With more of its customers choosing to move online for their banking transactions and needs, almost one in five branches of Virgin Money UK will possible have to be closed down in the coming months, said the British bank on Thursday.
This makes Virgin Money to become the latest bank to bring down its physical presence on high street after the Covid-19 pandemic.
The bank has been prompted to scale back its presence and close down branches because of the much greater tendency than before among customers to bank online or use their mobile phones for transactions and banking, despite the bank at one time having promoted its physical branches as “community-focussed spaces” to “brighten … lives”.
The bank witnessed an ever greater willingness to use “digital self-service” among customers, it said while announcing the cuts in its physical branches.
The bank plans to close down 31 of its 162 branches in the coming months. The office space that it uses will also be cut down in the near future which, according to the bank, will provide greater freedom and flexibility to its staff to choose their working location.
While some banks have restarted closing down of their branches since the ebbing away of the pandemic, a number of banks have on the other hand paused closing down of branches in the early months of the pandemic.
Plan for closing down 82 of its physical branches was announced earlier this year by HSBC. And its plans for cutting down 56 branches w3as resumed by Britain’s biggest domestic lender Lloyds in the second half of 2020. And closure of 164 of its branches was also announced by Sabadell’s TSB.
There is however a certain degree of controversy surrounding such branch closures because such steps can be uncomfortable for some customers who still prefer to use physical branches over the online systems, particularly the older people.
There were a combined total of 245 branches for the group after the merger of Clydesdale Bank with Virgin Money in 2018, which is expected to fall to 131 after these latest closures.
Banks were asked to rethink their moves to close branches during the pandemic lockdown, by the Financial Conduct Authority of the UK earlier this year, as the agency was concerned that such measure could be detrimental for some customers.
The bank will have to take a hit of 25 million pounds ($34 million) in the fourth quarter from restructuring charge because of the branch closures, Virgin said. The bank will also take a charge of 20 million pound related to cutting back and modifying its office space.
The total restructuring charges as a whole for 2021 will now be 145 million pounds, the bank said.
(Adapted from Investing.com)