Should Wal-Mart Buy Barclays?

I think most of us realize Wal-Mart is backed up against a wall in its efforts to grow earnings. WMT's net profit margin seems stuck at 3.5%, it has squeezed all the efficiencies it can out of the supply chain, upscaling failed, and their store growth will become more and more difficult as they try and move into urban areas.

It's also clear WMT wants to move into financial services, which is logical. To succeed in financial services you need 2 things, capital and distribution. WMT has capital, and 130 million people per week enter their stores. Ergo, distribution.

Wal-Mart wants to enter US retail banking, but WMT's move into retail banking through an ILC will be stymied by the new Congress, even as they open branch banking in Mexico.

Put aside banking for a minute. What if Wal-Mart was able to offer financial products, in the form of ETFs and mutual funds to the 80% of the American public that visits its store? Since the FDIC is not involved, it might be an easier path of entry for WMT.

Barclays (BCS) is clearly in play, one reason being the incredible success of their iShares, which are being used by more and more by retail and institutional investors as a less expensive means of investing. Bank Of America, with a market cap roughly equivalent to Wal-Mart's, seems interested. Why? Through their branches, Bank Of America has a massive distribution channel to retail investors. Much like...Wal-Mart.

Barclays has a net profit margin of 22%, which would surely aid WMT's pitiable 3.5%. Wal-Mart could spin off the parts of Barclays (investment banking, British branch banking) it didn't want or need and have a wholly new predictable, high margin, revenue stream to grow through their unmatched distribution. With no FDIC hearings.

Admittedly, this is an out of the box idea. But would cutting the costs of investing to millions of retail investors, many of them unbanked, while raising your profit margins utilizing assets and talents you already have, be such a bad idea?