National City taking equal stake in EPS' expanding ATM network.

After months of deliberation, National City Corp. has decided to increase its ownership stake in Electronic Payment Services, Inc., which operates the MAC electronic banking network.

Pending approval from the Federal Reserve Board, Cleveland-based National City will take a share in EPS equal to that of the other major stake-holders.

Mellon Bank Corp. and Key Corp. are also awaiting clearance from regulators for ownership positions. Banc One Corp., CoreStates Financial Corp., and PNC Bank Corp. have been cleared for full shares.

Six Equal Shares

If the pending stakes are approved, each of the six owning banks will have 16.67% of EPS, which links 14,000 automated teller machines and 107,000 point-of-sale terminals.

EPS, based in Wilmington, Del., has indicated it intends to add as many as four more partners in the next two years.

National City originally agreed to become an equity owner of EPS last fall. Then the $30 billion-asset banking company stated that it would take a 3.5% stake, but it retained the right to increase that share.

"We think [EPS] has a great future, and these business lines are important to us as a financial institution," said A. Joseph Parker, senior vice president and director of strategic planning at National City.

"So we decided to invest the extra dollars and move up to an equal stake."

Will Pay $42.9 Million

In doing, so, National City agreed to pay $42.9 million in cash towards the company. It will also transfer the processing for its 900 ATMs to EPS.

The cash payment is significantly higher than both the $29 million paid by Mellon and the $31.6 million paid by Key Corp. for their respective positions.

Mr. Parker explained the disparity as a function of the noncash contributions to EPS.

"The number of transactions that will put into EPS was less than Mellon and Key Corp., so therefore more cash was required to balance the transaction," Mr. Parker said.

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