For the first time in its history, MasterCard International has appointed a chief executive officer from within its own ranks.

Robert W. Selander, 46, named Wednesday to succeed H. Eugene Lockhart as MasterCard president, had spent the last three years as the association's executive vice president and president of its Europe, Middle East-Africa, and Canada regions.

Though still a relative short-timer at MasterCard-Mr. Selander spent 20 years with Citicorp-he comes into his new post with a knowledge of MasterCard's day-to-day workings that Mr. Lockhart and his predecessors had to acquire on the job.

In an interview, Mr. Selander said his role on MasterCard's senior management team has given him "ownership" in the enterprise. "I don't plan on disowning all those things we've collectively built."

The executive committee of MasterCard's global board unanimously approved Mr. Selander's promotion Monday, averting the need for an outside search. The appointment takes effect May 5 when Mr. Lockhart officially assumes the presidency of BankAmerica Corp.'s global retail bank.

Mr. Selander's successor in MasterCard's key international post has not been named.

"A constant churn of people coming from the outside creates instability," said Joel Friedman, managing partner at Andersen Consulting, San Francisco. "Appointing an insider is probably a signal of confidence in the overall strategic directions and the management team."

Card industry observers credited Mr. Lockhart with assembling a strong management team, but MasterCard's global market share has slipped while Visa International's grew from 63% in 1993 to 67% in 1996.

Some critics said MasterCard has lost focus on its core business even as it was improving staff quality, internal stability, technology, and performance measures.

"Lockhart got off on a tangent with all the electronic commerce-related activity and smart cards and direct banking and wasn't focusing on the core business enough," said James Shanahan, principal of Business Dynamics Consulting, Nyack, N.Y.

But Mr. Selander said he sees MasterCard as being in a stronger position now than in 1994, when Mr. Lockhart took over from Alex W. "Pete" Hart, who left for Advanta Corp.

Gross dollar volumes have been growing at a consistent 15% to 20% annually, reaching $550 billion in 1996. Operating margins have improved, and MasterCard under Mr. Lockhart completed several deals that could leave a lasting legacy.

Among them was the recent acquisition of 51% ownership of Mondex International, the smart-card-based electronic cash venture started by National Westminster Bank of London.

Mr. Lockhart, with Mr. Selander playing a key role, renewed and reinvigorated MasterCard's alliance with Europay International and reached an agreement with British banks to convert their seven million Access credit cards to the MasterCard brand.

Mr. Selander said it is shortsighted to focus on conventional credit and charge card market shares when the payments business-and the real opportunity for MasterCard and Visa-is in displacing cash and checks worldwide.

"We're dealing in a market that is virtually untapped," he said. "The global payments industry is enormous. We have a huge upside opportunity to grow our business, and we're strongly positioned to do that."

Visa International president and chief executive officer Edmund Jensen agreed that the opportunity is immense, with Visa's current share of personal consumption expenditures at just 5%.

"It's a matter of competing with cash and checks and making sure our members are the ones sustaining their position in the payments system," he said. "I think that's important and a common goal that both associations have."

Most bankers agree it is in their best interest that MasterCard and Visa be vigorous and aggressive competitors, said Mr. Shanahan, the New York consultant.

"It's important to be healthy and vital-you can't be if you lose market share," he added. "They have to turn it around, and that's not easy to do. It takes a long time to shift, unless you go for the big hit like Pete Hart did with cobranding."

If MasterCard has an edge over its direct competition, it is in Europe, with the help of Europay. To show how important Europay is to MasterCard, Louis-Noel Joly, president and CEO of the Brussels-based organization, said Mr. Lockhart called him every step of the way in recent weeks while he was making his decision to leave.

"There is always a fear that a U.S. organization is highly U.S.-oriented and does not understand a European business," he said. "In the case of (Mr. Selander), we are convinced that he does."

"It's extremely good from our point of view that the chief executive comes from inside," Mr. Joly said. "It's a member of the family, it's continuity, it's a person we know and one who knows international business."

Mr. Hart, chief executive officer of Advanta, who headed MasterCard from 1989 to 1994, said Wednesday that Mr. Selander "certainly seems to have done an exceptional job at MasterCard in dealing with the European situation, following a very fine career at Citibank. He sounds like a good fit."

Mr. Selander obtained considerable international experience at Citibank. From 1974 to 1994 he managed a wide range of activities-based in various countries-in retail financial services, running branches, credit cards, finance companies, mortgage activities, insurance, and investments.

"The payments industry transcends" credit cards, Mr. Selander said. "Most of the bankers in the world are looking at how can they improve the performance of their retail franchise, not just how they make their credit card business more successful."

Among MasterCard's current strategic moves is a search for an advertising agency to replace Ammirati Puris Lintas, the creator of its "Smart Money" campaign. The objective is a clearly communicated market position and brand identity.

"I think they face a challenge in terms of the understanding in the marketplace as to what their brand stands for and how it differs from Visa or American Express," said Mr. Friedman of Andersen Consulting. "Visa has been particularly successful in establishing brand preeminence."

When consumers are more often than not likely to pick the Visa brand from mail solicitations, he added, that says the "me too" model of the two associations' doing the same things and targeting the same customers is not viable in the long run.

"The question is, can the new leadership set out a differentiated strategy that is compelling to the consumer and compelling to the merchant, that says somehow we're different?" he said. "In a world as competitive as what we have right now, that's a fairly daunting task."

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