Magazine article American Banker

Montgomery Ward Plans to Establish Nonbank Bank

Magazine article American Banker

Montgomery Ward Plans to Establish Nonbank Bank

Article excerpt

Montgomery Ward Plans to Establish Nonbank Bank

Montgomery Ward & Co., the giant retailer, plans to buy the Clayton Bank & Trust Co. of Clayton, Del., and turn it into a nonbank bank.

The announcement by the Chicago-based retailer, a subsidiary of Mobil Corp., comes as Congress is locked in a struggle over legislation to prohibit the chartering of limited-service institutions, such as the one planned by Montgomery Ward.

The retail chain's announcement on Monday, a few days after Congress adjourned for a summer recess, is not expected to impel legislators to quickly resolve their differences over banning nonbank banks. "It [the Ward's announcement] won't be a catalyst to move the legislation,' said an aide to the House Banking Committee.

The committee's chairman, Rep. Fernand J. St Germain, D-R.I., has held up several banking bills before his panel and implied that he will keep them on hold until action is taken that will prohibit the chartering of nonbank banks. His committee passed a bill with such a provision in June 1985, but the House Rules Committee never moved the bill.

A spokesman for the Senate Banking Committee, chaired by Sen. Jake Garn, R-Utah, could not be reached for comment. Sen. Garn is pushing through a bill that, among other things, gives federal bank regulators more authority to arrange interstate takeovers of failing banks. However, the bill does not address the nonbank-bank issue.

Montgomery Ward said it will acquire 52% of the stock of the $15.5 million-asset Clayton Bank and offer to buy in the future the remaining outstanding shares. Terms of the deal were not disclosed.

The retailer plans to sell Clayton Bank's commercial loan portfolio after closing the purchase of the bank, which could take place in late October, said Charles H. Thorne, media relations manager for Montgomery Ward. …

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