Alliance & Leicester (A&L) is to close 46 branches because of the increasing popularity of internet and telephone banking.

More than 300 staff, including 111 full-time workers, will be affected by the closures, which will take effect from October 1.

The group, which has 19 branches in Sussex, said 80 per cent of retail banking transactions were now processed without direct contact with a member of staff.

A&L said a strong branch network remained an important part of its business and £35 million would be invested in its High Street facilities in the next three years.

The 46 branches being closed accounted for only three per cent of total sales of mortgages, personal loans and current accounts, even though they represented 15 per cent of the branch network.

Chief executive Richard Pym said it was important A&L concentrated its investment on channels customers preferred to use. He added: "Times are changing. British banking customers are not visiting their branches every week or even every month.

"They are finding it more convenient to use the telephone, the internet and cash machines for regular transactions and are increasingly looking at branches as places for more complex issues."

The company said it would redeploy as many staff as possible. The rest would be offered redundancy and specialist support.

The branch closures would result in a one-off cost of £10 million, followed by savings of £5 million a year.

Customers with current accounts or card-based savings accounts would be able to use any of 16,000 post offices to pay in or withdraw money.

The distance from a closing branch to the nearest post office was less than half a mile in all cases.

A&L said its branch network achieved record sales in 2003 as customers increasingly used the sites for sales rather than day-to-day transactions.

It said it would still look to open new branches in top retail locations but customers were also able to buy each of its four main products - mortgages, current accounts, savings and personal loans - online.

In February, A&L reported a 12 per cent rise in annual profits to £525 million after announcing it had met all its strategic targets for 2003.

Staff union Algus said it was shocked at the scale of the closures announcement and it would look at ways to challenge the company's decision.

Thursday June 17, 2004