Multi-year extension of Treasury contract buys time for Comerica to replace deposits, Piper Sandler says
** Regional lender Comerica CMA.N said on Thursday it had entered into a three-year extension of services for the Direct Express prepaid debit card program of the Bureau of the Fiscal Service to allow for the orderly transfer of services
** America's oldest bank BNY BK.N has been selected by the Bureauto act as the financial agent for the program
** BNY's 5-year agreement with the Bureau begins on Jan. 3, 2025
** CMA, which warned in July that it was set to lose the exclusive contract, has been the agent for the program since 2008
** Piper Sandler says CMA's announcement helps codify for investors the contours of its transition, away from being the program's agent
** Brokerage adds that the multi-year extension officially buys "valuable" time for CMA to replace the related deposits, such that the transition is less disruptive to its earnings and less visible to investors
** CMA had about $3.4 bln in deposit balances as of Q3 tied to the program, which it stands to lose
Reporting by Arasu Kannagi Basil in Bengaluru
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