Seeking to generate additional income from one of its core business lines, Wachovia Corp. has agreed to provide cash management services to commercial customers of Wells Fargo & Co.

Under the arrangement, announced last week, San Francisco-based Wells will offer "controlled disbursement" services and copies of checks on CD- ROM to its middle- and upper-market customers through Wachovia's East Coast disbursement center in Columbia, S.C.

The alliance lets Wells expand its cash management services package, while Wachovia gains volume and fees for an operation that has long been one of its specialties.

"This allows us to penetrate the middle-market segment on the West Coast without directly using Wachovia's sales force. So it's really an expansion of a sales strategy for us," said Linda C. Thompson, manager of private- label services for Wachovia Corporate Services Inc.

Wachovia's West Coast operations are currently limited to large corporations. The bank, based in Winston-Salem, N.C., uses its highly regarded cash management services as a primary marketing tool.

"Controlled disbursement" is a cash management service that lets a corporate customer schedule the funding of checks as they are presented. By using Wachovia's service, Wells customers will gain opportunities for float they might otherwise miss.

Case in point: A check paid by a West Coast company to a local supplier might clear within one day if drawn on a Western bank. But the same check processed through Wachovia's Columbia center might take two or three days to clear.

The three-hour time difference between coasts also gives Wells customers more time to determine which checks will be presented that day. Then excess funds would be swept into a short-term investment account.

"It's an expansion of our existing disbursement services," said Wells spokesman Dan Conway.

Ms. Thompson said Wells is the first major bank client to sign on with Wachovia's new "private label" cash management service. The arrangement lets Wells retain contact with its customers while Wachovia handles the back-office details of funds disbursement and check processing.

Wells will pay Wachovia for disbursement activities based on transaction volume. Ms. Thompson declined to estimate how much revenue Wachovia would gain, but said the arrangement would contribute "significant" income.

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