Wal-Mart drops banking request

Stymied by a phalanx of opponents including big banks and unions and dogged by conflicting messages about its intentions, Wal-Mart withdrew a bid for a banking license Friday.

The world’s largest retailer withdrew its application to the Federal Deposit Insurance Corp. for a bank charter after nearly two years of what it called “manufactured controversy.”

It was the Bentonville, Ark.-based company’s fourth unsuccessful attempt since 1999 to open a bank after previous efforts in Oklahoma, California and Canada were stopped by regulators or lawmakers.

Wal-Mart repeatedly said its latest bid was about payment processing, not branch banking. It said it wanted to open an industrial bank to save millions of dollars it now pays outside banks to handle credit and debit card payments in its stores.

Supporters said that it could help reduce fees and costs for customers and that the industry was in need of more competition.

But a vocal front of opponents including banks of all sizes, unions, farmers, convenience store owners and real estate firms protested to the FDIC and Congress that Wal-Mart was secretly planning to start a branch banking system.

Wal-Mart’s decision came a day after a Republican member of the House Financial Services Committee accused Wal-Mart of “a pattern of deception and dishonesty” about its intentions.

Rep. Paul Gillmor of Ohio released an e-mail that showed Wal-Mart was renegotiating leases with banks that operate branches inside Wal-Mart stores to preserve the retailer’s right to offer a range of financial services, including mortgages and loans. Wal-Mart said those lease terms were nothing new.

Jane Thompson, Wal-Mart’s president of financial services, denied that the revelation had anything to do with its decision to drop the bank application.

Shares of Wal-Mart rose 21 cents Friday to $46.21.