Alliance & Leicester closing 46 branches

The mortgage bank Alliance & Leicester today said it was closing another 46 branches, with possible job losses.

Some 310 staff work in the branches that will close. Of those people, 111 are in full-time roles, the company says.

The move will leave the bank with 254 branches and will cost just under ?10m in the first half of this financial year. The closures, mainly in London and the south-east, would make an eventual net saving for the bank of about ?5m a year, it said in a statement.

In recent years banks have closed many high street branches, some of which have reopened as bars or pubs, as customers switch to online or phone banking. Banks have also moved call centres overseas, to India in particular.

Figures compiled by the British Bankers' Association show a sharp decline in the number of branches. More than 3,500 have been closed in the past 20 years in a trend that was most vividly illustrated by Barclays' decision to shut 160 branches on the same day four years ago.

A&L said the closures were in line with changes in customer behaviour in UK banking as use rose of the internet, telephone and ATMs for both sales and service.

"Our customers increasingly use our direct channels, and around 80% of our retail banking customer transactions (even excluding cheque and debit card transactions) are processed without any contact directly with a staff member," the company said.

"Independent research shows that a higher proportion of our product sales are through direct channels than the average for UK banks."

Unions expressed dismay at the decision to close one in seven of the bank's high street branches.

The Alliance & Leicester Group Union of Staff (Algus) said: "Staff are shocked at the scale of today's announcement and angry at the way the company is handling the proposed closures." The union added that it was considering legal action to challenge the decision.

A&L said that while the 46 branches represented 15% of its branch network, they accounted for less than 3% of total sales of mortgages, personal loans and current accounts and were used for transactions by around 1% of its retail banking customers each month.

"We will seek to redeploy as many affected staff as possible to similar roles in nearby locations. Where redeployment is not possible, staff will be offered redundancy and specialist outplacement support," A&L said.

Earlier this month Barclays bucked the trend of cutting back on banking presence on the high street. It announced that it was cutting 800 jobs from its back office to appoint 1,000 new "customer-facing" branch staff in an attempt to reduce queues and boost customer service.

Other banks have been re-examining their outlets. After its takeover of NatWest, the Royal Bank of Scotland halted a plan by the previous management to close 200 NatWest branches.

The Scottish bank is now in the early stages of a five-year, ?150m programme to inject colour into NatWest's once black and white high street branches.

Troubled Abbey National is also in the process of sprucing up its branch network with a more colourful logo designed to reflect its new management's enthusiasm for customer service.