Citibank, historically not regarded as much of a friend to smaller competitors in the banking industry, is working on new and more cordial relationships in the credit card business.

The Citigroup subsidiary has opened a new strategic front in agent banking, the practice of issuing cards on behalf of other institutions, often under their brand names.

Citibank kicked off its agent program this year when it purchased Mellon Bank Corp.'s $1.9 billion card portfolio. Mellon customers will still be getting Mellon cards, but Citibank will manage them and own the receivables.

The New York bank is also renewing its commitment to affinity programs, in which it offers cards in conjunction with an organization or groups with common interests. Several deals are said to have been newly negotiated, adding to a portfolio inherited from Citicorp's merger last year with Travelers Group.

"We are looking for other portfolios like Mellon, organizations with $500 million of credit card receivables," said Thomas G. Anderson, president of Citibank's agent bank and affinity card division, a business line created in October.

This is the same giant institution that has been making waves in the credit card industry because of its desire to pump up its own brand name. Citigroup chairman John Reed and consumer banking chief Robert Lipp resigned from Visa U.S.A.'s board in February, reportedly because Visa rejected a request to de-emphasize its logo on credit cards and give more prominence to Citi's.

Mr. Anderson, a 20-year veteran of Citibank, said the agent and cobranding thrust is "compatible with our branded effort."

Promoting cards in the names of other banks is not a conflict because "customers use different cards for different purposes," Mr. Anderson said.

Citigroup is even with Bank One Corp.'s First USA division atop the ranking of U.S. MasterCard and Visa issuers. Each had about $70 billion of receivables at yearend 1998.

Mr. Anderson, who was formerly head of Citi's card operations in Latin America, assumed his current duties last fall when the banking-insurance- securities merger that created Citigroup was completed. He reports to A. Sami Siddiqui, president and general manager of North American card operations.

It was a Travelers Group subsidiary-Travelers Bank USA of Wilmington, Del.-that got Citi into the affinity card business.

Before the merger, Travelers Bank had 27 affinity card partners, including Intuit Inc., the Silicon Valley company that develops Quicken personal financial management software. Travelers offers a Quicken Platinum Visa as well as cards sponsored by the American Bar Association, and Mothers Against Drunk Driving, among other organizations.

Since October, Citigroup has added six relationships, including one with the American Dental Association, which formerly worked with Mellon Bank of Pittsburgh.

Mr. Anderson declined to identify the other five. "We have no aspirations to become the MBNA of the affinity card business," Mr. Anderson said, referring to the No. 3 bank card issuer, which markets primarily through affinity and professional groups.

Wilmington, Del.-based MBNA and First USA dominate the affinity and agent categories of the business, with far more affiliations than other card companies. Mr. Anderson said Citigroup can gain a competitive advantage through the "substantial institutional relationships" it has with banks.

The timing would seem good, as many second-tier credit card issuers have been finding it more difficult to grow and compete on their own, against larger operators that can benefit from economies of scale.

One expert in agent banking, Donald M. Berman, president of Cardholder Management Services in Plainview, N.Y., said Citigroup may "run into trouble because it could be perceived as a competitor" of the banks it wants to serve.

He said the same argument might be made against Citigroup that Visa and MasterCard used when warning member banks about entering into business arrangements with American Express Co.: that Citigroup could be viewed as a predator seeking access to a partner bank's customers.

MBNA and First USA do not provoke such reactions, Mr. Berman said. MBNA does not offer traditional banking services and First USA, although part of a full-service bank holding company since 1997, is still viewed as a credit card specialist, Mr. Berman said.

Mr. Anderson said he did not anticipate such competitive or image problems for Citibank.

"We had always wanted to enter the agent banking business," he said. Citi will be marketing to corporate clients as "an extension of our product set," he said.

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