Plans to close sites that house cash and ensure its supply to banks around the country have run into trouble due to disagreements about how to manage the sensitive project.
The talks, overseen by the Bank of England, have hit difficulties as banks and other groups involved have clashed. The issue has emerged alongside questions about bank branches and ATMs as the use of cash has declined. About two thirds of existing capacity in the nation’s highly secure cash sites is not needed any more, sources said, with estimates that sites could be cut from 31 to about 10.
Banks are nervous because the move will lead to significant job cuts in parts of the country where there are few alternative employment options. There is also friction about which sites should close and how a new entity to oversee a reduced number should be managed.
The sites are in large warehouses with high levels of security. The main owners are NatWest, the Post Office, G4S and a joint venture between Barclays and HSBC called Vaultex. They supply cash for their own businesses as well as other financial institutions such as Lloyds, and big users of money including supermarkets.
The declining use of cash has made the sites more expensive, prompting fears that individual players could make dramatic changes to their own networks. That could disrupt the nationwide supply of cash, potentially triggering a run on a bank if customers fear they cannot easily access their funds.
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The Bank of England launched a consultation last year on ways to manage future changes. One option is to create a utility to manage the sites with costs shared among lenders. There are disagreements about how it would be organised and paid for.
Those involved have also struggled with how to hold discussions about the pricing of cash distribution without breaching competition law.
The Bank may decide to push ahead with its own plan if the various parties cannot agree by this summer.
