By Mark Kleinman, City Editor
Vince Cable has summoned Britain's biggest banks for fresh talks about branch closures after their bosses refused to renew a promise not to close hundreds of rural outlets.
Sky News has learnt that the Business Secretary has asked executives from the five largest high street lenders to attend a meeting later this month following initial discussions in December.
Mr Cable wants the banks, including Barclays, Lloyds Banking Group and Royal Bank of Scotland (RBS), to make a binding commitment not to close branches when they are the last one remaining in a local community.
However, letters from senior bankers make it clear that rapid technological changes, with customers now performing billions of transactions remotely each year, have rendered such a pledge obsolete.
Figures compiled by community banking campaigners suggest that half of the UK's bank branches have shut since 1989.
Lloyds alone has said that it will close 200 branches during the next three years, although this will be partly offset by 50 new sites to be opened by the taxpayer-backed bank.
Instead, insiders said the banks have agreed to draw up a framework covering circumstances in which they could close a community's last branch.
This would include better information for customers about alternative banking arrangements in their area.
A broader partnership with the Post Office to utilise its 11,500-strong network, as well as the concept of shared branches, are also under discussion.
Speaking to Sky News, Mr Cable said: "There are a lot of people who are not connected who also need to do basic banking functions, and we mustn't be in a position where large numbers of villages and other small communities are effectively being cut off from banking.
"If the banks cannot perform that service we need an adequate substitute, and they've got a responsibility to help provide it."
In his letter to the banks, he added that they should "think about… how to address any additional financial and operational burdens on the Post Office", implying that they could face a substantial bill.
Last month's meeting convened by Mr Cable included representatives from consumer groups, the Competition and Markets Authority and the British Bankers' Association (BBA).
In a response to Mr Cable, Antony Jenkins, Barclays' chief executive, said the bank "aimed to leave no community without the ability to transact - meaning that, if we do choose to close a branch, we work closely with the local community to determine if there are other ways to support its day-to-day banking needs".
Ross McEwan, chief executive of RBS, said the bank had seen a 30% decline in branch usage since 2010, adding that it would be spending £1bn to improve physical and digital banking infrastructure for customers.
The acceleration of branch closures fits against a broader backdrop of financial inclusion, with major banks under political pressure to continue serving unprofitable customers even as regulators demand that they hold more capital to protect them in the event of another industry crisis.
Last month, the nine biggest high street lenders said they would launch fee-free basic bank accounts as part of an agreement engineered by the Treasury.
