ONE of Scotland’s richest men has blamed financial regulators for the demise of Britain’s last independent savings bank and warned of further closures to come in the future.
Stagecoach founder Sir Brian Souter said the closure of Airdrie Savings Bank was down to the “intransigence” of the Prudential Regulatory Authority which was set up following the financial crash in 2008.
The businessman was one of several prominent leaders who each put £1 million investments into Airdrie Savings Bank to help it expand in 2010.
But in recent years, it has struggled as the industry has seen customers move their banking away from branches, and secure internet and mobile banking has required high levels of investment.
Airdrie Savings Bank which was founded in 1835, had already closed several branches in central Scotland and announced this week the headquarters will shut, along with the remaining two branches in Bellshill and Coatbridge.
It is understood that 70 jobs will be lost.
Yesterday Sir Brian said: “My heart goes out to all the people who are about to lose their jobs.
“It’s so sad that a bank founded on old-fashioned family values is having to close its doors. Along with a number of other Scottish business people, I believed Airdrie Savings Bank had a bright future serving the people of Scotland.
“Unfortunately our efforts to encourage the growth of Airdrie Savings Bank were defeated due to the intransigence of the PRA.
“I believe that credit unions and other small financial businesses are unfortunately facing similar challenges.”
Other investors in the bank included Mr Souter’s sister Ann Gloag, founder of Kwik Fit Sir Tom Farmer and Edinburgh’s Noble Grossart merchant bank chairman Sir Angus Grossart.
At the launch of the investment, Mr Souter said people were “angry” about what had happened in the banking sector and the time had come to “relaunch” a bank that would invest in Scotland and is built on “mutual principles”.
The bank is thought to have found the cost of new regulation to be too great for a small lender, and the Board of Trustees made the decision to close.
The move came despite many of the new rules being introduced in response to the errors made before the financial crisis by Airdrie’s much larger competitors.
The bank’s profile was raised when the Royal Bank of Scotland and Halifax Bank of Scotland had to be bailed out by the government and customers turned to a bank with a more traditional ethos.
Banks have been steadily reducing branch numbers over recent years as more customers switch to digital and mobile banking.
Announcing the closure, Jeremy Brettell, the chairman of Airdrie Savings Bank, said: “While we are financially strong, a comprehensive strategic review of all future options concluded that we will not have – as a very small bank – the resources in the years ahead to provide the products and services our customers need in this increasingly digital world.”
The Trustees of the 182-year-old institution, which is the last remaining independent savings bank in Britain, are reported to have taken the decision to close the bank because of the higher costs in meeting new regulations.
In 2015 the bank announced it would close four branches, including full-time branches in Motherwell and Baillieston along with part-time outlets in Muirhead and Shotts.
Chief executive Rod Ashley has stated at the time of the 2015 closures, the improvements needed to make the bank competitive in the digital age, “required significant and ongoing investment at a time when the banking sector has had to address many financial and operational challenges, ranging from the increased costs of stronger regulatory requirements to higher transaction-processing costs”.
The bank is now required to either offer deposit customers their money back or move their account to another lender.
The loan book will likely be sold to another lender.
The Prudential Regulatory Authority, part of the Bank of England, declined to comment.
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