The Charles Schwab Corp. isn't talking
much about its plans to open a retail bank in
Reno, but the company has dropped hints for
much of the past year about its thinking.
Bankers in the area, meanwhile, say they
don't know how much effect Schwab will
have on the northern Nevada marketplace
until they know more.
Here's what is known for certain: The
Charles Schwab Corp., perhaps best known
for its retail investment brokerage business,
acknowledges that it's filed an application
with the U.S. Comptroller of the Currency
for a national bank in Reno.
Beyond that, the San Francisco-based
company is mum.
But it signed a lease for 13,000 square
feet of space at 5190 Neil Road for a
retail bank and back-office operations,
according to Ken Stark, a partner at NAI
Hale Day Gallagher Co.
Other hints abound.
Schwab told analysts in February that a
key element of its long-term strategy is development
of a national bank.
The company's top strategist said Schwab
wants to create "the world's best checking
account" for its premier customers.
Another hint came in June, when Charles
Schwab Corp. announced executive changes
in its institutional and retail organizations.
William Atwell, who was named executive
president for institutional, international and
banking operations, was specifically acknowledged
as the executive responsible for development
of the Charles Schwab Bank.
In mid-2001, company founder Charles
Schwab told analysts that the company was
studying either the purchase of an existing
bank or creation of a new institution. He said
the company hoped to offer bank-like services
such as FDIC protection and overdraft
protection to its customers.
One of its biggest rivals, E*Trade Group,
in 1999 bought TeleBanc for $1.8 billion in
stock. E*Trade then offered its customers a
wider variety of financial services on-line and
launched one of the nation's biggest ATM
networks.
And although the Reno-based operation appears
to be a
traditional brick-and-mortar institution,
Schwab was widely reported to be thinking
about creation of an on-line bank earlier
this year.
Northern Nevada banking executives
are watching the Schwab plans with
interest, although they're quick to
acknowledge that they don't know much.
Robert Hemsath, president of
Northern Nevada Bank in Reno, said his
institution always welcomes competition
because consumers ultimately benefit.
He said Schwab might present more
competition for large banks with a
national presence than it will for smaller
independent banks such as his.
The biggest issue locally, he said, will
be the way that Schwab chooses to
invest the deposits it collects from
northern Nevada customers. If it
decides to invest those deposits elsewhere
in the county, Hemsath said, the
effect would be to drain much-needed
capital from northern Nevada.
