Lloyds Bank defends branch closures plan to angry investors

By Elisabeth O'Leary

EDINBURGH, May 12 (Reuters) - Lloyds Banking Group (Other OTC: LLOBF - news) Chairman Norman Blackwell was forced to defend a branch closure programme on Thursday when angry investors accused management of deserting customers.

Britain's largest mortgage lender, rescued in a 20.5 billion pound ($29.7 billion) taxpayer bail-out during the financial crisis, is midway through a plan to close hundreds of branches and axe about a tenth of its workforce to cut costs.

"There has been no consultation on branch closures worthy of the name," one shareholder said at the company's annual meeting in Edinburgh, accusing the bank of backtracking on a pledge to help rural communities thrive.

"Your salary increase alone would pay for a branch to be open," the shareholder told the chairman, prompting applause from fellow investors.

Blackwell said the bank was responding to the changing needs of its customers, many of whom were abandoning visits to local branches in favour of online and mobile banking.

"We have to sensibly balance the needs of individuals in a local community with the way other people are doing their banking via screens and the online network," Blackwell said, adding that Lloyds had closed fewer branches than its rivals.

"We expect to keep the largest branch network in the UK."

The British Bankers' Association said last week it had launched an independent review aimed at minimising the impact of branch closures on customers, amid concerns whole communities could be left without access to a bank.

"People want reasonable local access to a bank with a real person behind the counter...Five hours on a Tuesday is a joke but we have all stopped laughing," said another shareholder.

Lloyds bucked the downward trend among major British lenders last month, maintaining flat first quarter revenue and cutting bad debts despite a tough economic environment.

Chief Executive Officer Antonio Horta-Osório is looking to shed thousands of jobs to streamline the business, support dividend payments and boost the share price so the government can revive a plan to sell its remaining 9 percent stake. ($1 = 0.6914 pounds) (Additional reporting by Lawrence White and Andrew MacAskill, editing by Sinead Cruise and xxxx)