US telecoms merger benefits Irish bank

THE merger of US telephone companies Bell Atlantic and Nynex should present a new opportunity for AIB's US subsidiary First Maryland Bancorp, according to Mr Richard White.

The president of First Omni Bank - the specialist credit card subsidiary of FMB - said he was "optimistic about the implications of the merger."

FMB, through First Omni, has a three to five year credit card co branding contract with Bell Atlantic. This gives the bank access to a customer base of over 12.5 million households. But Nynex has its own credit card cobranding arrangements with Chase Bank.

It will be some months before the telephone companies have completed regulatory approvals for a merger which will make the new company the second largest telecommunications company in the US market. The merger creates a giant company with a combined market value of over $50 billion, 133,000 employees, and revenues of $27.8 billion.

"We do not anticipate any existing contracts being broken and the companies will have a lot of integrating to do before they focus on the credit card business", Mr White commented. But he added that his market research on the Chase Nynex and the Omni Bell arrangements "makes me optimistic about future opportunities for Omni after a merger of Bell and Nynex".

Nynex has a customer base off 11.6 million households. The merged company would have a customer base of 23 million households from Maine to Virginia. The merged operation would have revenue of $27 billion, almost $3 billion in profits, and 127,000 employees.

Omni, based in a 300,000 square foot facility in Delaware, expects to announce a second major co branding arrangement within weeks. Mr White said that the new contract is with "a regional name" but not a company in the telecommunications sector.

In the competitive telecommunications market, credit card co-branding contracts give First Omni access to a large customer base and a widely recognised brand name. For the other party to the contract, such as Bell, the arrangement allows it to offer inducements to its customers through special credit card payment arrangements.