Tough times in credit cards are causing some banks to head for the exits.

Barnett Banks, stung by rising losses, is considering selling its $1.7 million card portfolio or finding a partner for the business, the company confirmed.

Earlier this year, Norwest Inc. sold nearly $1 billion of card loans, or half its card portfolio. And other banks are actively eyeing sales because of intense competition and rising delinquencies, experts say.

"Many banks are uncomfortable in this portion of the loss cycle," said Jerry Craft, former head of Wachovia Corp.'s card unit and now chief executive of Card Issuer Program Management Corp.

Barnett's deliberations follow a year of rapid growth. In 1995, the company's card portfolio ballooned by a full 30%.

But the growth brought a slew of bad credits. Chargeoffs hit 6.4% in the second quarter, versus an industry norm of well under 5%.

"We are doing a strategic review of that line of business," said spokeswoman Jeri Franz. "We need to decide what we're going to do with that line of business."

A number of observers are betting that Barnett will opt to enter a joint venture with another party, allowing the company to retain ties to customers.

Though such ventures are rare in the card field, Barnett may have established a model earlier this year when it joined forces in the mortgage business with Bank of Boston Corp. Barnett also offers investment banking services through a joint venture with Stephens Inc., Little Rock.

Possible partners for Barnett include both large bank and nonbank players, analysts said. Capital One Financial Corp. announced last September that it was searching out "strategic alliances" with other issuers, but has not yet signed a deal.

One Wall Street source reported hearing discussions between Barnett and First USA Inc. A First USA spokesman declined comment Wednesday.

As the industry continues to grapple with high chargeoffs, joint ventures are sure to become more common, said investment banker Robert K. Hammer.

"We are going to see some strange bedfellows who were once cutthroat competitors," said Mr. Hammer, president of R.K. Hammer Investment Bankers.

"Regionals around the country are talking about" selling or forming partnerships, he added.

Barnett is generally considered a second-tier card issuer, ranking well below the top 25 issuers. But it gained attention last year for its active marketing efforts.

News of its strategic review first appeared in the CardFlash newsletter, a publication of Ram Research Group. CardFlash reported that Barnett had informed its card unit employees that it was considering "selling off non- Florida and non-Georgia accounts, outsourcing operations, or merging its card business with another concern."

Ms. Franz, the spokeswoman, confirmed that Cynthia Graham, chairman and CEO of Barnett Card Services Corp., had outlined the various options to the card unit's 400 employees. But Ms. Franz said no action will be taken until the analysis is completed, which is not expected until the end of the third quarter.

Norwest's portfolio sale followed credit quality woes that apparently stemmed from mass-marketing efforts. The bulk of the $1 billion package went to Associates First Capital Corp.

Norwest also cut 250 jobs, or one-quarter of its credit card employees.

Lisa Fickenscher contributed to this report

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