The branch closures will affect 310 employees, including 111 full-time staff.

Alliance and Leicester announced in April that it was redefining itself as a "direct bank with a high street presence" because customers were increasing using its ATM, Internet and telephone banking services. The bank is also investing £10 million in Web-based marketing and advertising in 2004 in a bid to increase online sales.

Around 80% of the transactions conducted by the bank in the past year were processed through self-service channels. Alliance and Leicester says branches are increasingly used for sales and for more complex transactions that require face-to-face service.

Although the 46 branches represent 15% of Alliance and Leicester's total network they account for less than three per cent of total sales and are used by only one per cent of retail banking customers each month.

In a statement, Richard Pym, group chief executive, Alliance and Leicester, says: "Times are changing, British banking customers are not visiting their branches every week or even every month. They are finding it more convenient to use the telephone, the Internet and cash machines for regular transactions and are increasingly looking at branches as places for more complex issues."

The closures will save the bank about £5m a year. The move will cost just under £10m in the first half of this financial year and leave the bank with 254 branches.

The bank says it will continue to develop its remaining branches and will invest around £35m in improving the network over the next three years.