Banks and building societies have agreed a Code of Practice for dealing with staff, customers and local communities who are affected by branch closures.

The new code recognises that a variety of factors such as changed demographics and commercial practices have contributed to closures.

AIB and Bank of Ireland, the Republic's two biggest banks, were party to developing the code. Both institutions are currently engaged in a significant branch closure strategy. More than 40 AIB branches have closed their doors since the bank began its "Branch Reconfiguration Programme" in 1997. At least half of these were located in rural areas. One such closure in Kilfinnane, Co Limerick, so roused the ire of local residents last month that two customers staged a 12-hour protest fast outside the branch.

Bank of Ireland, meanwhile, is in the process of closing 60 branches. According to a spokeswoman, 19 branches have already been closed, mostly in urban areas where there was some overlap with other branches.

AIB currently operates 287 branches in the Republic, while Bank of Ireland's slimmed-down branch network will number 250 when restructuring is complete.

The Minister for Finance, Mr McCreevy, welcomed the publication of the code yesterday. "I hope this initiative will go some way towards alleviating some of the difficulties which arise when local banks close," he said.

Telephone and Internet banking will also be promoted under the code.