Chase Manhattan Corp.'s days of being the nation's largest bank may be numbered, but its credit card people are not letting that get them down.

"We are shooting at the No. 1 spot-there is no doubt in our minds," said Michael Urkowitz, executive vice president and head of card member services.

A leap from the No. 5 spot would be considerable. At $31.4 billion of receivables, Chase's card portfolio is roughly half the size of Citicorp's after Citi's recent acquisition of AT&T Universal Card Services.

No. 2 is MBNA Corp., at $44 billion, and Banc One Corp. with its First USA subsidiary is next at $38 billion. Among nonbanks Morgan Stanley, Dean Witter & Co.-with its $34 billion Discover-Novus portfolio-leads Chase.

But Chase has made substantial gains through portfolio acquisitions, cobranding arrangements, and internal growth. Receivables grew from $19.7 billion in 1994 to $23.7 billion in 1995, and $25.2 billion in 1996. A banner year in 1997 brought record growth.

"We will grow by traditional acquiring, we will grow through portfolio acquisition," Mr. Urkowitz vowed in an interview this week. "We're clearly committed to leadership."

He said the company covets the top spot "not just because it's emotionally appealing and motivating" but also because the economies and other benefits of scale "make so much sense."

Mr. Urkowitz can tick off a list of accomplishments since the 1996 merger with Chemical Banking Corp. that created the new Chase. It bought portfolios from Marine Midland Bank, First Omni Bank, and Bank of New York. It embarked on a major cobranding arrangement with Wal-Mart Stores, now with 1.3 million customers, and has begun issuing platinum cards and photo cards, both popular with consumers.

Chase recently took over the Continental Airlines card from Marine Midland Bank. Its other cobrand partners include Bell Atlantic and Toys 'R' Us.

"Our partners don't come to us with small and limited sets of customers," said Harry F. DiSimone, executive vice president and chief operating officer of the credit card business. "Millions of people walk through a Wal-Mart every day."

Chase also has high hopes for international growth. After pulling back from foreign markets between 1990 and 1993, it is back in the game.

In addition to card operations in the Virgin Islands and Panama, Chase has begun issuing secured credit cards in Mexico (see page 9) and increased its ownership of a card venture in Hong Kong. The bank wants to market cards in Thailand once the Asian financial problems subside, Mr. Urkowitz said.

"Our international strategy will have us moving in a very steady, step- by-step way," he said. "Not enormous steps."

Detractors say Chase's card organization, in its pursuit of sheer size, may be willing to pay too much. One observer, who asked to remain anonymous, said it will take five to six years for Chase to recoup its investment in the Bank of New York portfolio.

"They certainly have the resources" to overtake Citibank, said Marc Sacher, managing associate at Auriemma Consulting Group Inc., Westbury, N.Y. "It sounds like they have the will."

Chase's effort "undoubtedly will be met with an appropriate competitive response from those they are trying to overtake," Mr. Sacher said.

He said the most likely route would be "an acquisition strategy" or "another bank merger," rather than soliciting new accounts.

He discounted the possibility of acquiring one of the remaining monoline lenders because they "have their own methods of doing things, and Chase has its own. If you have two different groups that have proven themselves successful two different ways, the likelihood of their meshing is slim."

The Chase executives emphasized they do not intend to sacrifice credit quality. Chase said its portfolio grew 24% in the 12 months through March 31, faster than other major issuers.

Some 21.5 million of Chase's 30 million customers are card customers. Cards bring in more than 10% of net income.

Robert K. Hammer, an investment banker based in Thousand Oaks, Calif., who brokers card portfolio sales, said Chase's growth ambitions are realistic in a hot market.

In the last five months $20 billion of receivables have been sold, the same amount that changed hands in all of 1997.

Donald M. Berman, president of Cardholder Management Services, Plainview, N.Y., said overtaking Citibank would be "very hard if not impossible" for Chase. The planned merger between Citicorp and Travelers Group "creates a whole new set of cross-selling opportunities," he said.

Mr. DiSimone said Chase is ready for the competition.

"This industry has moseyed along without a significant amount of change for a long time, and today the pace of change is enormous," he said.

"You're fighting it out tooth and nail every day," he added. "You need speed. You have to be able to have the organization change very rapidly."

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