Small business bears brunt of closures of bank branches throughout Britain

BRITISH banks’ closure of hundreds of branches in the past three years has more than halved lending to small businesses in areas affected, research on Thursday showed, ahead of a debate in parliament on the effect of the cuts.

Britain’s biggest banks, HSBC, Barclays, Royal Bank of Scotland and Lloyds, have been steadily shrinking their branch networks to cut costs while investing in online and mobile banking services.

Research by campaign group Move Your Money suggested many customers were losing out as a result, with lending to small local businesses down 63% in towns and villages that had lost a branch.

The effect on communities following the closure of their last bank branch was even more striking, with a 104% drop in lending growth to small businesses, according to the research, based on data from the British Bankers’ Association.

“The UK’s biggest banks are abandoning communities across the country, and today for the first time we can see the incredible damage that is happening,” said Fionn Travers-Smith, author and campaign manager.

The effect of branch closures on lending in specific areas had not been closely tracked until the British Bankers’ Association began releasing information in 2013 about local lending patterns.

This marked a government push to increase transparency and encourage competition between British banks.

The Move Your Money study is one of the first to make use of that data to map how the closures have affected lending.

Politicians from the main political parties have arranged to debate the issue in parliament on Thursday and are expected to demand a tightening of the rules that govern branch closures and that banks do more to help customers affected.

A British Bankers’ Association spokesman said banks have signed up to protocols aimed at minimising the effect of branch closures, including partnering with post offices to offer services and doing impact studies before closures.

Reuters earlier this month reported that Britain’s biggest banks are disproportionately closing branches in lowest-income areas while expanding in wealthier ones.