THE OWNER of Clydesdale Bank is looking to close a further 50 branches and streamline its management function in a bid to reduce its cost base by £100 million in the next three years.

CYBG, the parent of both Clydesdale Bank and Yorkshire Bank, aims to cut £25m of costs by reducing the total number of branches in its network from 248 to under 200, with £15m of cost savings expected to come from an increasingly digitised customer service.

The banking group will also look to reduce the amount it spends on contractors by £40m while the remainder of the £100m reduction will come from streamlining the business to ensure there are only ever six layers of seniority between cashiers and chief executive David Duffy.

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This comes after the group, whose financial year runs to the end of September, closed 26 branches and laid off 150 senior members of staff in the current financial year at a total cost of £200m.

“Typically in a retail bank, if you don’t manage it well, you tend to grow layers of people who are reporting to people, who are reporting to people, who are reporting to people,” said Mr Duffy.

“The 150 [job cuts] was the start of our restructuring but there will be more.

“Our headcount will decline but we don’t know where. At the moment our staff is around 6,500 but we haven’t got a forecast of where it will be.”

Mr Duffy said that the banking group is also in the process of working out where the branch closures will come and will make a further announcement once it has analysed footfall around its existing network. At the moment 137 of its branches are branded Yorkshire Bank and 111 are Clydesdale.

While CYBG is looking to cut its ongoing costs from £730m to around £630m in three years, it is also investing £350m over the next two years, in part to fund the further restructuring and in part to bolster its digital business.

The group, whose client base is currently 77 per cent mature or less affluent individuals, is targeting younger, more affluent customers and will use technology to try to cross-sell products to them.

The intention is that 90 per cent of its business will come from online and mobile banking by 2020 and as part of the company’s so-called omni-channel model, customers can access services via traditional channels such as in branches or on the phone as well as on mobiles, tablet computers and via the group’s app ‘B’.

“B is an app but it’s on an open-architecture platform so it’s easy to plug things into our systems,” Mr Duffy said.

“We can develop a lot of functionality and an end-to-end account-opening model has been put in place that opens an account in 11 minutes.”

As part of this all Clydesdale and Yorkshire branches are having their technology upgraded so that every teller is issued with a tablet, with a refurbishment programme also being rolled out over the next couple of years.

Last year the group spent £1m upgrading its flagship Yorkshire Bank branch in Leeds, with retail, business and private banking all coming under the same roof. This will be replicated across the network.

The changes come as the group seeks to consolidate its position in the UK’s ‘challenger bank’ marketplace after demerging from former parent National Australia Bank at the beginning of this year to launch on the London and Australian Stock Exchanges.

It will announce its first set of annual results in November, covering the full year to the end of September.

Mr Duffy said: “We firmly believe that our size and scale, strong funding base and balance of assets across retail and business lending give us a solid foundation, enabling us to simplify and grow our business, reduce costs and increase capital efficiency, notwithstanding more complex market conditions.”