ALLIANCE and Leicester is to close 46 branches because of the increasing popularity of Internet and telephone banking, it emerged last night.

More than 300 staff, including 111 full-time workers, will be affected by the closures, which will take effect from October 1.

Eighteen jobs will be lost in the North-East and North Yorkshire, with the Scarborough and Stockton branches closing.

The group, which has 300 branches across the UK, said 80 per cent of retail banking transactions were now processed without direct contact with a member of staff.

A&L said a strong branch network remained an important part of its business, with £35m due to be invested in its high street outlets during the next three years.

However, it said the 46 branches being closed only accounted for three per cent of total sales of mortgages, personal loans and current accounts, even though they represented 15 per cent of the total branch network.

Chief executive Richard Pym said it was important A&L concentrated its investment on channels that customers preferred to use.

The company said it would try to redeploy as many staff as possible, with the rest offered redundancy and specialist support.

The closure of the branches will result in a one-off cost of £10m, although this will be followed by savings of £5m a year.

As well as direct channels, customers with current accounts or card-based savings accounts will be able to use any of 16,000 post offices to deposit or withdraw money. The distance from a closing branch to the nearest post office is less than half-a-mile in all cases.

A&L said its branch network achieved record sales last year.

It said that it would still look to open new branches in top retail locations, but that customers were also able to buy each of its four main products - mortgages, current accounts, savings and personal loans - online.