Closing UK branches may leave some towns without a bank

The news came as NAB, Australia's biggest bank by assets, reported a 12.5% drop in first-half cash earnings.

NAB owns Clydesdale and Yorkshire banks and had already announced plans to cut 1,700 jobs in the UK.

Glasgow-based Clydesdale Bank will lose 60 of 217 branches and Yorkshire will lose 40 sites - a fifth of its network.

However, NAB said it was planning to expand its operations in the south east of England.

Tough times

The job cuts are proving controversial and Australian Treasurer Peter Costello said he wanted a "good explanation".

We have had to move with the times David Thorburn, Clydesdale Bank

NAB is looking to keep ahead of rivals, such as Commonwealth Bank of Australia and Westpac Banking, which have been putting in a better performance.

The bank is still recovering from a trading scandal that broke at the start of 2004 when it emerged the company had currency dealing losses of $184m (�98m).

It is also facing increased competition in Australia and Europe, rising UK pension costs and a bureaucratic structure, analysts said.

NAB's image has been tarnished

Speaking about the planned job losses on national radio, Mr Costello said that the bank "better have a pretty good explanation because the NAB is a highly profitable organisation".

"I feel for people who have lost their jobs," he said.

NAB is looking to trim about 4,200 staff from its Australian and British operations, or about 10% of the workforce.

"The National is profitable, it is privileged and it is powerful," said Paul Schroder, the national secretary of Australia's Finance Sector Union.

"There is no case for cutting jobs. If anything they should be investing in staff."

But NAB chief executive John Stewart said: "We have consulted with them (the unions) all the way through."

'Last bank in town'

According to a statement from NAB, the UK closures will be part of �117m cost-cutting programme at the Clydesdale.

David Thorburn, Clydesdale Bank's chief operating officer, said the company had been forced to make "some difficult decisions".

However, he defended the closure programme, saying that only 1% of customers used the branches in question and they would have access to banking services through Post Office outlets.

"Everybody's banking habits have changed over the last few years," he told the BBC. "We have had to move with the times."

Britain's Amicus union said it was concerned by the "substantial number" of job losses.

The union also vowed to contest any "last bank in town" branch closures.

'Green light'

There are more than 30 communities across Scotland where the Clydesdale is currently the only bank branch.

Consumer groups expressed anger about the closures, saying they would damage other businesses.

"There are wider implications of a closure on this scale," said Derek French, director of the Campaign for Community Banking Services.

"It gives a green light to many other banks waiting in the wings which will play follow the leader and say it is not our fault, it is an industry problem."