Wal-Mart, Citing Controversy, Abandons Bank Plans (Alison Vekshin)

  Wal-Mart Stores Inc. scrapped plans to open its own bank, ending a two-year controversy that roiled financial-services companies that feared direct competition from the world's largest retailer.

  By Alison Vekshin

  March 16 (Bloomberg) -- Wal-Mart Stores Inc. scrapped plans to open its own bank, ending a two-year controversy that roiled financial-services companies that feared direct competition from the world's largest retailer.

  Wal-Mart said today it notified the Federal Deposit Insurance Corp. it was withdrawing an application to open a so- called industrial bank in Utah. The unit would have enabled the Bentonville, Arkansas company to process credit-card and debit- card transactions internally.

  ``We hope this gets us out of the spotlight,'' Jane Thompson, Wal-Mart's financial services president, said in a telephone interview. ``The controversy around us and whether we wanted to branch wouldn't die, even though the facts were to the contrary.''

  Wal-Mart's move represents a victory for banking lobbies that threw up hurdles since the retailer's application was filed with the FDIC in July 2005. Banks said Wal-Mart would have used the bank to eventually open branches in its stores and dominate the industry.

  ``Wal-Mart made a wise choice,'' said FDIC chairman Sheila Bair in a statement. ``This decision will remove the controversy surrounding their intentions.''

more

READ MORE: Bloomberg