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UK MPs urge state-owned bank role in post offices

Published 07/07/2009, 09:28 AM
Updated 07/07/2009, 09:33 AM
NWG
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* Would increase access to banking services

* Would provide new revenue source for post office network

LONDON, July 7 (Reuters) - The British government should help secure the future of the post office network by encouraging nationalised banks to offer services through post office branches, a panel of parliamentarians said on Tuesday.

The move would provide greater access to banking services, while providing the post office with a much-needed new income stream, the House of Commons Business and Enterprise Committee said in a report.

"The government should use its influence to ensure that the banks in which the public is a shareholder provide services through post offices," the committee said.

"There is currently a unique opportunity for the public to gain a specific and valuable benefit from its shareholding."

Britain owns a 70 percent stake in Royal Bank of Scotland and 43.4 percent of Lloyds Banking Group after providing the banks with financial support including an emergency cash injection of 37 billion pounds ($60 billion) last October.

The government is also the sole owner of mortgage lender Northern Rock, which was nationalised in February last year after the global credit crunch left it unable to fund itself.

Offering more banking services through post office branches could provide the subsidy-dependent network with a new commercial purpose, potentially halting a process of decline that has seen the number of branches halve in the last 45 years.

But the MPs acknowledged that the move could conflict with an existing arrangement under which the post office introduces customers to Bank of Ireland in return for a fee.

They also cautioned that nationalised lenders could not be used as the basis for an entirely new bank operating through the post office network, as this could hinder the government's plans to sell its banking stakes.

On Monday, the Post Bank Coalition lobby group called on the government to use Northern Rock as the institutional foundation of such a post-office based lender. (Reporting by Myles Neligan, editing by Will Waterman)

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