First Data Corp.'s Card Services Group, Omaha, signed a letter of intent with Chase Manhattan Bank and Chemical Bank to process their credit card portfolios when their proposed merger is complete.
If an agreement is reached, First Data will have snagged its largest customer yet. Combined, the banks have approximately $21 billion in receivables and 11 million active accounts.
The announcement was not unexpected since First Data has been providing card processing services to Chemical Bank since 1988.
Moreover, since Chemical is the dominant bank in the proposed merger, its executives are going to have a greater influence on how the merged banks' proceed.
Chase Manhattan currently handles card processing in-house.
"It's likely that First Data offered the banks a sweetened deal," noted David Robertson, president of The Nilson Report, who said it would have been just as logical for the banks to move all card processing to Chase's card processing center.