WASHINGTON - Wal-Mart Stores Inc., struggling to expand its in-store banking services but thwarted by Congress, is reluctantly opening the door to credit unions.

The Bentonville, Ark., retail giant wants bank branches at each of its nearly 700 supercenters. The firm estimates that 20% of its customers, and many of its 900,000 U.S. employees, are unbanked. Wal-Mart has placed banks or thrifts at about 450 of the stores. But it has been unable to fill the remaining 250 - largely, the company claims, because the stores are located in poor or rural areas.

The nation's fourth-largest corporation thought it had a solution: buy $26 million-asset Federal BankCentre of Broken Arrow, Okla., and establish branches at the empty sites. However, under pressure from community banks, Congress prohibited commercial companies from chartering or buying thrifts in the new financial reform law.

The predicament left Wal-Mart with little choice but to consider credit unions. "Credit unions are an alternative for us," a company spokesman said.

DuTrac Community Credit Union of Dubuque, Iowa, is the first nonprofit to benefit. The $173 million-asset credit union opened a 515-square-foot Wal-Mart branch on Oct. 29. The facility has three teller stations, a private office for loan meetings, and a member-services counter for signing up new customers.

"I contacted Wal-Mart a couple years ago to see if they might be interested in leasing us space," said Tom N. Sarvis, the credit union's president and chief executive officer. "They were not."

Earlier this year that attitude changed. Mr. Sarvis said he received a call in August from Wal-Mart's Midwest leasing manager, who told him the company's Dubuque store needed an in-house financial institution.

Despite the mythology of Wal-Mart - that it chews up its punier competitors and spits them out - an executive at one of two community banks in Dubuque said he does not feel threatened by DuTrac's new Wal-Mart branch.

"This market is already saturated with branches," said John K. Schmidt, senior vice president at $576 million-asset Dubuque Bank and Trust Co. "They're going to do a lot of transaction business and not make a buck."

Mr. Schmidt said Wal-Mart approached the bank in May about establishing a supercenter branch, but the bank declined.

However, community bank representatives here were alarmed. "It underscores that they are going to pursue absolutely every avenue to get into the financial services business," said Kenneth A. Guenther, executive vice president at the Independent Community Bankers of America.

Wal-Mart's interest in credit unions has been scant. Other than the Dubuque store, only two supercenters, both located in Georgia, host credit union branches, a company spokesman said. The firm's primary concern with the nonprofits has been their membership limitations, which are restricted by geography or employer.

But with more credit unions obtaining community charters, the concern that Wal-Mart customers might not be able to obtain credit union services has decreased. DuTrac, for example, is authorized to serve anyone who lives or works in any of 10 Iowa, Illinois, or Wisconsin counties.

Ken Swartz, president of NES Group, a bank facilities designer in Taunton, Mass., has seen Wal-Mart's change of heart firsthand. NES searches for financial institutions to fill Wal-Mart's in-store voids in the Northeast. If successful, NES receives a contract to build the branches. "It's sort of like the matchmaking in Fiddler on the Roof," he said.

The first few deals involved community banks. But then Mr. Swartz remembered that Northeast Credit Union, a $259 million-asset nonprofit in Portsmouth, N.H., had expressed interest in Wal-Mart months earlier. "We went to back Wal-Mart, and they said, 'Nope, nothing doing, we don't work with credit unions,' " he said.

Frustrated, Mr. Swartz asked the Credit Union National Association to contact Wal-Mart. CUNA president Daniel A. Mica sent an April 20 letter to Sally Jones, Wal-Mart's Northeast leasing manager. "As it relates to in-store branching, credit unions have secured relationships with major grocery store chains and oil companies," Mr. Mica wrote. "I urge you to consider credit unions a viable partner for branches within your stores."

When Northeast president and chief executive officer Peter J. Kavalauskas heard about DuTrac's success in Dubuque, he called Mr. Swartz for an explanation. Since then, Mr. Swartz said, Ms. Jones gave him the green light to interview credit unions as well as banks and thrifts.

Under federal law, companies such as Wal-Mart may not charter credit unions to serve their customers, according to the National Credit Union Administration.

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