Star Banc to join MAC teller machine network.

Abandoning talks seeking to form a midwestern electronic banking consortium, Star Banc Corp. has agreed to join the MAC automated teller machine network.

Star represents the third defection in two months from the group of Midwest Financial institutions that has been working to start a mega-network to complete with MAC, run by Delaware-based Electronic Payment Services Inc., a joint venture of four superregional banks.

The deal with Cincinnati-based Star will add about 300 ATMs to MAC.

Changing Shape

In late August, Liberty National Bancorp, Louisville, Ky., also left the group for Electronic Payment Services. In July, Provident Bank of Cincinnati broke from the group to join the Jeanie network, which is owned by Fifth Third Bancorp in Cincinnati.

While none of these institution's departures is in itself a death blow to the Midwest group discussions, a number of observers believe the mini-exodus is a sign that the forming company, which has been given the working name Electronic Transactions Inc., may be taking on a radically different look than the one publicized in recent months.

Star Bank executive Phillip A. Parker declined to comment on recent developments in the Electronic Transactions Inc. discussions, which now involve 12 financial institutions, including First Chicago Corp. and NBD Bancorp.

However, Mr. Parker, who was once the lead spokesman for the banks involved in the venture, indicated that Cincinnati-based Star Banc decide to go with Electronic Payment Systems because the bank was increasingly unconvinced that its best interests would be represented in Electronic Transactions Inc.

"We continued to look at ETI, [but] the organizational structure did not fit in with our plans for our market area," said Mr. Parker, an executive vice president at the $7.4 billion-asset Star Banc Corp.

"We did what we thought was best for our customers and that was to join" MAC.

In the mold of Electronic Payment Systems, Electronic Transactions originally was designed to be a diversified electronic banking company that would provide not only traditional services such as switching ATM transactions between banks, but also more sophisticated processing services such as ATM driving.

But insiders say that some of the most influential banks involved in the Electronic Transactions discussions, including First Chicago and First of America Bank Corp., are now pushing to render the consortium a much less complicated venture that will deemphasize, at least for the time being, complex processing services.

Merger Possibilities

As such, the formation of Electronic Transactions is shaping up to be more like a conventional network merger, with Chicago's Cash Station and Michigan's Magic Line network as the primary participants, sources said.

Magic Line and Cash Station, both among the top 20 largest regional ATM networks in the nation, had discussed the possibility of a merger several times in the last few years. And with both networks' major members at the same negotiating table for Electronic Transactions meetings, sources now say those talks will soon bear fruit.

Network and bank executives involved in the talks declined to comment on the possibility of a merger, citing a confidentiality agreement signed by all involved parties.

According to figures from Bank Network News, a Cash Station-Magic Line merger would create a network with about 7,000 automated teller machines.

Such a merger would be a continuation of a trend towards the consolidation in the electronic funds transfer industry that began about 18 months ago.

While there were once more than 100 regional electronic funds transfer networks in the United States, only about 75 still exist. Experts expect mergers to eventually whittle the number of networks to about 20.

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