Charities and clubs across the North East have been told they are no longer welcome at Newcastle Building Society.
The Tyneside lender has contacted local groups to say it will no longer be providing the special accounts reserved for good causes.
Charities will instead have to go to other high street banks, losing the local links with a trusted lender. Bank accounts for community groups typically see charges that would normally be made on business accounts waived, with other preferential rates and services on offer.
Newcastle Building Society said it had not offered the charity accounts to new users for many years and pointed to “greatly increased” administration costs when contacting customers.
The building society’s decision is the latest blow to the region’s charity sector to come from the banking industry. Already Virgin Money has announced it will not be supporting the Northern Rock Foundation, ending nearly two-decades of funding for the charity.
Voluntary groups have now said they hope the building society will continue to back local causes.
Carrie Brookes from the Voluntary Organisation Network North East, said: “This is sad news, removing the last local bank for charities to choose for their banking. It also follows a bad few weeks of news following the failure of the Northern Rock Foundation talks. We hope Newcastle Building Society will continue to support local charities and community groups in alternative ways as we understand they have in the past.”
Newcastle Council leader Nick Forbes was among those questioning the society’s decision.
He said: “Many clubs, societies and charities prefer to bank with building societies because they are seen as more ethical and locally based than banks. I’m therefore extremely disappointed to hear that Newcastle Building Society, having provided such services for decades, is pulling out of charity banking.
“This is causing great inconvenience to all those affected, with all the hassle of having to open new accounts, as well as sending a message that charities aren’t profitable enough for them. I urge the Newcastle Building Society to think again about how important strong local roots are in financial services before it is too late.”
Last night a Newcastle Building Society spokeswoman said: “The change forms part of the society’s wider simplification programme. We haven’t offered these accounts to new customers for several years and they do not form part of our core offering. Most of these accounts were set up a long time ago and many of the accounts are inactive.
“We wrote to account holders several months in advance of this to provide as much notice as possible.”