Magazine article American Banker

Postal Service Plans to Cut Its Roster of Cash Managers

Magazine article American Banker

Postal Service Plans to Cut Its Roster of Cash Managers

Article excerpt

The U.S. Postal Service said it plans to gradually reduce the number of cash managers it does business with to fewer than 1,000.

About half of the nation's commercial banks currently provide cash management services that help the Postal Service handle its $80 billion in annual cash flow.

The consolidation of cash management relationships is increasingly common for large businesses. According to a survey conducted by Greenwich Associates Inc. of Connecticut, the largest cash managers tend to be the benefactors of such consolidations.

"We have 5,000 banks that we deal with that handle coin, currency, and checks," said Stephen C. Kearney, treasurer of the Postal Service.

"We've set up an evaluation process that gives banks points" that determine whether they will get more or less business.

The scores are based on pricing, service quality, geographical reach, and a bank's ability to handle specific dollar volumes.

About 35 of the largest cash managers are expected to receive the bulk of the Postal Service's business. Several hundred more are expected to receive small-scale cash management responsibilities.

The consolidation should be completed sometime in the next two years, Postal Service officials said.

Prominent cash managers for the Postal Service include Citicorp, New York, which provides lockbox services; BankAmerica Corp., San Francisco, which develops automated clearing house and other electronic payment options; and First Chicago NBD Corp. …

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