Post Office can be saved by morphing into a state-backed bank, report concludes

Oliver Gill
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Post Offices Come Under Increasing Threat Of Closure
The Post Office was separated from Royal Mail as part of the Postal Services Act 2011 (Source: Getty)

The Post Office’s network of thousands of branches can be saved by transforming them into a state-owned UK Post Bank, a leading business school report has concluded.

The current agreement with Bank of Ireland to provide banking services is also throttling future investment in the Post Office and should be ditched, according to the report by Cass business school.

Establishing a new state-backed lender would improve finance for small businesses and rebalance the UK economy away from London.

Report author Professor Barbara Casu Lukac said:

A Post Bank would reach the large groups of people and small firms who do not currently use banking services. It would also reach customers who are affected by the massive branch closure programmes operated by banks, often in rural areas.

The Post Office was separated from Royal Mail as part of its privatisation. The government-owned firm currently operates a network of around 11,500 branches across the UK.

Read more: Post Office to cut 300 jobs as it ditches 37 offices


It is estimated setting up the bank would cost in the region of £2bn – the same amount the government has poured into the Post Office in the last seven years.

Casu Lukac said: “The profits this would bring in would eliminate the need for an ongoing annual subsidy for the Post Office, putting it on a sustainable footing for the future.”

And by unhitching itself from Bank of Ireland, a Post Bank could use the investment to better expand.

“Our analysis suggests the revenues the partnership between the Post Office and the Bank of Ireland has brought in remain significantly lower than post banks around the world and it has not delivered a full range of banking products for Post Office customers.”

Read more: Post Office workers to strike in week before Christmas

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