UK branch closures – no lessons needed from Europe and some dodgy arithmetic from Reuters

Acording to a note this week from Reuters, a record 762 bank branches will close this year in Britain.

My figures suggest 768 branches will close but we are near enough not to fall out over six branches.

While Reuters did not show all of their working – my figures are undernoted by the way – I do take issue with their arithmetic as regards UK bank branch penetration.

In fact, Reuters’ figure for UK branch penetration figure is  so far out of date that it beggars belief.

The note states that this year’s branch closures “will leave Britain with around 8,000 bank branches by the end of the year, according to a Reuters calculation of the banks’ statements”.

It goes on to state the UK has around 25 branches per 100,000 adults, compared with just 17 in the Nordic countries which are seen as “pioneers in the transition to mobile and digital banking”.

In terms of mobile banking growth, increased digital sales, the rise of  new challenger banks and the strongest fintech centre in Europe,  the UK is doing pretty well as a pioneer itself.

The UK population is, give or take, 65.6 million. As we are dealing here with “British adult population” and branches, we need to knock off 1.8 million for Ulster.

Of the GB population of 63.8 million, 18% are aged under 16 – about 11.5 million – so call it about 52.3 million adults in Britain.

If we accept Reuters total of 8,000 branches in total, simple maths brings out branch penetration of a fraction over 15 branches per 100,000 adults– very definitely not 25 branches per 100,000 adults.

The UK banks are, I would suggest, doing rather well in terms of branch rightsizing. I am sure that some would like to move more quickly but they need take few lessons in this regard from the banks in the Nordic countries.

But just for comparison, the most up to date figures I have for branches per 100,000 adults in the Nordics are Sweden with 18, Denmark at 23, and Iceland at 35; Finland and Norway at about 8 each are admittedly way below the GB figure.

As for global comparisons, take the US. It has a bloated branch network, only now inching down slowly to about 90,000 outlets serving around 260 million adults, a branch penetration rate of over 30.

The UK banks are doing just fine in re-sizing branch numbers as more and more customers and transactions migrate to digital.

Reuters’ 8,000 figure for total branches across the country at the end of 2017 looks on the generous side; I make it about 7,700 and that assumes that RBS ends the year without a mass closure of RBS branded branches in England and Wales.

  • Barclays will end 2017 with the largest network by brand with 1,237 outlets, down 72 on the year
  • LBG will end 2017 with the largest network by group: 1,843 outlets comprising Lloyds 999 (down by 141 during 2017), Halifax 627 (down by 30) and Bank of Scotland 217 (down 24);
  • RBS, surprise surprise, is trickier to summarise. The easy parts first; NatWest will end 2017 with 856 units, down 202 and Royal Bank branded branches in Scotland will reduce to 151, a net reduction of 42. But what of the Royal Bank branded branches in England and Wales that were to form the challenger brand Williams & Glyn? This network kicked off 2017 with 280 outlets, down from 316 when RBS initially planned to hive of W&G. RBS tried several times and failed dismally, embarrassingly and expensively to sell W&G. As RBS is branding anything and everything south of the Border as NatWest these days, it could re-brand the branches in that way but it definitely does not need another 280 or so NatWest branches in England.
  • HSBC will end the year on 625, down 123 branches during 2017;
  • Santander: 826, down 15 this year
  • Nationwide 691
  • TSB 559, down by 29
  • Clydesdale 71 – down by 40 and Yorkshire 99, down by 39
  • Coop 95, down 10
  • Virgin 73
  • Handelsbanken 207
  • Metro 58 (up by 10)