Wal-Mart Changes the Leases

BENTONVILLE, Ark. – Wal-Mart Stores, which has been insisting it has no plans for retail banking, acknowledged this week it has changed the standard agreements with its credit union and bank partners to enable it to more easily terminate lease agreements. This week’s acknowledgment came after a congressional opponent of Wal-Mart’s bid for a bank charter, disclosed an email he obtained with the new language in it. The news comes as dozens of credit unions are advancing with plans to open Wal-Mart branches, with five, Service CU, Granite CU, Desert Schools FCU, Members CU and Members Alliance CU, opening branches this month, alone. In the new leases, Wal-Mart reserves the right to offer services on its own, like mortgages, home-equity loans and investments and insurance it currently offers through third-party vendors like credit unions and banks. In the past the company has insisted its application for an industrial loan company charter, a so-called back-door bank, would only be used to gain access to the payments systems so Wal-Mart could process its own transactions. The world’s largest retailer said it has no plans to create its own branch network, but will continue to partner with more than 350 banks and credit unions on 1,300 in-store branches. A company spokesman downplayed the change in the leases, saying the company still has no plans to offer those other financial products directly to customers. The FDIC has agreed extend for another year its ban on all new ILC charters for Wal-Mart and other non-financial companies. Meantime, Wal-Mart has obtained a bank charter in Mexico and is proceeding with plans to develop a network of branches south of the border.