First Union Corp. said it is joining Ibos, the international banking technology consortium closely aligned with Electronic Data Systems Corp.
First Union is essentially picking up on prior participation agreements of First Fidelity Bancorp., the New Jersey-based holding company that First Union recently acquired.
First Fidelity's largest shareholder, Banco Santander of Spain, was one of the organizers of Ibos - formally the Inter-Bank On-Line System. And First Fidelity has been in the process of building links to the network, which delivers wholesale banking and payment services to each participant's customers around the world.
Andy Oleksiw, a senior vice president with Charlotte, N.C.-based First Union, said it sees Ibos as a way to bolster its cash management offerings.
"Ibos will enable us to better serve our corporate customers' multicurrency banking needs without incurring the expense of an extensive brick-and-mortar network in Europe," Mr. Oleksiw said.
Officials of the five-year-old consortium say banks can use the network and its bilateral operating arrangements to achieve goals that would be extremely costly to accomplish on their own.
Ibos, which originated at Banco Santander and Royal Bank of Scotland, had been struggling to achieve global coverage. It gained momentum when technology partner EDS and, more recently, Chase Manhattan Corp. took 24% equity stakes.
After Chase merges with Chemical Banking Corp., Ibos will claim both the largest U.S. bank and No. 6 First Union - not an equity owner - among its participants.
The U.S. presence boosts the credibility of an organization that industry sources had previously said was "a European show," with nine participating banks from that continent.
But a majority of the Ibos equity is in U.S. hands: 24.05% each with Chase and EDS, and 3.8% with Goldman, Sachs & Co.
Banco Santander and Royal of Scotland split the remaining 48.1%.
A source who requested anonymity said many bankers were wondering about Chase's long-term goals for Ibos. Chase might be "leveraging the network as a utility for its correspondent banking relationships worldwide."
The source, a banking consultant, suspected that given the equity infusion from Chase, the New York bank might be in "a position of influence rather than having Ibos evolve as its competitor.
"It leaves them in a position to control or to influence a conduit of information in transactions internationally," the source said.
First Union officials could be reached for a response to those speculations. Charles Mallis, Chase's marketing and strategy executive, simply said that First Union's announcement was "yet another endorsement of the technology." First Union should be operational on the network later this year, Ibos said.