Why bank closures are putting entire towns in jeopardy
Faced with the last bank branch in the town closing, the people of Shildon, County Durham, warned that the loss would endanger vulnerable residents, damage small businesses and turn the town centre into a ghost town. Three weeks later, the HSBC bank had already been shut down and stripped.
This was last October. Now, five months on, the residents' prophecies have come true. Shildon, a town of 10,000 inhabitants, many of whom are retired, has already seen several shops shut, including the Co-operative supermarket, and the high street grow steadily quieter.
Unfortunately, what happened to Shildon is not an isolated case but a scene repeating itself up and down the country as banks shrink their branch networks in favour of mobile, tablet and online banking.
Although this might seem like a nod to 24/7 banking, the removal of banks from communities can have devastating consequences, especially when a town or village is left without a branch at all.
Last year, the big four banks, HSBC, Barclays, Lloyds TSB and NatWest, that operate last-bank branches in 96% of rural and suburban communities, closed 156 branches. HSBC led the way with 74 closures (14 of which were last branches).
In 2011, the four banks closed 178 branches between them and in 2010, 193. Only months into 2013 and NatWest, which is part of RBS, has already announced 41 more closures for the year.
Similarly, the Co-operative bank has said 37 branches will close, however, a deal to take over some 600 of Lloyds TSB banks will increase its branch count overall.
The speed at which bank branches are closing may have slowed since their peak in 2000 – when Barclays announced 171 branches would close in one day – but the drive to close branches where footfall has fallen or costs are too high still means more and more communities are faced with the prospect of losing the last physical access they have to their finances.
Derek French, director of the Campaign for Community Banking, says that as of April last year, there were 421 rural communities with one branch remaining and 466 urban communities with only one branch within a mile. Even worse, there are now 1,200 communities in the UK that have lost all their banks.
The number of last-bank communities are spread evenly around the country, though it is the South East that clocks up the most, followed by the North West.
For the residents of Shildon, the nearest bank is now three miles away in Bishop Auckland, which costs £4.20 for a return bus fare.
Jeff Ridley, 68, business manager of the Shildon Town Crier, says it has hit the town's small businesses. "It's soul destroying," he says. "There's nowhere for small business to get change in the morning or deposit their takings. They have to get on a bus to Bishop and bring the change back. It's dangerous."
Clearly angry at how banks have let the town down, he adds: "They don't care about the little people – it's all about profit."
In a town with an ageing population unfamiliar with online banking, the lack of a bank cuts people off. Allan Walker, 75, has lived in Shildon since 1964. He says the branch closure is driving people away. "If people want to do their shopping in one place and want to get cash out, they go to the bigger towns around us. It's turned us into a ghost town," he says.
The town still has a post office, and there are two ATMs in Shildon but both are inside shops and only accessible during opening hours. The town's mayor, Brian Stoker, sums up the problem: "People cannot get money in Shildon to spend in Shildon." He points out that since the Co-op shut down, Morrisons is the only supermarket in the town.
This lack of competition could have a detrimental effect on prices. "The town's been affected a great deal," he adds.
While Shildon will survive, there are other cases where communities will be damaged more severely. Post offices and ATMs can only serve communities so well - especially given that many post offices in rural communities have shut down.
But, as a Barclays spokesperson indicates when she says the number of bank branch closures this year will be similar to last, shutting up shop has become business as usual.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.