The Dutch banking group made the symbolic payment to acquire the assets and assume the debts of the failed British merchant bank Barings. Jacobs, like his counterparts at Deutsche Bank, Swiss Bank and Barclays at the time, planned rapidly to build a global investment bank to serve the increasingly international needs of his clients and compete with successful American rivals like Merrill Lynch and Goldman Sachs.
Three years later, ING Barings and most of its rivals in Europe are retrenching. Stung by turmoil in Asia and having spent hundreds of millions of dollars building executive dream teams with no corresponding returns on their investment, European banks are rethinking their global investment banking strategies.
"In this business you need to move fast, but you can't replicate a successful investment banking business overnight," said Yves de Balmann, vice-chairman of Bankers Trust New York. "Some banks tried to build it overnight and they put too many bets on the table at the same time."
Earlier this week, ING Groep announced its second reorganisation at ING Barings in two months. The cost of having too many offices in places like Latin America and Asia led it to consolidate its emerging markets business and fire 200 people last month, and last week it said it would shut its emerging markets equity derivatives business, affecting another 200 jobs. More cuts to back-office workers, or support staff, are still to come.
At Deutsche Morgan Grenfell, the investment banking arm of Deutsche Bank, the cuts are even more drastic. Hundreds of staff are set to lose their jobs as Deutsche Bank folds its investment banking business back into the main operation, ending three years of trying to build a separate global investment bank.
Deutsche's rival, Dresdner Bank, is also pulling back some of its Dresdner Kleinwort Benson investment banking business to Frankfurt from London, while National Westminster Bank and Barclays sold the bulk of their investment banking business last year after 10 years of trying to build profitable businesses. NatWest sold its European equities business to Mr de Balmann's Bankers Trust.
The common problems are cost and culture. Whether they expanded their investment banks through acquisition like ING, or through aggressive hiring like Deutsche, the cost of keeping top talent has outweighed the profits brought in. Some employees, like former Deutsche investment banking heads Carter McClelland and Maurice Thompson, commanded as much as $5m (pounds 3m) a year. Deutsche also bought entire teams of highly-paid analysts and salesman from rivals, including a 1996 raid on ING Barings that led to 70 staff defecting to Deutsche in one swoop.
In a good year, investment banks can pay for these people. In an average year or a bad year, the costs jump right out of the balance sheet, especially for commercial banking directors used to making money on conservative lending and deposit taking.
"They're fundamentally different cultures," said Robert Jeens, former finance director at Kleinwort Benson and now a finance director at Woolwich. "The entrepreneurial, venture culture of investment banks doesn't fit well with the more conservative culture of a general bank."
What has made investment banks like Goldman, Merrill and Morgan Stanley Dean Witter successful has been a willingness to take risks, a long-term approach to the international markets and, most important, access to capital from the world's largest securities market. Without direct access to US capital, the European-based investment banks have had to rely more on their parent banks for capital, which has left them vulnerable when markets fall.
To be sure, some banks have had more success than others. Credit Suisse First Boston, the investment banking arm of Credit Suisse Group, announced a 29 per cent gain in pretax profits to $1.8bn last year, overcoming the trading problems in the Asian markets that plagued many of its rivals. SBC Warburg Dillon Read, for example, barely turned a profit in the second half of last year.
CSFB has something that has so far eluded most other European banks - a large, profitable business on Wall Street, the world's largest securities market. The link with First Boston dates back to 1978, enabling Credit Suisse to get almost a 20-year head start on its European rivals in the US market.
Allen Wheat, chief executive of CSFB, said the majority of the success came after Credit Suisse fully integrated CSFB into its main business in the early 1990s.
"It doesn't really gel until you go all the way," said Mr Wheat. "I report to someone who is not a traditional banker. If you report to a board, a bunch of people who have no idea what you do and are from retail, it's tough."
Last year CSFB took advantage of Barclays' decision to sell most of BZW, buying the investment bank's European equities and corporate finance businesses and part of its Asian operations.
This year it plans to hire as many as 500 people to expand its investment banking and underwriting business to compete more effectively with rivals such as Merrill Lynch and Goldman Sachs.
The only other current pretender to the so-called "bulge bracket" of global investment banks in the next few years is Warburg Dillon Read, the investment bank being painfully stitched together amid the merger of Swiss Bank and Union Bank of Switzerland.
At the moment, the investment bank is in turmoil as top executives leave amid concerns about the way the two banks are handling the merger. The combination is proceeding in a similar fashion to the way Swiss Bank took over SG Warburg Group in 1995, where more than 1,000 staff left in the six months after the takeover.
SBC Warburg then rebounded to the top of the rankings in corporate finance and equity research in the last two years, however, and Swiss Bank chief executive Marcel Ospel will not waste any time pushing the new Warburg Dillon Read to show performance.
The company is a long way from competing with CSFB's business in the US, however, and even further from matching the capabilities of rivals like Merrill and Goldman.
The main question is whether it will have the patience to grow globally that its European rivals did not.
Mr Wheat said many of the European banks jumped into investment banking with the promise that they would accept poor returns for as much as a decade in order to build a global business. "The truth of the matter is nobody will wait for a decade," he said.
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