Only days after the official completion of its merger with Chemical Banking Corp., Chase Manhattan Corp. has ended its $480 million check processing agreement with Fiserv Inc.
The deal, struck last February and supposed to run until 2007, was one of the largest bank outsourcing contracts ever.
Chase will pay a $15 million fee to Fiserv, and the computer services company will help the bank create its post-merger check operation for up to three years. This arrangement should initially generate $20 million in annual revenues for Fiserv.
"Chemical, which is the winner in this merger regardless of the new bank's name, came into this with a pretty strong in-house bias," said Leslie M. Muma, vice chairman, president, and chief operating officer of Fiserv. "Sometimes that is hard to overcome."
Fiserv now employs about 700 former Chase workers. Some of these employees will continue to work at Fiserv, while others will be offered jobs with Chase's in-house operation.
Mr. Muma said the ongoing relationship with Chase could lead to agreements between the two in the future.
Chase currently operates 10 check processing centers, which handle about 13 million checks daily. Bank executives said Chase may eliminate one or two sites in the next few years.