Mass axing of branches is 'only way to survive'

Cut-off customers across the country protest, but company angrily rejects criticism, claiming it must move with times

As 171 branches of Barclays in villages and rural communities closed their doors for the last time yesterday, the bank mounted an angry defence of its decision.

Unmoved by petitions signed by thousands of branch users, and spirited protests all over England and Wales, the bank insisted the branches were uneconomic to run and said less than 40 per cent of its customers used them anyway. John Varley, the retail banking director, said it was important for the bank to make a profit. "There has been a sea change, a seismic change in the way in which customers choose to bank in the United Kingdom," he said on BBC Radio 4's Today programme.

"If we ignore that then we will go out of business, and this country is littered with the carcasses of businesses that have failed to move with the times. Look at NatWest, our biggest competitor - taken over. Look at Rover - going out of business. It is in the interest of Barclays, it is in the interests of Barclays' customers and its employees to be successful. If we are profitable, that is a good thing, not a bad thing."

He did apologise to the customers "for the fact that we inconvenienced them", but the fact remained that the closures came in the same week as the bank revealed its top directors had received massive bonuses on top of their large salaries.

The bank's new chief executive, Matthew Barrett, has been paid £1.3m for just three months in the job. Mr Varley refused to confirm yesterday that the directors would make up to £40m in bonuses.

Charles Kennedy, the Liberal Democrat leader, said: "This is going down like a lead balloon in many parts of the country, particularly when people see juxtaposition of this alongside the rather megalomaniac scale of salary increases awarded to top executives."

Downing Street said the Government had always advocated "responsibility" in setting boardroom pay trends. A spokesman added: "We havealways maintained that companies should act responsibly and that pay and performance should be linked. Obviously, executives are accountable to their shareholders but it isnot for the Government todetermine the level of executives' pay."

Up to 40,000 customers are expected to lose their local branches as a result of the closures. People in rural areas have complained the move will leave some people with journeys of up to 20 miles to find a bank.

Barclays tried to soothe the situation yesterday by announcing that it had secured a deal with the Post Office to run personal banking services, but operators of small businesses and many of those in the farming community will still have to travel miles for their business transactions.

The Post Office has already run a pilot scheme in Cornwall offering banking services and said yesterday that by the end of the month all the areas where branches of Barclays had been closed would offer the new service.

The scheme would be expanded to cover all 15,500 offices in England and Wales "as soon as possible".

The Nationwide Building Society also announced yesterday that it planned to install 70 cash machines in the affected areas.