by Gwen Moritz
Posted 7/20/2005 11:49 am
Updated 2 years ago
Darryle Rude, supervisor of industrial banks for the Utah Department of Financial Institutions, told Arkansasbusiness.com that industrial banks, as defined by Utah law, differ from commercial banks in two primary ways. First, an IB can be owned by a parent that is not a bank holding company. Second, an IB cannot offer demand deposit accounts, such as checking accounts, if it has more than $100 million in assets - very small in the world of banking. For example, First Bank of South Arkansas at Camden and First National Bank at Paris are both larger than $100 million.
Rude said the services and products offered by a Utah IB are also limited to the business plan filed and approved by state regulators. Wal-Mart has said that it hopes to use the Utah IB charter to save on the money currently being paid to other financial institutions to process transactions made at Wal-Mart stores.
Rude said Utah is one of the few states in which nonbank holding companies are allowed to set up banking operations; California changed its law three years ago specifically to keep Wal-Mart from establishing an industrial bank there. Wal-Mart competitor Target Corp. of Minneapolis already operates an IB in Utah, as do GE Capital, Merrill Lynch and Pitney Bowes.
Wal-Mart's interest in operating a retail bank is well-established. Repeated attempts to get Congress to pass enabling legislation have been unsuccessful. A few Wal-Mart stores, primarily in Memphis, contain bank branches labeled as "Wal-Mart Money Centers," but they are actually branches of Memphis-based National Bank of Commerce and staffed by NBC employees.