Bank plan for Post Office

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http://www.guardian.co.uk/uk/2009/feb/0 ... st-offices" onclick="window.open(this.href);return false;



The 12,000-strong Post Office network could be turned into a nationwide bank - dubbed "the people's bank" - under proposals presented to a committee of MPs reviewing the future of the Royal Mail.

Although many post offices already offer some banking services through a joint venture with Bank of Ireland, proposals have been developed that would expand the range of products and the outlets from which they are available.

Pat McFadden, minister for postal affairs, has said he wants the business and enterprise select committee to look at plans to allow post offices to operate like a fully fledged bank, offering debit-card facilities and current accounts as well as the credit cards, mortgages and personal loans it is already allowed.

"Royal Mail has been very clear that we want to expand the range of banking services we provide," said Royal Mail chief executive Adam Crozier. "There are a number of things in the pipeline."

It is not the first time the government has tried to turn the Post Office network into a bank. Nine years ago, the government wanted to create a universal bank, in part to find a way to allow social securities benefits to be paid directly into accounts.

The high street banks - then flush with cash - were forced to hand over almost £200m over five years to help finance the creation of a card account aimed at benefits claimants. Bank of Ireland now runs the card account.

The plans are being worked on as the government tries to head off a possible rebellion over plans to sell part of the Royal Mail, which owns the Post Office, to a foreign operator.

As well finding a future for the Post Office network in the face of increasing use of email, Royal Mail also has a ballooning pension fund deficit that is threatening its existence.