Chemical Banking Corp. met with American Telephone & Telegraph Co. last week to discuss a new foray into home banking.

Chemical took a bath several years ago on a project called Covidea, a joint venture with AT&T that delivered home banking services to customers via a small terminal. Covidea was axed after consumers gave it an underwhelming response.

But undeterred, Chemical caucused last week to discuss a new home banking program based on AT&T's Smartphone, a high-tech telephone with a screen display.

Chemical "is very high on the Smartphone," said a source at the bank, adding that it could begin the service next summer. "It's the right approach."

Citicorp is testing a similar device that also offers bill-paying account balances, and home shopping services. But the two-year-old program is virtually at a standstill because of the high cost of producing the phones.

Last week's Chemical-AT&T meeting was also attended by representatives of Ohio's Huntington Bancshares Inc., which offers back-office services to support home banking programs. AT&T supplies the phone.

Sources said that Chemical can probably do without Huntington since it inherited an operation for processing home banking transactions from Manufacturers Hanover Trust Co. But it is likely to buy the phones from AT&T and then lease them to customers.

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