Citigroup plans to bring in-house the processing for its Universal Card Services portfolio.

The move would consolidate Citigroup's credit card operations and would take Universal Card-the former AT&T Corp. unit-away from its processor, Total System Services Inc.

Total System disclosed Friday that it had been notified the Universal Card agreement would not be extended beyond its Aug. 1, 2000, expiration.

Maria Mendler, a spokeswoman for Citibank in New York, said, "After a review of our capabilities, we found that we were able to do the business in-house."

Citibank, which has historically preferred to control key operations including credit cards, bought the $15 billion Universal Card portfolio early last year. Citibank's managed loan total is up to about $70 billion.

Total System, a subsidiary of Synovus Financial Corp. of Columbus, Ga., supported AT&T Universal since its 1990 introduction. It was one of several industry leaders that chose Total, helping to establish its reputation as the main rival to Atlanta-based First Data Corp. in cardholder account processing.

"You hate to lose any customer," said Philip W. Tomlinson, president of Total System. The Universal Card business is "one of these things we have a lot of sweat equity in."

Total System said it has signed up enough new business to compensate for the loss and sees no "material adverse effect" on profits next year.

Mr. Tomlinson said the company is busy converting such significant customers as Sears, Roebuck and Co., Royal Bank of Canada, and Canadian Tire Acceptance Ltd. Total expects to add 78 million accounts to its portfolio this year and wants to capitalize on the expansion of credit cards in Europe and South America.

"The overall picture is very bright," Mr. Tomlinson said.

Citibank plans leave its Universal Card business accounts and American Airlines AAdvantage business card program with Total System.

The bank and processor "share many other common interests that we may want to enhance and grow in the future," said Leslie Palmer, senior vice president and chief information officer at Universal Card Services in Jacksonville, Fla. "We look forward to a continued relationship ... into the next century."

Last year, Citigroup closed two operations centers it acquired in the AT&T deal.

Citibank, which is about as big as Bank One Corp. in consumer card receivables, has gone against the outsourcing trend. Bank One recently solidified its relationship with First Data.

Brent Wouters, an analyst at Robinson-Humphrey Co. of Atlanta, said losing Universal Card and other accounts would slow Total System's earnings growth for one year alone: 2000. He predicted revenues of $442 million and earnings per share of 35 cents in 1999, followed by revenues of $450 million and 35 cents in 2000.

"The bottom line is ... a period of slow growth for 1999 to 2000," Mr. Wouters said.

The condition is likely to be temporary, he said. The average Total System customer sees its accounts grow by 11% each year, compared to an industry average of 5%.

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