Closed doors: Shared banks would revitalise communities up and down the country
Banks shutting branches is all too common an occurrence. Last week, it was the turn of the mighty Lloyds Banking Group to sharpen its corporate axe in preparation for a round of branch trimming.
It said 44 branches across the Halifax and Lloyds brands would shut for good this year with the bank blaming falling customer usage for their demise.
Sad though it is to say, Lloyds’ decision to wield the axe comes as no surprise. Of all the traditional banks, it has by far the largest branch network, double that of rivals Barclays and NatWest, so it was inevitable a round of pruning was on the cards. Indeed, I’m surprised it was only 44.
Earlier this month, I approached Lloyds about a tip I had been given from a good source that the bank was working on a much wider closure programme – one that would result in up to 700 branches (nearly half of its entire network) closing across its Bank of Scotland, Halifax and Lloyds brands.
I was told the tip was not true, so backed off, although of course I wasn’t told of its ongoing plan to shut 44.
While a radical shrinkage of Lloyds’ branch network appears not to be on the cards short term, I would put money on the fact that by the time the 2024 UEFA European Football Championship takes place in Germany (by the way, good luck England this Tuesday in the round of 16, Euro 2020), the network will be a shadow of its 2021 self. Half its current size is my guess.
One last point on Lloyds’ branch cull. In attempting to put a bit of gloss on the closures, it referred to some of the good things it is doing to keep bank customers sweet. These include the provision of cashback facilities at some 500 retailers up and down the country, a story we exclusively broke late last year – and its support for the trialling of community banks.
Although this trial only involves two branches – one in Rochford, Essex, the other in Cambuslang on the outskirts of Glasgow – it is now patently obvious that such community banks are the answer to the demise of the single brand branch.
In recent months, we have visited both Rochford and Cambuslang and have been overwhelmed by the positive impact that these branches (managed by the Post Office) have had on their local community, retailers and small businesses.
Customers of all the big banks – business and personal – can use them to deposit or withdraw cash. Representatives from individual banks are also on site on selected days for those customers who need to have a chat. Community banks, overseen by the Post Office and where the running costs are shared by all the high street banks, are the way forward.
If the likes of Lloyds, Barclays, NatWest, Santander and HSBC were to financially back a nationwide roll-out of such banks, it would revitalise communities up and down the country – especially those that have lost all their banking facilities. It would also take the heat off the banks every time they shut another 44 of their own branches.
Open-ended property funds not fit for purpose
Open-ended property funds are investment vehicles that are not fit for purpose. They are investment accidents waiting to happen. Everyone knows it, but until recently no one in the investment industry has really wanted to admit it.
Yet the announcement last week that both Aviva and Aegon are permanently closing their property funds – more than a year after dealings in them were suspended – surely spells the beginning of the end. More closures will follow.
It’s simply illogical for investment managers (however smart they are) to offer investors a fund that invests in illiquid assets (offices, shops and industrial units) when they know that any investor stampede for the exit gates will leave them with no choice but to prevent them from leaving.
This is because, unlike a share stake in a company, commercial property can’t be liquidated quickly enough to generate the cash necessary to give exiting investors their money back promptly.
It all takes time, leading to widespread investor disquiet.
The sooner open-ended property funds are knocked on the head, the better. Their time has been and gone.