Fat cat banks cream off more and more profits as jobs and services go

HIGH STREET banks are making vast profits while cutting jobs and slashing their level of service to customers, campaigners say. Four of the biggest banks have announced profits well above the expectations of analysts; NatWest this week announced half-yearly profits up by 18 per cent.

Last night a range of groups, including Help the Aged and the Consumers' Association, accused the banks of putting profits before customers. "We are not bothered about the size of the banks' profits but we think they offer fairly poor products," said Neil Walking, a spokesman for the association.

Within the past 10 days, NatWest, Lloyds TSB, Abbey National and HSBC have all announced interim profits up by at least 12 per cent. Abbey National this week started charging customers pounds 5 for over-the-counter bill payments.

Barclays Bank announced 1,000 fresh job cuts on Thursday. However, unlike the others, its profits fell, by about pounds 300m. It had already announced 6,000 job cuts last May.

NatWest's chairman, Sir David Rowland, said of the bank's profits rise: "Strong growth in earnings per share flowed from an increased profitability coupled with tight capital management."

Consumer rights campaigners were more to the point. They say such profits, unheard of among banks on the Continent, have been made at customers' expense. The Consumers' Association alleges some of the extra profits have been made by banks holding back reductions in the base rate from their mortgage customers. It says Barclays, Lloyds TSB and HSBC have made pounds 40m between them by cutting saving rates before reducing mortgage rates.

The banks have also been accused of cutting their costs by closing branches and encouraging customers to use electronic or phone banking. The Campaign for Community Banking Services says about 4,000 branches have been shut since 1990, mostly in villages, inner cities and, increasingly, the suburbs. More than 600 communities have been left without a bank, and campaigners think that the number will rise to 1,000 in five years.

"They are too obsessed with profit," said the campaign director, Derek French, citing the village of Hartland in north Devon, whose last bank branch closed in March. Villagers now face a round trip of 30 miles to the nearest bank.

"We should all be interested in the sustainability of local communities," he said. "It is part of the social fabric that binds Britain together. A bank branch of some sort is a key component of community life."

Help the Aged, one of 27 groups represented on the campaign's steering committee, believes the closure of branches and the move towards electronic banking have a particularly bad effect on elderly people. "Older people are keener to have one to one contact with someone, said a spokeswoman for Help the Aged. "That is what they have been used to in the past and I think they find it harder to change."

The banks insist the use of new technology helps to give customers a better service. A NatWest spokesman said: "At the moment we do not serve our customers well enough ... We will be looking to increase profits by 18 per cent next year as well."