Wal-Mart Rolls Out Bank in Mexico

by Mark Friedman  on Monday, Feb. 25, 2008 12:00 am  

After failing to land a bank charter in the United States, Wal-Mart Stores Inc. took its plan south of the border.

On Nov. 12, Wal-Mart opened the first four branches of Banco Wal-Mart in Mexico. Banco Wal-Mart already has 22 locations and is expected have at least 80 by the end of the year.

Meanwhile, Wal-Mart's plans to open a bank in the United States appear to be dead.

Earlier this month, the Senate Banking Committee approved a bill that would prevent retailers from owning the sort of limited bank charters that Wal-Mart previously had sought, just as they are prevented from owning commercial banks. The bill now is headed to the full Senate for a vote, but a date hasn't been set.

If the bank ban passes, Wal-Mart doesn't appear to mind.

"There are no such plans at this time" to pursue a bank in the United States, Wal-Mart spokesman Kevin Gardner said last week in an e-mail statement to Arkansas Business.

Wal-Mart is instead focused on growing its Mexican bank.

Gardner wouldn't say how many new accounts Banco Wal-Mart has opened.

Banco Wal-Mart could be a hit, though, for the Bentonville retailer.

"What you find in Mexico is the type of people who shop there often don't have the regular checking accounts," said Refugio Rochin, a professor of Chicana/Chicano Studies and an economist at the University of California at Davis. "So if Wal-Mart is installing something that allows the buyers to have credit, it makes sense that buyers could also take advantage of the Wal-Marts for banking."

But Wal-Mart Watch, a nonprofit advocacy group in Washington, D.C., isn't happy with Banco's interest rates. Interest on the savings accounts is 1 percent and interest on consumer loans - which can be used only to buy Wal-Mart items - is 75 percent annually.

The loans provide credit to people who wouldn't otherwise have access to credit cards, Gardner said.

"It doesn't sound like it's that helpful to low-income people," said Stacie Lock Temple, a spokeswoman for Wal-Mart Watch. "It sounds like it could easily get them into a cycle of debt and not being able to afford what they are purchasing."



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