people will have to make do with telephone and internet banking. Banks may also start offering more services – particularly for small business customers – through the Post Office's network of 11,500 branches.

The number of bank closures has accelerated over the last few years as more and more people bank online. More than 500 branches are expected to get the chop this year, compared with 479 last year and just 195 in 2013, figures from the Campaign for Community Banking Services (CCBS) show.

Around 50 branches of the Co-operative have been closed as part of the bank's rescue plan. Barclays has denied plans of a massive run of closures, but says that 90 branches are likely to go by the end of the year. And RBS is closing 44 branches, of which 14 are 'last banks in town'.

Finally, Lloyds became the last bank to ditch its promise not to close a 'last bank in town' last October, saying it planned to shut around 200 branches over the next three years.

This will mean many more cases in which communities are left without access to a local bank: in Keynworth in Nottinghamshire, for example, as well as in St Agnes in Cornwall, which is set to lose its branch of Barclays at the end of this week. Indeed, according to the CCBS, this was the case in 124 closures last year.

"Some constructive suggestions are now being made by government and we appeal to the banks to engage with them, putting on hold all planned 'last bank' closures," says CCBS director Derek French.

Read more on AOL Money:
End free accounts, says bank boss

Online plan to clear bank ID checks

Barclays customers told they're too poor for Premier accounts
UK Banks Out of the Woods?