CoreStates Financial Corp. will fold its own wholesale and retail lockbox operations into its third-party processing unit, bolstering this new segment of the bank's diverse processing business.

The Philadelphia-based banking company is consolidating its proprietary lockbox business with CashFlex, the remittance processor it bought almost two years ago.

This move pulls CoreStates up from being the country's fifth-largest lockbox operation to the third largest -- behind Mellon Bank Corp. and National City Processing Co. -- according to Les Stockel, the chief executive officer of CashFlex, who quoted figures from Ernst & Young.

Consolidating the lockbox business also underscores CoreStates' commitment to transaction processing, a business area the bank has grown and honed for the past few years.

According to Robert N. Gilmore, the head of CoreStates' technology and operations, the bank is focused on its corporate and institutional customers.

"We feel strongly that the best way to meet their lockbox needs is through CashFlex," he said.

After the consolidation, CashFlex will be processing more than million retail lockbox items and 2.3 million wholesale lockbox items every month.

CoreStates has long placed an emphasis on cash management as well as processing, executive say. The bank was among the first to install video-imaging systems in its lockbox operation as early as the 1970s.

For CoreStates -- which has held its aggressive stance in the processing arena, even when other banks steered clear of the market ---- this is an expansion that will further build upon the bank's substantial and relatively independent line of servicing business.

CoreStates last October spun off its check processing unit, forming the Transys subsidiary. Last November, the bank also established an independent credit card processing unit, Synapsys.

The $27.5 billion asset-company was also an early and successful entrant into the automated teller machine network business, founding Money Access Service -- known as MAC -- in 1979.

MAC has since become the largest single ATM transaction switch in the country, handling more than 65 million payments a month.

Two years ago, CoreStates joined with three other regional banks to form Electronic Payment Services, which operates the MAC network,

CoreStates may next turn the spotlight on trade services and international processing issues, according to Mr. Gilmore.

"The market is consolidating, and there'll be a few strong competitors," Mr. Gilmore said. "But I feel good about where we are."

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