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02/12/17 00:01

RBS branch closures

Time for a minimum provision of banking services to be introduced.

The Scottish Government has called on the UK Government to establish and enforce a guaranteed minimum level of service provision for essential banking services, recognising the importance of continued access to banking for communities across Scotland, and across the UK.

Following the announcement of planned RBS branch closures, Minister for Business, Innovation and Energy, Paul Wheelhouse, has urged the UK Government to defend customers and take steps to ensure communities, particularly vulnerable customers and small businesses, have access to day to day banking services.

In a letter to the Economic Secretary to the Treasury, Mr Wheelhouse wrote:

I am deeply concerned at the Royal Bank of Scotland’s announcement that they are to make further deep and damaging cuts to their branch network in Scotland. I am sure that you will also have concern at the rate of branch closures at RBS, and Nat West.  Scotland is proud of its banking heritage and has done much to build the industry globally and RBS has grown due to its ability to rely upon a loyal customer base here, through good times and bad. 

Today’s announcement of a further 62 branch closures, coming as they do after previous tranches of branch closures affecting rural and urban Scotland, will leave many communities without ready access to essential day-to-day banking services and is a genuine body blow to our high streets. These cuts affect some of our most remote rural communities, and many market towns in rural areas are also losing their branch, with potentially significant impacts on business customers, local personal customers and visitors, with the worst impact felt by vulnerable customers and those small businesses, who are the backbone of the economy, who rely on the services provided by a physical, local branch presence.

While we appreciate that many customers are choosing to access services digitally, and there clearly has been rapid growth of online banking at RBS in particular, there are many customers for whom this is neither a practical option, nor an option they are comfortable with, perhaps where they may be more fearful of online fraud. For these customers there is an imperative to meet their requirement for access to physical face-to-face banking services.

I am therefore writing to you, in advance of a proposed discussion, to ask: what will the UK Government do to halt or reverse the continuing trend of branch closures; to preserve access to essential banking services; and to mitigate the impact of this announcement on the individual customers, communities and businesses affected?

I call on the UK Government to establish and enforce a guaranteed minimum level of service provision for essential banking services, recognising the importance of continued access to banking for communities across Scotland, and across the UK.

In doing so, I recognise the increasing partnership working between the retail banks and Post Office Limited, to ensure provision of basic banking services is retained in local communities, albeit, even where this is feasible, this does still result in a significantly reduced range of services that can be undertaken on a face to face basis and the continued availability of post office branches is vulnerable to sustainability and succession issues in many cases.

Similar issues arise in respect of availability of ATMs, as this key service may be vulnerable where the last branch in town is being lost or where the closure of the RBS branch leaves the community vulnerable to the loss of any third party remaining ATM provision subsequently. This is obviously a key issue for tourism and hospitality businesses as well as local retail outlets that do not yet have cashless payment technology or for whom the cost of installing such technology is a challenge.  I would urge you to consider a strategic dialogue with banks and ATM stakeholders, such as LINK, and wider stakeholders to ensure that a robust network of ATMs is retained in all communities affected in Scotland and across the UK. 

Crucially, as the UK Government maintains a majority shareholding in Royal Bank of Scotland, and also retain all legislative and regulatory powers in respect of financial services, I seek your support in asking the Royal Bank, and other banks that may well yet announce further programmes of closures, to call a halt to this potentially damaging programme of closures, while banks, their stakeholders and both Governments consider how best to take account of its obligation to its customers to provide a banking service that meets their needs.

The UK Government, as the bank’s majority shareholder, in our view, should use its influence through not agreeing to any closures in locations where no face-to-face alternatives are in place, and should require the Royal Bank of Scotland to ensure that practical and sustainable alternative banking services are put in place before any closures are signed off.  While I recognise the financial imperative to ensure the flotation of the Government’s shares in RBS, the pace of this should be appropriate and, indeed, customer loyalty should not be abused in any consequential cost reductions to ensure fitness for re-flotation. 

I am concerned that insufficient resource is being allocated to invest in mobile banking services to ensure adequate geographic coverage can be delivered following branch closures, but I would hope this could be resolved in time to put in place the required provision to meet customers’ needs before any closures take effect.

I understand that our request for a call has been met positively, which I welcome, and this is in the process of being arranged for Monday, but given the cumulative loss of branches within RBS, I would request a meeting with you and with senior staff at the Royal Bank of Scotland to discuss in detail what can be done to support the staff and customers affected by this, and other recent announcements, and to ensure that essential banking services continue to be available to those who need them.