Bank of America Corp Chief Executive Kenneth Lewis on May 02 said, Wal-Mart Stores Inc would pose a competitive threat if it succeeds in opening its own bank.
"I do see them as a threat," said Lewis, who runs the No 2 US bank, on a webcast sponsored by Prudential Equity Group LLC. "I'm not saying at all that they shouldn't get a bank charter."
Wal-Mart is seeking US regulatory approval for an industrial bank charter. The world's largest retailer has said it wants a bank to handle electronic payment processing.
Bank of America, based in Charlotte, North Carolina, posted a $4.99 billion profit last quarter, and is the largest US retail bank. Wal-Mart is based in Bentonville, Arkansas. Its bank would be in Utah.
Lewis identified two threats that he says Wal-Mart poses. First, smaller banks might struggle to compete on cost. Second, Hispanics, the largest US minority group, might prefer to bank with Wal-Mart than with a traditional bank.
"Obviously, to the community banks it would be a major threat," Lewis said.
"Second, I think it could affect our Hispanic strategy," he added. "One of the issues with the Hispanic community, particularly first generation, is they don't trust banks. I think they would be more likely to go to Wal-Mart than to use a commercial bank."
Wal-Mart spokesman Marty Heires said the retailer is not a threat to community banks. The company already leases store space for more than 1,150 independent bank branches.
Heires also said Wal-Mart's financial services unit offers money orders and transfers, payroll check-cashing and other products intended primarily for people without bank accounts.
"Approval of a bank charter application would have no bearing on those services," he said.
Last month, the Federal Deposit Insurance Corp held public hearings on Wal-Mart's charter application.
The regulator faces no deadline on whether to grant the application, which Wal-Mart filed last July. Wal-Mart has said it is confident that it will win FDIC approval.
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