Riggs Wins Treasury Contract; Banking Firm Will Act As Clearinghouse For Electronic Collections
Riggs National Corp. has won a multimillion-dollar contract from the U.S. Treasury to act as clearinghouse for $286 billion the government collects electronically each year from citizens and corporations, the government and Riggs confirmed yesterday.</br></br>Riggs won the bid over nine rivals that include New York banking giants Citicorp, Chemical New York Corp. and Chase Manhattan Bank, sources close to the deal said. The $286 billion represents 200,000 "Fed wire deposit system" transactions that are sent to the government each year by computer and telephone wire rather than by check, money order or other paper document, according to Treasury officials.</br></br>The electronic payments represent about one-third of the nearly $1 trillion in payments the Treasury collects each year on behalf of 200 federal agencies. Payments include everything from taxes on income to leases on grazing land owed by the Department of the Interior, officials said.</br></br>Winning the contract is a coup for Riggs, which like most banks is looking to boost revenue from service fees as much as from interest charged on loans. For the Treasury, the contract is another step in the government's attempt in recent years to turn over as many operations as possible to private industry.</br></br>"We see the government as a natural customer for us," said Riggs spokesman David Palombi. "We're looking for fee income like anyone else, but we got in line for this one because we see the federal government as a natural market to expand in."