Schwab mum about bank

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.