British banks told to pause branch closures

LONDON: Britain's financial watchdog on Thursday told banks to rethink planned branch closures in a warning to lenders seeking drastic cuts to patch up pandemic-dented finances.

The Financial Conduct Authority (FCA) said banks should consider the impact of national pandemic restrictions on their ability to comply with regulatory guidance on branch closures, including consulting customers affected.

Last September's FCA guidance on branch and cash machine closures sets out how banks should assess customer and business needs by considering what alternatives are available.

"Some banks and building societies have informed us that they are either going ahead with branch closures already announced, or announcing new branch closures during the current lockdown," the FCA said in a statement.

"We are concerned that these activities could have significant consequences for customers. It may be harder than usual to reach all customers under the current restrictions and engage with them on closure proposals effectively."

HSBC this month said it plans to axe 82 branches in Britain after a drop in footfall and a surge in digital banking, though it said the trends predated the COVID-19 pandemic.

The bank gave no immediate comment on the FCA's statement on Thursday.

Several banks paused branch closures in the early months of the pandemic before resuming cutbacks. In the second half of 2020 Britain's biggest domestic lender, Lloyds, resumed plans to cut 56 branches. Sabadell's TSB, meanwhile, announced it was axeing 164 branches.

"We want firms to review their plans against our existing guidance and ensure that they continue to comply with our principles," the FCA said.

"Where firms consider it is appropriate to continue with plans during this period, we expect them to have considered our guidance and be able to demonstrate how they've taken the concerns and expectations set out in this statement into account."