This article will make me unpopular. I am going to say something nice about Barclays Bank. Well, not nice exactly but at least tempered with a degree of understanding.

At first sight this is a very difficult task. The bank chose the week of its 172 branch closures to run an expensive TV campaign saying how "big" it was. It announced its chief executive's salary of £1.3 million at the same time as telling thousands of staff that they could no longer be afforded.

It led the highly-unpopular move to charge customers of other banks for the use of its cashpoint machines. The bank seems almost to have displayed a sort of in-your-face defiance of everything previously considered sensible by PR professionals.

My relative sympathy for the bank, however, is partly driven by the lack of understanding displayed by many of its critics. One commentator last week said "I am sorry that in their drive for greater profits it is apparent that they are abandoning any sense of social responsibility". Such a comment is nave. Of course the bank has a "social responsibility" to the staff and customers who rely upon it. But it also has a big responsibility to the pensioners whose interests make up the vast majority of its shareholders.

There is a marked new tendency to refer to "shareholders" as if they were all rich City investors and to mention "profits" as if they were somehow unseemly. The truth is that big quoted companies like Barclays are effectively owned by pension funds. Those funds rightly expect the investments to perform well - otherwise the pensioners do not get paid.

It is worth pointing out, in passing, that building societies and other mutuals do not face this pressure. With no external shareholders their only responsibilities are to their customers and staff. It is certainly no coincidence that the closure of a building society branch is a relative rarity whereas the banks are announcing them on a weekly basis.

But the bigger question is how exactly can a "big" bank like Barclays be expected to keep increasing its profits year after year while its traditional over-the-counter business is in decline. Customers used to write letters to bank managers. Now they ring up. They used to pay in money by hand. Now they get paid automatically. Internet banking is just around the corner. To expect a bank like Barclays to continue with the same overhead structure as suited it in the 1980s is totally unrealistic.

The real heart of the problem, I think, is that the basic marketing policy deployed by all the bigger banks in the mid-90s has been proved to have been wrong. They did not expect their customers to shop around. They expected that their customers would trust them to provide everything. This was, admittedly, a highly-convenient policy to adopt when an expensive branch network had to be maintained. But it was wrong.

Customers are very happy to get their insurance from Direct Line, their pension from Norwich Union and their mortgage from a building society while still banking with Barclays.

Now that Barclays, and others, are waking up to this fact, their costs of rectification are much greater and much more visible than they would otherwise have been.

Converted for the new archive on 30 June 2000. Some images and formatting may have been lost in the conversion.