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By Andrew MacAskill and Lawrence White
LONDON, June 30 (Reuters) - British banks' closure ofhundreds of branches in the last three years has more thanhalved lending to small businesses in the areas affected,research on Thursday showed, ahead of a debate in parliamentabout the impact of the cuts.
Britain's biggest banks HSBC, Barclays,Royal Bank of Scotland and Lloyds Banking Group have been steadily shrinking their branch networks to cut costswhile investing in online and mobile banking services.
Research by campaign group Move Your Money suggested manycustomers were losing out as a result, with lending to smalllocal businesses down by 63 percent in towns and villages thathad lost a bank branch.
The impact on communities following the closure of theirlast bank branch was even more striking, with a 104 percent dropin lending growth to small businesses, according to theresearch, based on data from the British Bankers' Association.
"The UK's biggest banks are abandoning communities acrossthe country, and today for the first time we can see theincredible damage that is happening," Fionn Travers-Smith,campaign manager for Move Your Money, said.
The impact of branch closures on lending in specific areashad not been closely tracked until the British Bankers'Association began releasing information in 2013 about locallending patterns.
This marked a government push to increase transparency andencourage competition between banks. The Move Your Money studyis one of the first to make use of that data to map how theclosures have affected lending.
Politicians from the main political parties have arranged todebate the issue in parliament later on Thursday and areexpected to demand a tightening of the rules that govern branchclosures and that banks do more to help customers affected.
RBS, Lloyds, Barclays and HSBC did not respond to requestsfor comment.
A spokesman for the British Bankers' Association said bankshave signed up to protocols aimed at minimising the impact ofbranch closures, including partnering with post offices to offerservices and carrying out impact studies before closures.
"Banks are determined to leave no one behind," he said.
Reuters earlier this month reported that Britain's largestbanks are disproportionately closing branches in thelowest-income areas while expanding in wealthier ones.
The analysis found more than 90 percent of the branchclosures were in areas where the median household income isbelow the British average of 27,600 pounds ($39,042).
Banks could face more pressure on costs after Britain's votelast week to leave the European Union, potentially creating thebiggest upheaval for the country's banking industry since the2007-2009 financial crisis.
The vote for Brexit has led to predictions of a recessionand earnings downgrades that hit bank shares.
Academics and campaign groups say Britain should enacttougher legislation like in the United States which requiresbanks to maintain branches and lending in poorer areas.
The U.S. Community Reinvestment Act of 1977 is designed toreduce discriminatory lending against low-income areas byrequiring banks to lend in communities where they are chartered.The U.S. law also has the power to block opening of new brancheselsewhere if a bank does not comply. (Editing by Sinead Cruise and Jane Merriman)
