Royal Bank of Scotland is closing 259 branches in a move that unions fear signals the end of branch-based banking.
The bailed out bank said 62 Royal Bank of Scotland branches would shut and 197 NatWest ones as customers turned to digital channels to conduct every-day banking. This is the equivalent to a quarter of the existing branch network.
The Unite union said 1,000 roles faced the axe although the bank – which is 71% owned by the taxpayer – said the move would result in 680 redundancies once staff were offered redeployment opportunities.
Rob MacGregor, Unite national officer, described the cuts as “savage”. “The Royal Bank of Scotland has decided to decimate its bank branch network. Now serious questions need to be asked about whether these closures mark the end of branch network banking.
“This announcement will forever change the face of banking in this country resulting in over a thousand staff losing their jobs and hundreds of high streets without any banking facilities,” MacGregor said.
He asked why the government – which last week signalled it was preparing to sell off its remaining stake in the bank at a loss – was signing off a branch closure programme on this scale.
The bank’s chief executive Ross McEwan has repeatedly talked about the increasing use of online and mobile banking and is attempting to cut costs to bolster profits. When it reports results in February, the bank is expected to admit that it will have incurred 10 years of full-year losses since its taxpayer bailout in 2008. It has already reported £58bn of losses.
In March, when RBS last announced a branch closure programme, the consumer group Which? calculated that high street banks had closed more than 1,000 branches in the UK between January 2015 and January 2017, with HSBC axing the most over this period.
Earlier this week Lloyds Banking Group announced 49 closures across its network – with 32 under the Lloyds brand, six Halifax branches and 11 Bank of Scotland outlets.
An RBS spokesperson said that since 2014 the number of customers using branches had fallen by 40% while mobile transactions increased by 73%. More than 5 million customers are using its mobile banking app and one in five customers only bank this way.
“We expect these branch closures to result in around 680 redundancies. We realise this is difficult news for our colleagues and we are doing everything we can to support those affected. We will ensure compulsory redundancies are kept to an absolute minimum,” RBS said.
The closures come at a time when there are fears that thousands of cash machines could shut or start charging – leading to “deserts” around the UK where there will be no free-access to cash because of proposed changes to the way the system operates.
More branch and ATM closures will raise fears that the vulnerable customers will be impacted most. The banks argue they have to compete with new banks which are being created without any branches, at a time when banks with smaller networks are making a push into digital banking.
The new banks aim not only to capitalise on customers’ use of the internet but also expect to benefit from forthcoming regulatory changes that will make it easier for customers to shop around for financial products. As it published the outcome of its latest stess tests on the banking sector this week, the Bank of England said that “fintech” – financial technology – “may have profound consequences for incumbent banks’ business models”.