Wal-Mart Exec Says Little New, but Her Audience Size Is Telling

LAS VEGAS - Jane Thompson offered an hourlong defense of Wal-Mart Stores Inc.'s financial plans here and urged bankers to look at the retailing giant and would-be bank as posing an opportunity, not a threat.

Though she offered little in the way of new insight into Wal-Mart's financial services strategy, and few audience members seemed interested in changing their views on the subject, the fact that she can still fill a room during one of the industry's busiest conferences shows that Wal-Mart's plan to obtain a banking charter remains a lightning-rod issue.

In a packed conference room at the Bank Administration Institute's Retail Delivery Conference Tuesday, Ms. Thompson, the president of Wal-Mart Financial Services, said the Bentonville, Ark., company plans to expand its financial offerings by working with vendors, and she described its strategy as being "a bridge for the unbanked" to establish financial identities.

For the most part, she received a tepid reception from the audience of more than 200 bankers and others, and drew laughter that seemed forced when she quipped, "I hope this is a friendly crowd."

Ms. Thompson reiterated that Wal-Mart's application for an industrial loan charter is for back-office functions, and that it does not want to compete with banks.

Even in the absence of an ILC charter, Wal-Mart plans to keep widening its financial offerings. It has opened "Wal-Mart Money Center" sections in 100 stores and eventually plans to open as many as 500, she said. It offers a cobranded credit card with Discover Financial Services Inc., and international remittances through MoneyGram International Inc. of Minneapolis.

But the retailer also wants to expand its partnerships with banks, she said. It has about 1,200 branches in its stores now and plans to open 500 more eventually. Most of these are branches of independent community banks, but Wal-Mart also has a "strategic bank partner" in SunTrust Banks Inc. of Atlanta and is talking with two other big banking companies about similar arrangements.

To be strategic partners, banks must extend services "that they don't offer at their other branches," such as checking accounts that do not allow overdraft fees, she said.

One person asked if Wal-Mart had a formal process to move unbanked customers into the system, to which Ms. Thompson replied: "We don't, and I think we should. We should have more formalized cross-marketing. We're working on that with SunTrust."

Andrew Mastorakis, the executive vice president of sales and service at Tri Counties Bank in Chico, Calif., said Wal-Mart has been a better partner than some other retailers whose stores have Tri Counties branches. "They're easy to do business with," Mr. Mastorakis said in an interview after listening to the presentation.

The $1.9 billion-asset unit of Trico Bancshares has opened four branches in Wal-Mart supercenters in the past 12 months and has agreements to open seven more, he said. Overall, retail stores house 23 of Tri Counties' 54 branches.

Ms. Thompson acknowledged that the political tussle over the company's ILC application has damaged its relationships with banks that oppose its intrusion into their business, and she said Democratic control of Congress could further complicate its efforts.

Reps. Barney Frank, D-Mass., and Paul Gilmore, R-Ohio, said Tuesday that that they would ask the Federal Deposit Insurance Corp. to extend a moratorium on granting ILC applications from commercial firms until next summer.

Tom Brown, the head of the hedge fund Second Curve Capital and the moderator of the presentation, was blunt in his assessment of the government's slow progress on Wal-Mart's application. "I think it's absolutely ridiculous," he said, speculating that nonfinancial companies, whether Wal-Mart or others, could end up suing regulators if the government decided to quit issuing ILC charters to such companies.

"It would be hard for them to deny the applications, given the approvals they've already made," Mr. Brown said.

But when he was asked whether he thought Ms. Thompson had won any new supporters with her presentation, he replied with a mirthless chuckle, "Not in this group."

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