management operation continues to roll out new products. Taking advantage of new powers mandated by last year's interstate banking law, the Los Angeles-based bank has joined the bandwagon of banks offering an interstate cash management system to corporate customers. "Companies with multistate operations will no longer have to concentrate and reconcile funds," said Jan Cloyde, an executive vice president with the $56 billion-asset bank. The bank's new system, Next Generation Cash Management 2000, includes interstate demand deposit accounting, account analysis, and information reporting services, as well as cash, lockbox, and merchant bank-card deposit processing options. First Interstate said its years building a common banking platform for its 1,100 branches in 13 states helped it produce the new interstate services. NationsBank Corp., Charlotte, N.C., and Norwest Corp., Minneapolis, have already started moving customers to interstate cash management systems. Norwest developed a special-purpose bank in Colorado that offers only one service, called Commercial Interstate Deposit Banking. The service allows a commercial customer to deposit its cash in one large account. NationsBank has built a similar system, called Customer Connection. First Interstate officials said customers needn't close current accounts with it to use the new interstate service, because data from its branches have already been almost entirely moved to a common system. The four-year project consolidated scores of data centers and demand deposit accounting systems, as well as general ledger and automated clearing house transaction systems. The Interstate Banking and Branching Efficiency Act became law last year. A provision that took effect in September lets subsidiaries of bank holding companies receive deposits and close loans across state lines. Previously, banks had to manage separate computer and information systems in each state. The change means large corporations with operations in several states can consolidate many banking relationships. "Our customers have already started moving their basic depository businesses from competitors back to us to get ready for this," Ms. Cloyde said. Lawrence Forman, a cash management expert with Ernst & Young, New York, said several more banks are likely to offer interstate cash management services for fear of losing customers for banks that already do. There will be "a real imperative for multistate corporations to choose a vendor that offers this type of system for simplification," he said. But though many banks have multistate presences, Mr. Forman said probably only three or four will soon offer interstate cash management services. Many multistate banks have very different systems from state to state and so would face enormous costs establishing an interstate service, he said. It's unclear how a merger would affect First Interstate's interstate cash management service. Battling to keep itself from being acquired by Wells Fargo & Co., San Francisco, First Interstate directors have agreed to sell the company to First Bank System Inc., Minneapolis. The battle adds a twist to the bank's nearly four years of rebuilding itself into a top performer through the massive conversion to common systems. Philip G. Heasley, vice chairman of the product group at First Bank Systems, said he expects to head the consolidation effort if his company succeeds in acquiring First Interstate.

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