First Fidelity Bancorp. has joined an international banking technology consortium that will give its customers access to foreign exchange and other services from several European institutions.
The Lawrenceville, N.J.-based banking company said last week that it will become a full member of the group, called the Ibos Association. First Fidelity has had a looser "network service" affiliation with London-based Ibos since last summer.
The centerpiece of Ibos is the Inter Bank On-Line System, which will link First Fidelity's customers to six other member banks with 3,800 branches in Europe.
First Fidelity sees Ibos membership as a boon to its middle-market business strategy, according to executive vice president Perc Moser.
Mr. Moser said he hopes Ibos will attract companies with annual sales of $150,000 or less that either export to Europe or have affiliates there.
First Fidelity, with $36 billion in assets, is the only American member of the Ibos Association.
Ibos service will probably not be available to all customers throughout First Fidelity's 710-branch, five-state network until the end of the year, Mr. Moser said.
The bank plans to offer cross-border services to retail customers as well, he noted.
Through Ibos, customers can get immediate on-line international payment and cash management services like those normally available only to large multinational companies.
In addition, customers at remote locations can call up information about their balances and transaction details.
Mr. Moser refused to disclose the size of First Fidelity's investment in Ibos, but analysts say it is certainly more cost effective than opening offices in Europe.
The bank is beefing up its presence in major U.S. cities, particularly in big eastern trading centers that have companies doing business overseas.
First Fidelity is already well situated in port and gateway cities such as Newark, N.J., Philadelphia, Baltimore, and Wilmington, Del.
In November, the bank acquired Baltimore Bancorp. for $346 million, fulfilling the southern part of chairman and chief executive officer Anthony Terracciano's plan to concentrate resources between Baltimore and Boston.
It remains to be seen how First Fidelity will move from Connecticut north to Boston.
"We want to be one of the largest commercial banks in that footprint," Mr. Moser said of the Baltimore-Boston arc. "One of the things our customers are asking us for is the capability to conduct transactions, expedite trade, throughout Europe."
Analysts say the stronger tie-in with Ibos makes eminently good sense for reasons beyond business strategy: Banco Santander of Spain, a co-owner of Ibos, owns 24.8% of First Fidelity and has gotten permission from the Federal Reserve Bank of New York to raise its stake to 30%.
The Ibos network grew out of the strategic alliance of Banco Santander and Royal Bank of Scotland. The two banks own stock in each other.
In 1994, three years after those banks formed Ibos, Electronic Data Systems Corp., their technology provider, bought a one-third interest in Ibos. Goldman, Sachs & Co. also bought a minority share.
Other participants are Banco de Comercio e Industrial of Portugal, Credit Commercial de France, Unibank of Denmark, Kredietbank of Belgium, and its Credit General affiliate.
Ibos is planning to have a representative in each European country, allowing First Fidelity and other participants to offer access to a multinational "virtual bank." Association members plan to subscribe to common marketing, pricing, operating, and access practices to underscore the notion of uniform services and quality.
A need to increase fee income may also be behind First Fidelity's signing up with Ibos. The bank may want to improve its corporate and payment services using facilities available through the network.
The Morgan Stanley regional banking index, which tracks the performance of 35 regionals, places First Fidelity 34th in fee revenues. While the average bank in the index generates 32% of its revenues from fee income, First Fidelity is only at 20%.
Mr. Moser said the bank is indeed attempting to diversify its revenue stream. He added, however, that the impact on revenue from Ibos "would not be significant over a year or two," and he would not reveal any revenue goals.
