Electronic Data Systems Corp., has scored a major coup with the addition of Chase Manhattan Corp. Chase, which is planning to merge with Chemical Banking Corp., agreed with Chemical's approval to take an approximately one-fourth interest in the group, formally known as the Inter-Bank On-Line System. Ibos, until now dominated by European banks and lacking one with Chase's global reach and money-center credentials, said the signing is a significant step toward its goal of a "seamless" high-tech network to serve the multinational needs of member banks' customers. "We see this as a 'virtual bank' concept that can take us into the next millennium," said Charles Mallis, Chase's marketing and strategy executive for global payment and treasury services. Chase's equity stake of 24.05% - the value was not disclosed - will be equal to those of EDS, Banco Santander of Spain, and Royal Bank of Scotland. Santander and Royal Bank, which have a close strategic alliance that includes mutual share ownership, launched the consortium five years ago. EDS, the technology supplier, bought its nearly one-third stake, soon to be reduced with Chase's entry, early last year. The other Ibos shareholder, Goldman, Sachs and Co., will see its stake reduced to 3.8% from 5% when Chase buys in. Speaking for Ibos, Norman McLuskie, managing director of Royal Bank of Scotland's operations division, called Chase's announcement "a remarkable advance" because the bank has "the world's largest correspondent banking network." "This will greatly extend Ibos' global reach, particularly in North America and Asia, and will benefit our rapidly growing European network, which includes banks in eight countries," Mr. McLuskie said. Ibos participants are able to draw on each other's electronic payment services and other banking facilities, obviating the need for branches or other direct representation outside their core markets. Mr. Mallis said Chase views Ibos as complementary to "our own proprietary global network to help execute payment transactions quickly, securely, and efficiently." The current Ibos association members, in addition to the equity owners, are Banco Comercio e Industria of Portugal, Credit Commercial de France, ING Bank of the Netherlands, Instituto Bancario San Paolo di Torino of Italy, Kredietbank and Credit General of Belgium, and Unibank of Denmark. In July 1994, Ibos announced First Fidelity Bancorp. of New Jersey as its first U.S. participant. Banco Santander owns about 20% of that bank, and Electronic Data Systems is its technology operator. That foothold was likely to expand with First Fidelity's pending merger with First Union Corp. of North Carolina, but Chase's move is seen as far more significant. At yearend 1994 Chase was about equal to Banco Santander in assets, at $113 billion. Officials of Chemical Banking Corp., which intends to retain the Chase name after the acquisition, said they intend to build on its prospective stature as one of the top 25 banks in the world, with assets of around $300 billion. Chemical executives could not be reached for comment on Chase's Ibos move, but Mr. Mallis said it had Chemical's endorsement. "Our venture with Ibos will help create new forms of global electronic commerce as well as cash management and treasury solutions for all our corporate and institutional customers," Mr. Mallis said. It has taken Ibos several years to gain momentum, and it is still lacking major bank partners in Germany and Japan. Despite Ibos' cooperative approach and promise of cost-cutting, observers said leading cash management banks have tended to adhere to their practice of offering complete product menus through profitable foreign offices. Banks - particularly those with global relationships and a good correspondent network - "can form their own Ibos networks ... without having to go through massive capital investments," said Thomas R. Metz, director of global business development for Ibos Ltd., the consortium's London-based managing company. Mr. Metz said many banks with global operations are taking a second look at the Ibos network as they concentrate on improving their offerings in cost-effective ways to smaller and midsize companies. Especially attractive, he added, is the opportunity to use the network to expand into countries that would not support a conventional office. In announcing the Chase signing, Ibos sought to distance itself from Swift, the global interbank messaging network. While Swift connects thousands of institutions around the world, Ibos said it focuses primarily on delivering specific cash management and treasury products within its membership. Mr. Mallis of Chase contrasted Swift's "hub and spoke approach" with Ibos' "decentralized hub," in which each bank has its own interface to the network, its own risk management system, and separate interfaces into general ledger systems. Mr. Metz said despite market whispers about an Ibos-Swift rivalry, "We don't see ourselves competing with Swift at all." However, Mr. Metz conceded that Ibos as it grows could siphon some transaction volume from Swift.
