The Chase Manhattan Bank and First Data Corp. today announced an agreement to form the nation's largest merchant processing business, Chase Merchant Services.

The joint venture, which is expected to begin operations in the first quarter of 1997, brings together two of the world's leaders in payment processing and financial services offering processing and related services to merchants for credit, debit and stored value transaction cards. Financial terms of the agreement were not disclosed.

Chase Merchant Services will have an initial portfolio of nearly $90 billion in annual credit, debit and card sales volume from 30,000 national, regional and middle market merchant accounts. Chase, the largest banking company and third largest bank card issuer in the United States, has relationships with more than 200,000 national, middle market and small business customers.

Under the joint venture, which is subject to regulatory approval, Chase will provide clearing and settlement, First Data will provide merchant processing services and back office operations, and both companies will provide significant sales and marketing support.

"This joint venture, which will become the largest merchant processing entity in the nation, enables Chase to provide full payments services to its customers, including clearing and settlement of credit, debit and stored value card transactions. The new company's capabilities will strategically position Chase in the forefront of a rapidly emerging area of electronic commerce," said Edward D. Miller, Chase Senior Vice Chairman. "This new entity will be the bank's primary processing agent for the clearing and settlement of card-based merchant transactions."

The venture will be managed by a board of directors with four representatives from both Chase and First Data as well as a dedicated management team with staff contributed by each company. Robert F. McNamara, formerly president of First Data Client Merchant Services, will become chief executive officer of Chase Merchant Services.

"The creation of Chase Merchant Services further demonstrates First Data's commitment to work with our bank clients," said Ric Duques, First Data's chairman and chief executive officer. "Through the venture, our merchant clients will continue to have access to First Data's advanced merchant processing technology as well as Chase's experience in providing merchants with a wide array of financial services."

The Chase Manhattan Corp. (NYSE:CMB) is the largest banking company in the United States, with over $320 billion in assets. With operations in 52 countries and clients in 180, it has top-tier positions in all important areas of global finance, trading, private banking and information and transaction services and is the leading bank to corporate America. Domestically, with offices in 39 states and relationships with more than 25 million households coast to coast, Chase is a leader in all financial products and services for consumers, including mortgages, branch banking, credit cards, mutual funds and electronic commerce. Within the tri-state region of the metropolitan New York and throughout the state of Texas, it is the leading banker to small businesses and middle market companies.

First Data Corp. (NYSE:FDC), based in Hackensack, N.J., and its business units provide payment systems, electronic commerce and information management services to financial institutions, merchants, insurance companies, health care providers, public utilities and consumers worldwide.