WASHINGTON -- Nordstrom Inc., an operator of upscale department stores, won approval from federal bank regulators to expand its credit card unit into a thrift that makes loans and takes deposits.
The Office of Thrift Supervision, the regulator of savings banks, said Monday it approved the Seattle-based retailer to convert its existing state-chartered bank, used to service Nordstrom's credit cards, into a federally chartered thrift. Federal savings bank charters provide broad powers to conduct financial services nationwide.Nordstrom's thrift, to be named Nordstrom fsb, will use its new charter to begin retail banking services in the Phoenix area, although its main business will continue to be issuing and servicing Nordstrom's store cards and Nordstrom Visa cards, according to the OTS.
The company "plans to broaden its product line to include mortgage loans and retail deposits," the OTS said in a statement Monday. Nordstrom also will offer "new starter credit cards designed for applicants with little or no credit history," along with home-equity loans, individual and commercial credit cards, debit cards, and consumer loans for major purchases.
"This allows us to better meet the needs of our customers and strengthen our competitive position," said Kevin Knight, chairman of Nordstrom National Credit Bank, the card unit.
Nordstrom's new thrift will have to file with the agency a program ensuring it complies with savings bank regulations before it can begin its retail business, according to the OTS, a bureau of the Treasury Department.
The store owner's thrift, based in Scottsdale, Ariz., also will have to begin reporting regularly on its activities, including lending in low-income neighborhoods as required by the Community Reinvestment Act. To start, Nordstrom's S&L will offer mortgages tailored for low-income borrowers, the OTS said.
Other retailers won't be able to follow Nordstrom's move, because Congress has since outlawed non-financial firms from acquiring or establishing thrifts.
A sweeping overhaul of financial services laws, signed into law by President Clinton last month, prohibited Wal-Mart Stores Inc. and other commercial firms that applied for thrift charters after May 4 of this year. Nordstrom beat the deadline by applying more than a year ago, in November 1998, the OTS said.
Nordstrom shares have declined almost 30 percent this year.