Bank's stealth axe cuts off customers: HSBC closing more branches, abandoning several towns and villages

By JEFF PRESTRIDGE, MONEY EDITOR AT LARGE
Updated: 18:03 EST, 24 April 2010

HSBC may have ridden out the credit crunch better than some of its competitors and avoided turning to the taxpayer for support.

But as far as some of its customers are concerned, the bank's rude financial health isn't helping them one little bit.

They have just been told that HSBC is shutting their local branch, in some instances leaving the village or town they live in with no bank.

HSBC, which proudly calls itself the 'world's local bank', has confirmed to Financial Mail that it is closing ten branches because it says they are not being used enough. It has also said a further seven have been earmarked for closure between July and September.

Anger: Much Wenlock, Shropshire, above, will be left with only a Barclays branch when HSBC goes; traders and shoppers in Bruton, Somerset, below, will have no bank when HSBC pulls out

Although we know where they are, the staff at individual branches have yet to be told they are being axed. Already this year, 17 branches have been shut.

These closures may seem insignificant set against the fact that HSBC's has 1,350 branches, but they continue a trend that has seen the bank chip away at its network over the past five years. Last year, 54 HSBC branches were axed, meaning that between 2005 and 2009, a total of 188 branches were shut. No other bank or building society closed as many branches over this period.

It also means HSBC has by stealth shut more branches than Barclays did in 2000 when it caused an outcry by announcing it was closing 171 branches in one day.

The impact of the HSBC closures on communities is certainly not insignificant. Of the 17 branches to close between now and September, five are 'last in town' outlets.

It means these communities will no longer have a bank, forcing people and businesses to travel to do their banking - although some will be able to go online or use the local post office. Only basic account holders with HSBC can use the post office to withdraw cash. No other HSBC customers can use the post office to do their banking.

One community losing its last bank branch is Bruton, Somerset, a town with a population of about 3,000 and three large boarding schools. Its history and beauty make it popular with tourists.

In 1995, Bruton was without a bank when NatWest closed its branch, but Midland Bank, now HSBC, responded by launching a mobile banking service in the town. This proved so successful that Midland decided to set up a branch in the premises vacated by NatWest.

But over the years HSBC has steadily cut the opening hours to 11 a week, on Tuesdays and Thursdays. HSBC has now decided to pull the plug with the branch shutting for good at the end of June. Customers will have to travel either five miles to Wincanton or eight and a half miles to Shepton Mallet to use an HSBC branch.

Annette Pitman, who runs The Way Forward, an association that aims to attract more businesses to Bruton, says the closure is a 'body blow' to the town. 'We've got two new housing developments in the area,' says Annette, 65. 'It's a thriving town that commands and deserves a bank. HSBC is letting us down.'

It is a view shared by Rachel Carpenter, 49, who runs Rachel's Hair & Beauty. Although she banks with NatWest, she says the loss of the HSBC branch will hit local businesses, including her own. 'It's a short-sighted decision,' she says. 'We are growing as a town, but our banking facilities are in terminal decline.'

In Much Wenlock, Shropshire, HSBC's impending branch closure is also causing anger, although unlike Bruton the town will still have a bank, in the shape of Barclays.

Butcher Paddy Ryan runs a successful family business that last year was judged the country's best local food retailer in food and farming awards organised by BBC Radio 4.

Paddy, whose wife, Sue, and sons Michael and Sam all work in the business, says he will close his business account with HSBC, switching to Barclays' business banking services.

'As a businessman, I understand a business must make money and if HSBC isn't making money in the town, its departure is understandablehe says. 'But there will be a knock-on effect, for sure. HSBC's exit will deter some people coming into town. Instead, they will go to Bridgnorth, eight miles away, to do their banking and shopping, so my business will ultimately suffer.'

HSBC's closures have angered Derek French, director of the Campaign for Community Banking Services. Backed by a number of charities representing the interests of older people and small businesses, the CCBS wants banks to share branches rather than abandon communities. To date, he has had little joy persuading the High Street banks that sharing makes sense.

'These closures are an undisguised attack by HSBC on small, often remote and rural communities,' says French. 'HSBC has been chipping away at its branch network for the past five years. When will the cull stop and how soon will other banks follow its example and start closing branches?'

HSBC says: 'Branches are, and will continue to be, a fundamental part of our distribution network. Indeed we are investing more than £75 million a year on a refurbishment programme across our 1,350 branches.

'However, there is little doubt customers are changing their banking habits and using branches where they work rather than where they live, or are using the 24-hour convenience of internet or phone banking.

'Financial institutions have to react to this shift in customer behaviour and as such we need to ensure our branches are situated in locations where they will be used.'