7.RBS’s decision to close 62 of its branches in Scotland caused widespread concerns about the impact this would have on customers, businesses and the wider economic health of affected communities. Unite Scotland have described the bank’s decision as “morally bankrupt” and accused RBS of reneging on their promise not to close one of their branches if it was “the last branch in town”, a commitment made by RBS in 2010.
8.Emma Cooper, from Scottish Rural Action, told us that rural communities would be particularly affected by the closures as poor transport links meant that “it can take people a really long time, having to use several modes of transport and at great expense, to travel to the next nearest bank, sometimes involving ferries as well as public transport”. She also said that those with mobility issues and caring responsibilities would be particularly badly affected. We have also received accounts from individuals concerned about the impact on their elderly relatives, with one account provided to us by Scottish Rural Action stating:
My father in law uses this bank and has done so all his life he has dementia and can’t remember pin numbers to use the machine. He is in his late 80s and struggles with change.
Similarly, the consumer group Which? have noted that “Bank branch closures disproportionately impact vulnerable consumers, particularly those in rural areas, those without access to good broadband, and those on lower incomes”.
9.The Federation of Small Businesses (FSB) have described the closures as: “disappointing news […] for the Scottish towns, cities and villages affected. Ultimately, these changes will make it more difficult to run a business in much of Scotland—including many deprived communities and tourism hotspots.” Research by the FSB into the impact of bank branch closures on local businesses found that closures often created additional costs for business owners, made it more difficult to manage cash flow and hit productivity and the wider local economy. Charandeep Singh, Scottish Chambers of Commerce, told us that “businesses are trying to be as pragmatic as possible” about the closures and that provision of information about alternative ways of accessing banking services was “exceptionally important”.
10.Scottish Government business minister Paul Wheelhouse MSP has described the closures as “hugely concerning”, saying that it would leave “large areas of Scotland, particularly rural areas, with limited branch coverage”. He went on to say:
These cuts affect some of our most remote rural communities, and many market towns in rural areas are also losing their branch, with potentially significant impacts on business customers, local personal customers and visitors, with the worst impact felt by vulnerable customers and those small businesses, who are the backbone of the economy, who rely on the services provided by a physical, local branch presence.
11.David Mundell MP, the Secretary of State for Scotland said RBS’s response that more people can use internet and mobile banking was “not good enough” and, commenting on the proposal to close branches in his constituency, said that RBS had “given up on rural Scotland”.
12.When he appeared before the Committee we asked Ross McEwan, Chief Executive of RBS, whether he understood the impact these closures would have on communities and the anger and disappointment felt by the people affected. He replied:
[…] change is absolutely difficult and we have been in these communities for a very, very long period of time. What we have endeavoured to do is to look at each one of these customer groupings and work out what services we should provide to them […] so that they can do their daily banking in the way that they currently do today. But it will be in a different way. […] I do recognise that customers are very disappointed that their local branch is closing.
13.The closure of these branches will be a devastating blow to the affected communities, removing vital services relied upon by businesses and disproportionately affecting vulnerable customers. We are not convinced that RBS fully appreciate the damage these closures will do to the communities and businesses that rely on these branches.
14.During both evidence sessions RBS repeatedly stated that the closures were driven by changes in customer behaviour. RBS have said that they are closing branches in response to increasing numbers of customers accessing services online and via mobile devices. Its impact assessment on branch closures reported that there has been a 40% drop in the use of branches since 2014 and that mobile transactions have increased by 73% over the same period. Ross McEwan, Chief Executive of RBS told us that banking via mobile phone was the most popular channel for its customers to access banking services. In addition to online banking, RBS have said there are several other ways that customers can access banking services, including via mobile branches, community bankers and in Post Office branches. We consider these alternatives in more detail later in this Report.
15.Unite Scotland had a different view of RBS’s motivation, saying that they believed the closures were intended to improve the value of the bank’s shares, “ripening it up to go back into the private sector.” When we put this suggestion to RBS they said that this was not their motivation, and told us that closures were not driven by a desire to make financial savings. Les Matheson told us:
The saving that we are going to be making is £9.5 million. You are right, it is not a significant amount of money. Rather than pieces of it, if you take the whole cost base, for example, of the business that I am responsible for, it is a little over £4 billion. This is not about saving money. This is about making sure that we are adjusting to changes in customer behaviour.
16.RBS recently reported a profit of £792m in the first three months of 2018, compared to £259m in the same period last year. This rise has been attributed to a “fall in restructuring costs, and a drop in conduct and litigation costs”, as well as its plans to reduce the size of its estate. Unite has called for a moratorium on RBS branch closures following the publication of the latest financial figures.
17.RBS have told us that these closures are not motivated by a desire to save money but are about responding to changes in customer behaviour. RBS themselves have told us that the savings these closures will make are small relative to the size of their business. During the course of this inquiry, we have heard compelling evidence about the adverse impact these closures will have for individuals, communities and businesses. If RBS truly wants to meet the needs of its customers it should respond to this overwhelming evidence—which shows that there continues to be a strong demand for in-branch services—and halt its closure programme. Given the recent profits reported by RBS this is a cost they can easily afford to bear.
18.When the closure programme was announced, it was reported that 158 jobs would be lost. However, this figure does not give a complete picture of the impact on jobs. Unite Scotland’s evidence claims that “RBS has consistently used figures to present job losses as FTE (Full-Time Equivalent) rather than the actual numbers of jobs at stake” and that, because many roles in bank branches were part-time, the actual number of people whose jobs were at risk was 321.
19.When we questioned RBS on this they accepted that the 158 figure was for FTEs and that the total number of employees affected by the closures programme was 312. Jane Howard told us that RBS had been able to guarantee jobs for 79 members of staff meaning that 233 people had been told that their jobs were at risk. Of those 233, 169 people chose to take voluntary redundancy, with 64 people wanting to be redeployed within RBS. At the time we first took evidence from RBS, alternative roles had been found for 41 members of staff meaning that 23 people were still facing the prospect of compulsory redundancy. At our session in May, RBS provided an update, saying that there were now 12 employees for whom an alternative role in the organisation had not been found and were therefore at risk of compulsory redundancy.
20.RBS told us that it was offering training and support to staff who were at risk of losing their jobs, including training in “digital capability and transferable skills.” We were also told that RBS was seeking to minimise compulsory redundancies by offering voluntary redundancy to staff in branches that would remain open and matching that post to someone in a closing branch that wanted to remain with RBS, and that some affected staff were being offered roles as community bankers.
21.We welcome the detailed information that RBS has provided on the impact on staff, although we believe they should have been upfront about the true scale of job losses when they first announced the closures. We are encouraged by the steps RBS is taking to minimise the number of compulsory redundancies and urge it to do all it can to work with the 12 members of staff without job offers to find them suitable positions. We would welcome an update on this situation in response to our Report.
22.Following our initial evidence session in January, RBS announced a number of changes to their closure programme, including:
a)Where RBS owns the building a branch is situated in, and there is no demand for that building, it will transfer ownership of a building to a community venture for free if there is a viable and deliverable three-year business case. If the community venture fails within those three years, then the ownership of the building will remain with the RBS.
b)Providing free digital devices to a small number of high-use, regular branch customers affected by branch closures, who have no access to a nearby branch where they can bank online.
c)Reviewing the opening times of all branches.
d)Reviewing Mobile banking van routes and times on a monthly basis.
23.The most significant change was the announcement that 10 of the branches that were marked for closure would be kept open until the end of 2018. The affected branches are: Biggar; Beauly; Castlebay on the Island of Barra; Conrie; Douglas Lanarkshire; Gretna; Inveraray; Melrose; Kyle and Tongue. When it announced these extensions, RBS said that “Should any of these branches see sustainable transactional increase and viable new income over this period, then we will reconsider the closure of the relevant branch as part of a full independent review.”
24.We asked RBS how it had decided which branches would have their closures delayed. We were told that it was a response to concerns that had been raised about RBS closing the last bank branch (of any provider) in a town and the distance that customers would have to travel to their nearest branch. Eight of the ten reprieved branches are the last bank in town and more than nine miles from the next nearest RBS branch. The Melrose branch is also the last bank in town but is not nine or more miles from the nearest other branch, however RBS decided to delay its closure “because of the concentration of closures in the Borders” and because of its “accessible” location. The final branch included is Kyle, which was originally the host branch for RBS’s mobile branch vans. RBS told us that while they had “now found a new home for that mobile van […] at the time we had not decided where the home was going to be for the mobile van and we decided to keep that as we changed the routes to make sure it settles down well for our customers.”
25.RBS have provided little public information about how this review will be conducted. This may partly be because it has been reported that the company originally identified to lead this work is now unable to do so. RBS was not able to provide us with more information on who would be leading these reviews, only saying that it expected someone to be in place by the end of June and that the reviews themselves would take place “between June and August.”
26.We pressed RBS for more information about how the review process would operate when they appeared before us in May. We asked them to provide us with information about how the performance of these branches would be judged, to which Les Matheson replied that “at the moment the criteria that we are looking at are the volume of transactions, the accounts that are open, that are present and new ones that are opened, new volume, but we will also be talking to those independent advisers to get any other thoughts and suggestions they have.” He confirmed that this meant that the targets the branches will have to meet had not been finalised, but assured us that they would be made public when they were agreed. Following the session Ross McEwan wrote to us to say that “it would be for the independent reviewer to decide the final criteria for the branches to be reviewed against, and we will work with them to ensure they have the information they need to carry out the work.” He added that RBS expected the independent reviewer to “actively and formally engage with customers, community leaders, elected representatives and colleagues” as part of the review.
27.We also asked RBS what support they were providing to these branches. RBS did not provide information about any additional support, with Ross McEwan only saying that they were “making sure that the staffing levels are maintained.” As some Members noted during the session, a number of these branches have extremely limited opening times which makes it difficult to see how they can achieve “sustainable transactional increase and viable new income” without additional support.
28.During the session we asked RBS how it defined a transaction for the purposes of evaluating the performance of these ten branches, as there had been concerns that only transactions that could not be done online would be counted. RBS told us that this was not the case and, following the session, provided the following explanation of what was meant by transaction:
Branch figures reflect both recorded customer transactions and service – and include both counter and automated machine transactions. Examples of transactions include, cash withdrawals and deposits, statement requests, funds transfers; paying a bill; mixed lodgement; and a change in address. We are however unable to include a general enquiry or a customer picking up a product leaflet, where such inquiries are not easily recorded. Customer visits numbers include both customers and non-customers.
29.We did get some clarity on the scope of the review programme. RBS’s initial statement suggested that it would only be those branches that saw “sustainable transactional increase and viable new income” that would have their closure decisions reconsidered “as part of a full independent review.” However when this was put to Les Matheson he said that all ten branches would be reviewed. RBS also confirmed that it would be RBS, rather than the independent reviewer, that would make the final decision on branches futures, although Ross McEwan assured us that they would take the review’s findings “seriously.”
30.There is still a lot of uncertainty around how the ten branches which have been granted a six-month reprieve will be evaluated and on what basis decisions on their futures will be taken. Given the lack of information available, it is not currently possible for us to have confidence that this process will be fair and independent. We are concerned that no reviewer has been appointed and no decision has been made on how branch performance will be judged, almost four months after the initial announcement was made. This is not fair on the staff who work in these branches nor the communities they serve. The fact that it was not until two weeks after our second hearing that RBS announced that the independent reviewer, rather than RBS itself, will decide the criteria these branches are judged against casts doubt on how well RBS has planned and managed this review process. We recommend that RBS should postpone the review of these branches until 6 months after the independent reviewer has been appointed and the targets these branches will be judged against have been announced. RBS should also set out what additional support it is providing to these branches to ensure that they are not being setup to fail.
31.Several individuals who contacted us expressed frustration that their local bank was facing closure after they had moved to it following a previous round of closures. 38% of those who responded to Scottish Rural Action’s survey of its members said that they had been affected by multiple branch closures over the last few years, with one individual commenting:
They shut our Bonnybridge branch. Then we used Denny and now its shut. [We] now use Bannockburn and they’re going to shut this.
32.RBS acknowledged these concerns, saying that one reason why the current round of closures “felt large” was that it was trying to avoid displacing customers multiple times. Jane Howard, Managing Director, Personal Banking, told us that “customers do not like closure by closure by closure because they go to another branch. What we are trying to give is certainty”. We asked RBS if this meant that the current round of closures would be the last for the foreseeable future. Les Matheson responded:
We have no other plans. I can absolutely categorically say that. At some point in time, if circumstance changed in particular areas or technology changes in a way that we cannot imagine right now, things may change, but I can absolutely say we have no plans right now.”
During his appearance in May, Ross McEwan went further saying that there would be no more closure reviews in Scotland until at least 2020.
33.We welcome the assurance that RBS has no plans for further closures in Scotland and that this would only change if “circumstance changed in particular areas or technology changes in a way that we cannot imagine right now”, and Ross McEwan’s statement that there would be no further reviews until 2020. We intend to hold RBS to this commitment. Should any future review lead to more branch closures in Scotland, RBS must provide detailed information about how the local or technological situation has changed to such a degree as to justify a further round of closures.
7 “”, Scotsman, Accessed 22 May 2018
8 ““, Financial Times, Accessed 22 May 2018
11 Mrs Elizabeth Bernard ())
12 Scottish Rural Action ()
13 Which? ()
14 “Locked Out: The Impact of Bank Branch Closures on Small Businesses”, FSB, October 2016.
16 HC Dec, 6 December 2017,
17 David Mundell website, , Accessed 22 May 2018
19 For example: , , ,
20 RBS, Accessed 22 May 2018 (Same facts in all branch closure documents)
22 Chapters 5 and 6.
25 BBC News, , 27 April 2018
26 BBC News, , 27 April 2018
27 Herald, , 22 May 2018
28 Unite Scotland ()
29 Rather than the 321 figure given by Unite.
34 RBS, , 6 February 2018
38 BBC News, , 27 April 2018
43 , 21 May 2018
47 , 21 May 2018
48 RBS, , 6 February 2018
51 Scottish Rural Action ()
Published: 27 May 2018