(IDG) -- Beginning next month in the United Kingdom, Citibank will offer customers free Internet access, hoping to lure them to its new online banking service that will be launched in August. Citibank is also in talks with Netscape in the United States to bring online services to the Netcenter Web site.

Citibank's U.K. unit already has an online banking service in place called PC-banking, according to Peter Wilkes, marketing director for Citibank International. Because New York-based Citibank has only three branch offices in the United Kingdom, the bank depends heavily on this online service, as well as ATMs, to handle customer transactions in Britain.

Unlike its PC-banking service, where customers have to dial directly via their PCs into a Citibank server to carry out transactions, the new Internet-banking service will enable customers to do online transactions from anywhere in the world, Wilkes said.

In the United States, Citibank and Netscape are negotiating to bring banking services -- including online trading -- to Netscape's Netcenter Web portal site, said Mike Homer, chief of Netscape Web site marketing. Last month, Citibank agreed to license most of Netscape's Internet-based products for use worldwide.

Netscape officials described a hypothetical scenario for such online services wherein free stock and mutual fund trading services would be offered to those who do their savings and checking with a particular bank. Netscape is moving aggressively to acquire partners to make its Web site more appealing to both consumers and businesses worldwide.

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Citibank may soon have a huge arsenal of financial, trading, and insurance services to offer due to the proposed merger between Citibank and Travellers Group. That deal, among the largest corporate mergers ever, still requires regulatory approval, as well as a shift in U.S. banking laws.

In the United Kingdom, Citibank's Internet banking customers will also be able to enjoy preferential interest rates, according to Wilkes. Because Citibank hasn't had to invest in infrastructure in the United Kingdom, the bank will be able to pass the savings down to its online customers, paying them a 4.7 percent interest rate or 11 times the interest rate currently being offered in the U.K. market, he said.

Though Citibank now has 10,000 online banking customers in the United Kingdom, the bank aims to attract more of the 5.9 million Internet surfers in the British Isles with its offer of unlimited Internet access, Wilkes said.

If new and current Citibank account holders meet certain requirements, Citibank will give them a year's subscription to Virgin Net worth $235, Wilkes said. With the subscription, customers can also get e-mail addresses and access Virgin Net's content.

Citibank's U.K. unit earlier this week announced a partnership with Virgin Net, the Internet service provider owned by Richard Branson's Virgin Group. In the deal, Citibank will pay Virgin for each qualifying customer.

To qualify, customers must enroll in Citibank's Internet banking service, be a Citibank current-account holder, and maintain a 2,000-pound balance, Wilkes said. Customers can sign up for the free Internet access offer until December, he said.

Although the Internet banking service is yet to be launched in the United Kingdom, Citibank already offers the service in Germany, Wilkes said.

Joy Dietrich is a Paris correspondent for the IDG News Service, an InfoWorld affiliate. Dana Gardner is an editor at large at InfoWorld.