Wal-Mart card heralds banking push in Canada
By Cameron French. REUTERS, Updated: June 15, 2010 1:37 PM
TORONTO (Reuters) - Wal-Mart Stores began a push into Canada's financial space on Tuesday, launching a domestic bank and a rewards credit card, in what could be just the first foray by the U.S. retailer into an already-crowded Canadian banking sector.
In launching a no-fee MasterCard as its initial product, newly formed Wal-Mart Canada Bank hopes to mine the million-odd customers that visit the retailer's Canada stores daily, Trudy Fahie, chief executive of the bank, said in an interview.
"It's really the Wal-Mart customer base that's our target," she said.
Since entering Canada more than a decade ago, Wal-Mart has stolen market share from other established retailers, and Fahie doesn't deny that customers could soon be shopping for savings accounts and mortgages as well household goods and groceries.
"We definitely in future will look to offer additional products and services from the bank," said Fahie, a former executive at American Express.
The Canadian unit of the U.S. retail giant received regulatory approval two weeks ago to establish the bank. An attempt by Wal-Mart to open a U.S. bank was abandoned in 2007 after intense lobbying from the sector.
The credit card, which carries an interest rate of 18.99 percent, will earn holders reward dollars that can be redeemed at Wal-Mart stores.
Customers will earn back 1.25 percent of purchases at Wal-Mart and 1 percent on purchases anywhere else MasterCard is accepted.
The launch of the bank follows similar moves in past years by retailer Canadian Tire and grocer Loblaw, and introduces a potentially powerful competitor into a sector dominated by the country's top five banks.
Canada's credit card market is led by Canadian Imperial Bank of Commerce, which added to its heft on Monday by agreeing to buy Citigroup's C$2.1 billion ($2 billion) Canadian MasterCard business.
Fahie said she believes there's room in the market for another competitor.
"We know is there is a lot of interest in having additional competition in banking and we know what our customers are looking for is a very value-focused program that helps them save even more," she said.
However, she said the Canadian operation was not being used as a test case for a renewed push into banking by the U.S. parent.
"We certainly are part of the larger organization ... but each market is different," she said.
(Reporting by Cameron French; editing by Rob Wilson)
