Community Bankers Association of Illinois


The Mexican unit of Wal-Mart Stores, Inc., Wal-Mart de Mexico, has recently applied for a banking license in that country with the intention of opening full-scale branches in some of its 826 stores there.

Walmex, as the company is known, would have $25 million in start-up capitol as required by Mexican regulators and has agreements with lenders to service Wal-Mart credit cards in Mexico. Laws that prevent commercial companies from owning bank charters (the ILC charter is one exception) in the U.S. are not present in Mexico. As a result, several other retailers in Mexico already possess bank charters. A furniture and appliance company, Grupo Famsa received a bank charter in August. Grupo Elektra chartered Banco Azteca as many as four years ago. It appears, however, that Wal-Mart would be the first U.S. based retailer to hold a bank charter in Mexico.

A recent American Banker article commented that many observers in the U.S. wonder if Wal-Mart could use the Mexican bank to enter the United States, considering their attempt to secure an ILC charter. The article quoted Gail Lavielle, the chief spokeswoman for Wal-Mart as saying that "these are two very separate things and two very separate markets…". Rep Paul Gillmor, R- Ohio, and sponsor of legislation to close the ILC loophole, responded that "It is clear from past attempts in the United States that Wal-Mart's preferred business plan is to expand in to banking, Wal-Mart's decisions abroad certainly have implications at home."

Representative Paul Gillmor, R-Ohio, and Barney Frank, D-Mass. Have authored a bill, HR 5746, which would close the industrial company loophole by prohibiting commercial firms from chartering or acquiring industrial banks after June 1, 2006. Representative Gillmor has already stated his desire for the FDIC to extend the moratorium beyond 6 months in order to give Congress sufficient time to act. Meanwhile, CBAI continues to urge you to contact your congressman and urge him or her to co-sponsor HR 5746. Please contact your representative in the U.S. House immediately to urge them to co-sponsor H.R. 5746! Call 202-225-3121 and ask for your representative by name. If you are not sure who your U.S. Representative is, please click here.

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