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February 2, 2009

Post Office to become “People’s Bank”

by Gill Montia

Story link: Post Office to become “People’s Bank”

The Government has confirmed plans to create a “People’s Bank” by extending the financial services offered by the Post Office.

Following recent closures, the Post Office has a network of around 12,000 branches across the UK and the Department for Business Enterprise and Regulatory Reform is reported to be consulting with the Commons Business & Enterprise Select Committee to find ways in which the new role can be developed.

Commentators are suggesting that the move could increase lending during a period when commercial banks remain cautious and unresponsive to Ministers’ threats of legal action if they do not honour the Government’s bail-out of the UK banking sector by lending more.

An extension of the Post Office’s financial services business could also lessen the likelihood of the Royal Mail being privatised.

The Post Office currently offers personal loans, savings accounts and mortgages that are backed by the Bank of Ireland, alongside certain other banking services.

However, its future with the Bank of Ireland may be in doubt as it emerged over the weekend that the bank is in need of a bail-out of up to €4 billion from the Irish Government, to cover potential losses on bad debts arising mainly from constructions projects and land deals.

 

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