Wal-Mart’s move into the US banking industry is expected to grow once SunTrust Bank takes over its partner, National Bank of Commerce, even if Wal-Mart denies any plans to enter the business. Bankers have watched the retailer’s past efforts to acquire at least two banks, and Tony Plath, associate professor of finance at the University of North Carolina, has stated, “Wal-Mart will find a way into the banking business”. Wal-Mart appears to want to blur the lines between retail and banking, with Britt Beemer, of America’s Research Group, predicting the end-result to be “better [consumer choices] at lower prices”.

If Wal-Mart did enlarge its role in the banking industry, the Orlando Sentinel asks whether loans would be denied to competing retailers, suppliers would need bank accounts with Wal-Mart in order to do business, or if Wal-Mart would use its bank to subsidize its retail operations. Such a prospect is “frightening”, says James Gilkeson, associate professor of finance at the University of Central Florida, and a former banking regulator. In the same article, Britt Beemer agrees that Wal-Mart’s ability to reach the mass market gives banks genuine cause for concern, with Tony Plath identifying community banks as likely to be hardest-hit.

SunTrust Bank has indicated that if its proposed acquisition of National Bank of Commerce does proceed, the in-store banking partnership with Wal-Mart would be continued. In fact, Wal-Mart’s reputation led NCB to brand its 20 existing in-store branches as “Wal-Mart Money Centers by National Bank of Commerce”. NCB reports ‘phenomenal’ growth in its deposit accounts since opening in-store branches at Wal-Mart, where foot traffic is high, and maximizes business with lower fees and higher deposit rates, even if Wal-Mart markets its banking partnerships as being non-exclusive, and aims to open a bank in each new store.

(CNNfn)