Blackfriar: Banks talk local, but turn their back on communities

PLAIN vanilla community banking is back in vogue – at least if you believe the UK’s big banks.

Stung by the public’s anger and Government prodding, their latest marketing spiels are all about grey-haired bankers, touchy-feely staff and helpful banking.

But the evidence on suburban high streets, small town centres and villages across the UK suggests the contrary.

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The demise of the franchise agency model, where external estate agents, solicitors and insurance brokers include bank or building society lending counters, is a very real example of big banks’ approach to community banking.

Lloyds closed the remainder of its 320 Halifax agencies in November last year, marking the end of a 13-month process to offload the banking counters acquired with its rescue takeover of Halifax. In September, Nationwide also revealed plans to shut its 130-strong network of agencies.

Despite the fact that agencies tend to be commission-based, and do not employ any of the lender’s staff, Nationwide said its agencies are “no longer economically sustainable”.

The UK’s biggest building society, owned by its customers, is not stopping there. Last week Nationwide also revealed plans to close 13 branches in the south of England.

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Yorkshire Building Society, Skipton and Santander have been commendable in adding agencies or similar services over the past couple of years to boost their branch networks. They all see it as a viable and affordable extension to their coverage.

But this can’t disguise the underlying trend – big lenders don’t want much to do with the agency model. They know there’s little profit to be made from basic transactional services, especially in the record low interest rate environment.

The real money in retail banking is to be made from selling add-ons, such as mobile phone insurance, fee-based accounts and home insurance. To them, agencies clearly are not the channel for this.

Derek French, from the Campaign for Community Banking Services, said along with small bank branches, agencies provide a lifeline for many marginal communities, and help attract key spending to the local economy. Combined with small branch closures, he said their demise reflects big lenders’ retreat from small communities.

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“They provide a service for a community that very often does not have any other,” he said.

“We would say, ‘please stay there as you have some kind of social obligation’.”

While bankers’ bonuses and lack of business lending rightly raise hackles, the threat posed to rural and suburban communities by these closures is significant.

The Independent Commission on Banking should add this to its to-do list.

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HI-TECH company Carclo has been promising great things about its Conductive Inkjet Technology (CIT) for several years.

CIT prints “invisible” metal lines on plastic products such as touch screens and medical sensors. Carclo’s chief executive Ian Williamson has even agreed to stay on until 2013 to oversee the development of the CIT division.

Under the Ossett-based company’s rules Mr Williamson should only work until his 60th birthday this year, but last year shareholders voted to bend the rules and keep him on to spearhead the CIT project.

In 2009, Carclo’s CIT division signed a deal worth up to $1m with US electronics heavyweight Atmel Corporation to develop and launch a new touch screen for use in mobile phones.

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The agreement was based on Carclo’s patented photolithographic metallisation film. Since that landmark agreement, the CIT division has installed a new production line at its Cambridge facility to produce the touch-screen sensors.

Carclo has said it is working with a couple of major phone players and the focus will be on the high-end element of the market, which all sounds very promising.

In October, Carclo said it expected the Cambridge production line to begin full production in March.

But yesterday that was delayed with the group saying it now expects volume production to start during the second half of the 2011 calendar year.

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Carclo still has great hopes for CIT. Yesterday it said that the revenues that CIT will generate from its agreement with Atmel Corporation on touch screens are expected to be “substantial and material in the context of Carclo’s prospective revenue and profit growth”.

But analysts were not convinced yesterday and the group’s shares fell seven per cent, to close down 24.25p at 302.75p.

Analyst Chris Thomas at Arden Partners said the recent emergence of a similar technology from 3M for touch screens is a concern and advised investors with large positions to consider locking in some profits.

Carclo has been promising great things. It now needs to make sure it can deliver.