Utah may get Wal-Mart banking

News that retail giant Wal-Mart is poised to enter the banking business in Utah remained in the realm of rumor this week despite newspaper and banking industry magazine reports that say the move is imminent.

Arkansas-based Wal-Mart could become a financial institution under an industrial loan company charter, but to date the company has not applied for a charter from the state of Utah, the executive director of the state's Department of Financial Institutions said.

"I have confirmed that now we don't have an application," G. Edward Leary said, adding that he could not say if the state had even a preliminary conversation with Wal-Mart officials about a charter application.

An industrial loan company charter, or ILC, allows commercial entities — often financial services companies and automobile manufacturers — to provide some financial services such as loans and credit.

Under an ILC charter, a retail company could process some financial transactions, like debit card purchases, internally.

Wal-Mart could "operate like almost any other community bank," offering most financial services with the exception of a checking account, Leary said.

About 60 companies nationwide operate as ILCs and hold charters; 29 of those are in Utah and have assets amounting to more than $115 billion, Leary said.

Federal law prohibits commercial entities from also owning banks. However, Utah is one of five states exempted from some 1980s federal banking regulations, allowing the state to offer ILC charters.

Stories published over the past week in a Salt Lake newspaper and in the nationally circulated American Banker both said a charter application from Wal-Mart is on the horizon.

Wal-Mart would not discuss its future plans.

"It has been widely reported. We have not confirmed anything yet," Wal-Mart spokesman Marty Heires said Tuesday.

He said company policy is to not comment on what Wal-Mart may or may not do in the future. But he said the company is not varying from its policy to have other banks set up shop within Wal-Mart stores.

"We're not interested in operating branch banks. Our strategy has been to invite third parties to operate in our stores," Heires said.