Post Office offers sweeter deal for universal bank players

The aims of the controversial universal bank have been broadened by the Post Office to include a wider range of "universal banking services" to increase its chances of winning the support of a sceptical financial services industry, writes Jill Treanor.

Basil Larkins, the network banking managing director for the Post Office, said yesterday: "No bank has said they don't want to contribute. No one has turned us down."

So far, however, Barclays is the only major banking group to offer some tentative support for the plan which is at the core of the government's intentions to throw a lifeline to the post office network.

Sources in the Department of Trade and Industry insisted last night that other banking groups would soon start to demonstrate their support.

The Post Office believes the broad plan - under which post office bank ac counts, to be known as "Clear", run alongside the banks' own basic accounts - has "an 80% chance" of winning over the reluctant banks.

The financial services industry is being asked to stump up £130m each year towards providing bank accounts for the 16m benefit claimants who receive their social security payments in cash over post office counters.

After delicate negotiations with major banking groups, the Post Office wants to offer a "tiered portfolio of banking services" through the 18,000 post offices around the country.

Mr Larkins said yesterday that the range of "universal banking services" would include a "simple account for the payment of benefits" in addition to the basic, no-overdraft accounts which the banks have until the end of the month to provide. HSBC, the last of the major banks to announce its basic bank accounts, is now expected to meet he deadline imposed by the Treasury.

Mr Larkins said yesterday that negotiations between the financial companies and the Post Office were continuing.

He confirmed that he was aiming to put out to tender the running of the new accounts next year.

The new accounts are likely to be launched under the "Clear" brand, although Mr Larkins refused to confirm that yesterday.

He indicated that the cost of running the post office accounts would depend on their popularity.

"Our aim if not to compete with other financial institutions over basic bank accounts, but to support their services with a simple account for the payment of benefits and expand the existing successful partnership we already have with a number of banks," Mr Larkins said.