Magazine article American Banker

Andersen Deal Seen Helping CoreStates Look Past Merger

Magazine article American Banker

Andersen Deal Seen Helping CoreStates Look Past Merger

Article excerpt

CoreStates Financial Corp.'s recent deal with Andersen Consulting is an indication that the bank is ready to move beyond absorbing Meridian Bancorp, which was a handful.

CoreStates acquired Meridian a little over a year ago, but consolidating its systems and operations proceeded more slowly than expected.

"Any time you do a merger like what we just did ... there is always a lingering sort of cleanup because of the size of them," said P. Sue Perrotty, chief information technology officer at CoreStates.

But now, "we don't have a lot of what I would call 'hovering technology issues' related to the merger," said Ms. Perrotty, who came from Meridian.

Under the 10-year deal signed last week with Andersen, CoreStates agreed to farm out applications development and system maintenance functions. Financial terms were not disclosed.

Analysts said the agreement indicates CoreStates has turned its attention from the merger integration to more strategic issues-such as how to improve the combined retail business.

"If a third-party provider can handle more of the nuts and bolts operational tasks, that could leave more time for management to focus on generating revenue," said Michael Mayo, a bank analyst at Credit Suisse First Boston Inc.

Thomas McCandless, senior bank analyst at Natwest Securities, added, "I think this is a step toward a more unified retail banking approach."

Through the Andersen deal, CoreStates is off-loading about 40% of its technology and operations functions. But executives at the Philadelphia banking company were quick to emphasize that it is not abdicating control.

The company will dictate "all of the strategic oversight direction, prioritization, decision-making, and cost management," said Ms. Perrotty.

CoreStates retains full control of core computer operations, network administration, and telecommunications. …

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