updated 7/19/2005 9:24:16 AM ET 2005-07-19T13:24:16

Wal-Mart Stores Inc. has applied to establish a Utah industrial bank that would process credit card, debit card and electronic check transactions from its retail locations, the bank's chief said.

The world's largest retailer now uses a third-party processor for the transactions. Handling the work itself would save a significant amount of money, Alan Whitchurch, the bank's president and chief executive, said Monday He declined to say how much money would be saved.

Wal-Mart's application with the Utah Department of Financial Institutions follows five years of attempts to get into banking. Previous plans to buy financial institutions in California, Oklahoma and to partner with a bank in Canada were unsuccessful.

Utah may present it its best chance. General Electric Co., Merrill Lynch & Co. Inc., American Express Co. and Target Corp., already have set up industrial banks in Utah. In May, Warren Buffett's Berkshire Hathaway Inc. announced plans to operate a Utah industrial bank to handle consumer loans for its R.C. Willey Home Furnishings stores.

Industrial banks, also known as industrial loan corporations or ILCs, are found in only a few states. They operate like banks with federal deposit insurance and can issue credit cards, take deposits and make loans. About the only thing an ILC cannot do is offer standard checking accounts if its assets exceed $100 million. At the end of last year, there were 29 Utah industrial banks. Combined they had total assets of more than $120 billion.

Whitchurch declined to discuss the bank's likely asset size, except to say that it would be small compared to some of the state's other industrial banks.

Critics fear Wal-Mart could drive smaller banks and credit unions out of business.

"The largest company in the world would certainly have the financial resources to drive other competitors out of the market," said Ronald K. Ence, vice president at the Independent Community Bankers of America.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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