Four superregional banking powers said Wednesday that they have agreed to pool their resources in a bold bid for leadership of the electronic retail banking industry.

Banc One Corp., CoreStates Financial Corp., PNC Financial Corp., and Society Corp. said they will combine their automated teller machines and point-of-sale terminals in a joint venture called Electronic Payment Services Inc.

Future Rivals Stunned

The announcement, which was unlike any other in the history of bank networking, sent shock waves through many electronic payments organizations. (See article on page 22.)

Anchored by CoreStates' Mac system, the joint ATM network would be the biggest in the country by at least some key measures, and would be a potent competitor against multistate ATM associations like NYCE, which has been dominant in the Northeast.

The partnership's more than 12,000 ATM's would rival the number linked by California-based Star System Inc., the industry leader in that category at the end of last year.

Major Player in Debit Field

The point-of-sale portion would become a major player overnight in a market that many observers view as poised for an explosion of debit card transactions.

Officials of Electronic Payment Services, to be known as EPS, said economic and competitive forces move them toward cooperation.

By consolidating systems and marketing, the banks hope to cut operating costs and speed product development, while reversing the flow of processing business to nonbank companies.

Protecting Bank Turf

"We have a very strong belief that the consumer payment systems ought to remain in the hands of the banks," said Donald L. McWhorter, president of Banc One and one of seven designated directors of EPS.

Pending approval by the Federal Reserve Board, the four holding companies hope to close their deal in the fourth quarter. EPS would set up headquarters in the Wilmington, Del., area. It is expected to have annual revenue exceeding $200 million and employ about 600 people.

According to terms of a definitive agreement, Banc One, CoreStates and PNC will each own 31% of EPS common stock, while Society will own 7%.

Bonus Dividends Planned

CoreStates will also control $245 million of nonvoting preferred stock, with bonus dividends tied to the joint venture's earnings.

Banc One and PNC are to pay CoreStates $30 million and $48 million in cash respectively, for their parts of the business.

CoreStates said it will book a pretax gain of $23 million at the closing. Its tangible equity will increase by $100 million, including the effect of removing intangibles on its books as the result of previous acquisitions.

The deal is not expected to materially affect the financials of Banc One, PNC, or Society.

20% Share Overnight

By merging the bank's separate ATM and point-of-sale units, EPS will become responsible overnight for 20% of the transactions processed by automated teller machine switches-a market already about 11% controlled by CoreStates' Mac unit.

The network would link the machines of 1,400 financial institutions in 16 states. Its projected annual volume of 670 million point-of-sale payments, including both debit and credit transactions through almost 150,000 terminals, would span 48 states.

Under the EPS umbrella will come CoreStates' widespread Mac system, formally Money Access Service Inc., which is No. 1 in switched transactions and No. 5 in total ATM transactions according to Bank Network News; and CoreStates' Buypass Corp. unit, a leading provider of credit card authorization and electronic draft capture services.

EPS also will take over the Green Machine Network Corp. of Cleveland-based Society Corp., one of the top 10 in switch transactions; Owl and Trinet, both controlled by Pittsburgh-based PNC; and Banc One's Jubilee system and point-of-sale business.

Cost Savings Expected

According Michael L. Douglas, PNC's director of electronic banking, the new company will realize substantial cost savings by consolidating the four banks' separate ATM and POS computer systems.

The banks plan to consolidate into thee data centers: one that CoreStates is building in Delaware, a new data center planned for the Midwest, and an existing site in Atlanta that supports Buypass.

The banks plan eventually to replace their individual ATM and point-of-sale brand names with a unified identify, probably Mac.

Transition Will Take Years

Mr. Douglas said this transition will take years. The PNC official has been designated chief operating officer of EPS. Douglas D. Anderson, a CoreStates executive vice president, will be chief executive officer.

The directors, aside from Mr. McWhorter, are: David M. VanLear, chairman and chief executive officer, Banc One Regional Affiliate Group: Terrence A. Larsen, chairman and chief executive office of Philadelphia-based CoreStates; Robert N. Gilmore, executive vice president of CoreStates; James E. Rohr, president of PNC Financial Corp., Pittsburgh; A. William Schenck 3d, executive vice president of PNC; and Stephen E. Wall, executive vice president, Society Corp.

Mr. Douglas and Mr. Anderson declined to comment on whether any bank employees will be laid off if the deal goes through.

Expansion Frustrated

Mr. Anderson said CoreStates has tried unsuccessfully, to expand Mac outside its Middle Atlantic stronghold for more than two years. "But we found resistance from other networks that weren't interested in selling" to a network owned by a single bank.

Mr. Wall of Society Corp. said joining the venture puts Society at the forefront of a wave of consolidation expected to hit the ATM and point-of-sale industries.

Mr. McWhorter said EPS had its genesis about 15 months ago, when CoreStates tried to sell Banc One on using the Mac network. Banc One refused but expressed an interest in buying Mac or forming a joint venture. CoreStates was talking to PNC at the time, and Society later entered the discussions.

Mr. McWhorter said EPS is open to letting other banks take an ownership stake.

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