Is your local bank branch about to disappear?

Posted in 'Personal Finance' by Richard Catlin

12 July 2010

If you bank with RBS or NatWest, you could soon find yourself having to go further afield to visit your local branch, with more than 300 branches set to be absorbed by the ever-growing Santander.

The European Commission has ordered the RBS Group to sell off 318 branches, due to fears about competition in the wake of Government bailouts that left the group 83% state owned. RBS branches across England and Wales will go, along with NatWest branches in Scotland.

Until very recently, a number of other parties, including Virgin and the National Australia Bank (NAB, which already owns Clydesdale and Yorkshire Banks in the UK) were believed to be in the running to assume control of the branches, but their interest has cooled and Santander is now seen as the sole interested party. This is mostly because the buyers are likely to be required almost immediately to cough up £2 billion of capital to help support the loan books relating to the branches being sold, which total a staggering £24 billion – half of which has been lent to small businesses.

Should the Santander deal go through, it does little to quell European concerns over a lack of competition. The Spanish bank has made significant inroads into the UK marketplace since acquiring Alliance & Leicester, Bradford & Bingley and Abbey in recent years.

The fear is that with an ever-shrinking number of lenders behind the brands we bank with, there will be less competition and in turn less incentive to offer competitive deals or exceptional customer service.

If you’re at all fed up with your own bank or credit card provider, it makes sense to think about switching. You could get a much better deal, and hunt down much better customer service. Each year, our Banking and Credit Card Survey uses the experience of thousands of real customers to build a picture of the best (and worst) lenders in the UK. You can see who came out on top in 2009 here.

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