Banks May Take Note as Ceridian, A Top Payroll Processor, Gets Bigger

Ceridian Corp.'s agreement last week to buy Comdata Holdings Corp. strengthens an already powerful player in a business that is of renewed interest to bankers.

Comdata is a transaction processing and information services company based in Brentwood, Tenn. Ceridian, based in Minneapolis, is the nation's second-largest payroll processor, behind Automatic Data Processing.

Only a few years ago, acquisition activity at a payroll processor would have been a nonevent for the banking industry, which essentially exited payroll processing in the 1980s. Heavy regulation and the complexities of distributing checks across state lines were cited as the main reasons banks withdrew.

But in recent months, spurred by interstate branching and Glass-Steagall Act reforms, banks once again have shown interest in payroll processing.

Last month, Shawmut National Corp entered into a deal to buy Interpay Corp., a payroll processor, for $12 million.

The Shawmut deal prompted Alan Bergstrom, a consultant with Boston-based Dove Corp., to speculate that even heavyweights like Ceridian and ADP may eventually be acquired by banks.