Barclays chief pledges to continue with branch closure programme

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The Independent Online

Barclays' chief executive, Matthew Barrett, risked a fresh wave of criticism of his bank's branch-closure programme yesterday when he said more local branches would have to close.

The comments - made at a Treasury Select Committee meeting called to give the big banks a chance to answer Don Cruickshank's damning report into the industry - came just days after Barclays closed 171 of its branches, provoking a fierce response from MPs and consumer groups.

During a sometimes acrimonious meeting, Mr Barrett said: "I will not duck the fact that I will continue our programme of branch closures, driven by customer behaviour, where there is insufficient demand to justify staying open."

Mr Barrett went on to express his annoyance at other banks "that have hot-footed it out of town", leaving only Barclaysin some communities. He condemned "free-riders" - banks that had not expanded cash-machine networks, leaving customers to use other banks' facilities.

Mr Cruickshank gave some backing to Mr Barrett's stance, telling the committee that Barclays' closures seemed to be matching those carried out in recent years by its rivals such as Lloyds TSB and HSBC. Mr Cruickshank said the timing of his report and the closures was "unfortunate for Barclays".

The meeting was also attended by the chief executive of Lloyds TSB, Peter Ellwood, who reiterated his bank's pledge to retain branches if they were the last remaining in a community. HSBC's William Dalton told MPs that his bank was in "branch-opening mode".

Barclays came under fire from MPs for not rolling out its scheme with the Post Office - which allows individuals, but not businesses, to deposit and withdraw money free - when it closed its branches. David Ruffley, MP, said: "It's an absolute disgrace. Why didn't you have it in place? You're paid how much Mr Barrett?"

Philip Telford, the Consumers' Association's senior policy adviser, said Barclays' actions, and those of some of its rivals, may persuade the Government to introduce fresh legislation on the issue.

"Access to a bank account is increasingly seen as essential. If the banks don't adapt their approach the Government may legislate. They may make them justify why they are closing branches," Mr Telford said.

All three banks yesterday refuted accusations they make "substantial excess profit" by dominating the small business market, a key charge of Mr Cruickshank's report. They told the committee their 26 per cent return in the market was justified by its high level of risk. But analysts said the situation may have to change. Peter Toeman, at Morgan Stanley, said: "The basic problem behind the lunatic pricing decisions is that there are not enough entrants to the market. The Cruickshank report was designed to open the market right up."

The MPs and bankers also clashed over proposals for customer charges to access to cash machines. Barclays and HSBC were criticised for their plans to surcharge non-customers £1 per withdrawal, more than three times the 30p transaction cost estimated by Mr Cruickshank.

Mr Ellwood said that disloyalty charges, paid by Lloyd's customers when they used a rival's machines, would be scrapped from 1 January. He said a new surcharge of 50p would be levied on non-customers using Lloyds machines.