FEARS that a rural community would lose one of its two remaining banks have been confirmed.

HSBC has announced that it will close its branch in Front Street, Stanhope, in 12 weeks.

Local people have expressed concern about the future of the branch since HSBC installed a new-style cash machine and telephone banking point in front of the building.

Now, the "the world's local bank" has confirmed that it is winding down its Stanhope operation.

Zoe Waller, from HSBC, said: "Usage has dropped off, people aren't using the branch and we have two staff there, the minimum security requirement, not being used effectively.

"We are leaving a fee-free ATM that means free cash withdrawals, balance checks, HSBC credit card payments and transfers between accounts.

"The majority of banking needs will still be met."

She said the bank was consulting with local district and parish councillor John Shuttleworth to help people adapt to the change.

Ms Waller said: "We're always aware that closing a branch can cause concern and are here to listen to any inquiries or issues."

She said the branch's closure comes as part of a £450m investment and upgrading package.

Typically, the branches that were closed were running at about 28 per cent of the capacity of other branches, but for Stanhope it was even less.

She said that investment was going into better-used branches and more popular banking methods, but that there would still be banking facilities in the village.

Coun Shuttleworth, who is chairman of Stanhope Parish Council, said: "We do have a Barclays and I am hoping that there can perhaps be some kind of deal struck with the Post Office.

"I expect that there will be many customers, particularly the elderly, who will switch to Barclays because they prefer an over-the-counter service.

"But there is always the possibility that Barclays could pull out, too, and they have already closed branches in Tow Law and Shotley Bridge. The effect on the local economy if the Stanhope branch closed would be devastating and it would leave people travelling as far as Bishop Auckland, Consett or Kirby Stephen to find a bank."