Retailer to acquire EnerBank

NEW YORK — Retailer Home Depot Inc. agreed on Tuesday to acquire Salt Lake-based home improvement loan provider EnerBank USA from CMS Energy Corp., a Michigan-based energy holding company.

The move reflects a growing trend among retailers and other commercial companies to take advantage of a regulatory loophole that allows any type of company to own a certain kind of bank known as an industrial loan corporation.

The issue has ignited controversy and captured the attention of Congress and on Main Street with Wal-Mart Stores Inc.'s application to start its own industrial bank.

Home Depot officials said the deal is part of a strategy to expand its business with contractors and emphasized that the retailer has no plans to get into banking. EnerBank originates loans used for home improvement projects like window replacements, heating and air conditioning upgrades and landscaping.

"This is a financial service that the contractor provides to his or her customer. It's a natural fit," said Frank Blake, executive vice president, business development and corporate operations at Home Depot, which is based in Atlanta.

Terms of the deal for the loan provider were not disclosed, but it is subject to regulatory approval.

Home Depot has in recent months begun rolling out such services as lower insurance costs and other benefits to its contractors. He said Home Depot doesn't plan to open branches in its stores or pursue other types of banking.

"Our plans are keeping it where it is," said Blake.

But Karen Thomas, executive vice president of Independent Community Bankers of America, was skeptical and expressed concern about the growing trend among commercial companies to own industrial banks.

"Once they have the charter, there is nothing to prevent them from expanding their line of business," said Thomas. "This is not a limited charter in terms of power."

Wal-Mart's size and power in the U.S. economy recently led the Federal Deposit Insurance Corp. to conduct its first public hearings on a banking application. But Wal-Mart has maintained that it doesn't plan to open branch banks or pursue consumer lending.

Instead, the world's largest retailer said it wants to charter a bank in Utah to handle the 140 million credit, debit and electronic check payments that the store handles every year. That would help the discounter potentially save millions in fees it now pays to banks to process those transactions.