Delivering the Post Bank

The Aims of the Post Bank Coalition:

• Revive and protect the Post Office network;
• Support local economies and small and medium size businesses;
• Combat social exclusion, and financial inequalities;
• Introduce diversity into the retail banking system.

The Post Office network of 11,952 branches has been ‘secured’ by way of the Government
declaration that there will be no more post office closures. But the network has to be profitable
to remain viable. Post Office Ltd has recognised that the increasing provision of financial services is
the way forward. In view of this we urge the Government to avoid piecemeal solutions and create
a recognisable, strong and trusted Post Bank.

Post office closures damage local economies by reducing money flow locally, by reducing footfall
and by creating delays and travel costs for local businesses. We need a network which positively
assists the small businesses upon whom the economy depends.

Post Bank would have the scale and reach to offer banking services to the financially excluded
and unbanked. It is the only national network which could do so.

Post Bank, an alternative to the shareholder model of the main High Street banks, would introduce
diversity to the banking system and act as an antidote to restrictive practices.

PO infrastructure is equal to the task. It has 24 Cash In Transit Depots, 9 Cash centres across the
country and a fleet of 430 Cash in transit vans.

The Post Office already has the basis upon which to build a strong and popular bank. It is growing its financial services in partnership with the Bank of Ireland. Benefits and income would be much greater with sole ownership. In the year ending 31 March 2009, POFs had over 2 million customers, delivering deposit growth of 136% year on year, with UK consumers increasingly viewing the Post Office as a more trustworthy repository for their savings given the problems afflicting the retail banks.

Post Bank could also be an efficient and wide reaching provider of:

• Financial advice
• Financial management tools
• Local business knowledge and assistance
• Links to other financial institutions such as credit unions and organisations providing micro finance
• Innovative banking tools

The decision to set up a Post Bank will be a political one. But it should not be turned down on
the grounds that there is no practical, affordable way of creating such a bank.

There are models of alternative banking provision and current options for the creation of
a Post Bank. These include:

• Northern Rock: We do not need to start from scratch. Northern Rock is now in public ownership, and could form the institutional foundation of a new, mutually structured people’s bank.
• Buying out Bank of Ireland: The relationship of Post Office Ltd with Bank of Ireland has, we believe, come to the end of its useful life. If the UK government is serious about securing the future of the Post Office network, then a bold decision to support a buy-out of the Bank of Ireland’s stake in Post Office Financial Services would be an extremely significant step towards doing so.
• Incorporating National Savings and Investments: National Savings and Investments (NS & I) has its origins in the Post Office Savings Bank set up in 1861. It was separated from the Post Office in 1969. It has developed a range of savings and investments over the years to suit the market and meet the needs of customers and the UK Government’s need for funding. The Post Office has remained a significant distribution channel for NS&I products.
• Mutual Banking and the TSB model: Post Bank offers the prospect of capitalising on a rich but neglected history within British banking, that of mutual banks and non-profit trustee bank models such as the old TSB. These are models which should be considered in the establishment of Post Bank.

The Government should now set up a Working Party to examine the social and economic case
for Post Bank.