24 Mar 2017

Banking World Shaken by More Closures

After announcing an annual loss of £7 billion about a month ago, the Royal Bank of Scotland now comes with more bad news for its customers and employees. 30 RBS branches all over Scotland, 128 NatWest all over the UK and another 22 divisions of the Irish division of Ulster bank will be closed in the near future, affecting the jobs of a total of 770 people.

This is the third-time RBS is reducing their offices. The first big reduction was in 2014 when a total of 44 branches all over the UK were terminated. The second one came a year later after the bank declared another £2 billion losses. Then 12 offices around Scotland shut their doors. The new cut-back is the biggest by far, and it gets closer to the massive reduction done by Barclays a decade ago when 171 branches were closed in a day.

According to the RBS spokesman, their move is in response to the increasing popularity of mobile and online banking. “We interact with our customers over 20 times more through digital channels than physical ones. Half of our personal customers in Scotland are mobile banking users – grown from 500,000 to 900,000 since 2014. As customers change the way they bank with us, we must change the way we serve them,” the spokesman commented. He also added that despite the need of job cutbacks, which the bank stated will reach a maximum of 362, most of the employees will keep their jobs by reorganising their position.

However, the biggest union, representing the bank workers, Unite, blame RBS for “turning its back on the communities that have been the foundation of their business for generations”. “That’s bad news for our members who now have to live with the threat of redundancy – and it’s bad news for customers and businesses. Banks have a duty to the wider community and that is especially the case for banks like RBS that have large taxpayer-owned shareholdings,” Lyn Turner, the Scottish regional officer of Unite commented.

The news provoked reaction of other Scottish public and economic organisations. The Federation of Small Businesses (FSB) described that the news made their members feeling “frustrated to see RBS show so little loyalty to our high streets”. According to Andy Willox, Scottish policy convener “Branch closures put pressure on local economies and make it harder for local firms to access banking services. As the big banks shut down branches in chorus, it unfortunately seems like the banking industry is content to leave some customers behind”.

The RBS announcement was unclear of the date of the branches closure, leaving hundreds of people wondering about their future and “this is deeply concerning,” according to Scottish Labour’s economy spokesman Jackie Baillie. She urged RBS “to provide urgent clarity about when branches are going to close and what will happen to those facing redundancy.”

The RBS decision marked another point of the last few years’ tendency. The development of online banking platforms and mobile banking services has been attracting more and more customers. According to a report from the British Bankers’ Association (BBA), a regular street bank branch works with 71 visitors a day which is 32% less than 2011, and that number will decline to around 50 a day in the next five years. Other high street financial institutions also closed some of their divisions. Just two months ago, HSBC said it was shutting a further 62 branches this year, while Yorkshire building society revealed it was closing 48 branches. In July 2016, Lloyds Banking Group announced the closure of 200 branches.


Meanwhile in London

Luckily not all is dark and gloomy in the banking world. Deutsche Bank announced that it has signed a 25-year lease for a new headquarters in London, which is a breath of relief for many of its nearly 9000 UK employees. The ghost of a looming Brexit caused many people to fear that the bank will be moving away from its current place in London City, but building a new headquarters and declaring its trust in the UK’s financial situation after Article 50 is triggered, couldn’t be more positive.

The new building will be situated in the London area called Moorfields and will host most of the bank employees currently scattered all over the City. “This site will provide a long-term, sustainable location for the Corporate & Investment Bank (CIB) and infrastructure colleagues who need to be situated alongside CIB. Locating these staff in one building will increase productivity and strengthen controls and communication between functions,” a memo sent by the bank’s UK CEO Garth said.

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