Wal-Mart, Dillard?s Edged Out of Banking Business

Wal-Mart Stores Inc. failed in its bid to get into the bank business, but another retailer, Nordstrom Inc., recently won governmental permission to open a federally chartered thrift.

It all came down to timing, says William Fulwider, spokesman for the Office of Thrift Supervision.

Wal-Mart and Dillard’s Inc., Arkansas’ most famous retailers, both filed their applications for thrift charters after May 4, the deadline set for non-financial companies to submit applications for thrift charters. The deadline was set by new legislation, the Gramm-Leach-Bliley law, that rewrote the financial services laws and was signed into law in November.

The new law broadens the services that banks, securities firms and insurance companies may offer but it discourages mixing commerce and banking. Wal-Mart had filed its application in June while Dillard’s was filed in August.

The find application from the Seattle-based apparel retailer was filed Nov. 19 but it was apparently unaffected by the new legislation because it calls for converting a Nordstrom-owned credit card bank to a thrift. Nordstrom National Credit Bank will become Nordstrom fsb. It plans to offer various mortgage products specifically designed to meet the needs of low- and moderate-income borrowers and neighborhoods within the Phoenix Metropolitan Statistical Area.

Federated Department Stores Inc.’s application for a thrift charter, filed prior to May 4, is still pending with the OTS, Fulwider says. Based in New York, Federated Department Stores’ chains include Macy’s, Goldsmith’s, Bloomingdales and Stern’s.

Wal-Mart’s failed bid was expensive to another business with Northwest Arkansas connections: the thrift it tried to buy. Federal BankCentre of Broken Arrow, Okla., is owned by the same people, most of them Northwest Arkansas residents, who founded Dent-A-Med Inc., a Fayetteville-based company that makes small loans to people for medical services.

Dr. T. Warren Center, a Springdale dentist, is chairman of the thrift.

Center says the new legislation not only prohibited Wal-Mart from buying the institution, it “lowered the value of some thrifts because it took a lot of buyers out of the market.”

The collapse of the deal “definitely cost us quite a bit of money,” Center says. “It cost us tens of thousands of dollars in lost fees, turnover and legal fees.”

Federal BankCentre hadn’t been on the market prior to Wal-Mart’s overtures but, Center says, “I think all businesses are for sale if they find someone with deep enough pockets.”

“We’re disappointed. [The potential sale] created some distraction at the bank,” he says.