Report: Wal-Mart Setting Stage for Banking Services

Mar 16, 2007 3:00 AM

BENTONVILLE, Ark. -- The picture of Wal-Mart Stores‘ plans for expanding into financial services got muddier yesterday with the Wall Street Journal reporting that the retailing behemoth is renegotiating leases with its in-store banking tenants to give it more leeway in the future to offer mortgages, home-equity lines of credit and consumer loans. A Wal-Mart spokesman said the lease language doesn't "signal anything new" and that the retailer is already offering some financial services. Wal-Mart had applied to start an industrial loan company -- a type of banking entity owned by a non-bank -- but has been stalled for at least a year by the Federal Deposit Insurance Corp.‘s refusal to back it. Meanwhile, state and federal legislators are attempting to pass laws preventing retailers from owning their in-store banks. However, Wal-Mart has said repeatedly it does not want to get into the branch banking business, but wants the banking entity to process credit and debit interchange fees, which Wal-Mart, as well as most other retailers, feels are too high. For instance, when the Tennessee Senate passed a bill this month prohibiting retailers from running their own in-store bank branches, a Wal-Mart spokesman said the bill seeks to "to prevent us from doing something we have no interest in doing," according to the Associated Press. Additionally, the New York Times reported yesterday that Rep. Paul Gillmor, R-Ohio, has emails suggesting that Wal-Mart has told tenants, including banks, that it reserves the right to be a full-service bank. In response, a Wal-Mart spokeswoman said this language has been in leases for five years. “There‘s nothing new here,” she said.