Wal-Mart Applies to Buy Its Own Bank
Wal-Mart Stores seeks regulatory approval to buy a small California bank, reports the New York Times. According to Wal-Mart, the move is largely motivated by the retailer chain’s frustration with the high cost of processing its customers’ debit card purchases. “This is not an attempt to enter the retail banking system,” says Wal-Mart Spokesman Robert McAdam.
Wal-Mart had made two previous attempts to enter into the banking business. Last month, it filed applications with the California Department of Financial Institutions and the Federal Deposit Insurance Corporation to acquire Franklin Bank of California, in Orange, Calif. The single branch bank had $2.4 billion in assets at the end of last year, according to F.D.I.C. data. Franklin also has an industrial bank charter, which is one of the few ways a company not primarily involved in banking or financial services is allowed under federal law to own a bank, experts in banking law say.
If it owns a bank, Wal-Mart can have access to the system that arranges for debit card transactions to be deducted from a customer’s checking account. Only banks have such access, Mr. McAdam says. It would also be able to offer financial services ranging from savings accounts and certificates of deposit to home equity loans or auto financing. Several retailers, including Target, Federated, Nordstrom and Sears, have their own banks, according to David Robertson, publisher of The Nilson Report. “Wal-Mart could be very competitive,” he says.
Moderator Comment: What would be the effect of Wal-Mart getting into banking/financial
This is just another indicator why so many vendors do their very best Wayne’s
World imitation when the subject of Wal-Mart comes up. “We are not worthy.”
Anderson – Moderator]