In officially disclosing their agreement Thursday to acquire AT&T Universal Card Services, Citicorp officials sought to stress that this was no ordinary credit card portfolio purchase.

They repeatedly described it as a marketing partnership, sealing their intentions with a 10-year cobranding arrangement that would preserve many of the consumer benefits AT&T Corp. built into its seven-year-old program.

"We are not just buying a portfolio," said Alvaro de Souza, executive vice president of Citibank's North America consumer business. "We are buying a business and creating a new partnership."

A. Sami Siddiqui, president and general manager of Citibank's card operations in North America, conceded that the AT&T "portfolio has underperformed, but their current management recognizes it.

"They are working on it, and we think our partnership will add more value to their customers and that we will do more business with those customers."

Citicorp said it is buying AT&T Universal for $3.5 billion in cash, $500 million less than the price rumored in previous days. Closing is expected in the second quarter next year.

Citicorp said it paid $2.5 billion, a 16.3% premium, for $15.3 billion of receivables and 13.6 million accounts. The additional $1 billion was characterized as "net book value," a payment for intangibles like brand equity.

Besides the receivables, Citicorp is getting AT&T Universal's operations center in Jacksonville, Fla., plus facilities in Columbus, Ga., and Salt Lake City. Citibank also plans to hire 4,000 AT&T employees including the management team led by president Richard J. Srednicki. AT&T hired him from Citibank a year ago to turn the card portfolio around.

The AT&T business will at least temporarily operate independently from Citibank's $46 billion card business, already the biggest in the bank card industry. Integrating the operations would take several years, said Mr. Siddiqui.

Citibank said it does not intend to break AT&T's processing contract with Total System Services Inc. of Columbus, Ga., which has two years to run.

Citibank said its total U.S. portfolio would climb to $61 billion of receivables and 38.5 million accounts. The New York bank is not acquiring 5.3 million of AT&T's 18.9 million accounts that are either inactive or closed.

At least one analyst was skeptical that Citibank can breathe new life into the AT&T portfolio without substantially changing its reward structure.

Its offer of "no-fee-for-life didn't work," said Moshe Orenbuch of Sanford C. Bernstein & Co. "So why isn't Citi or AT&T doing more than that, like some reward that is triggered by general-purpose spending?"

Mr. Orenbuch also said Citibank overpaid: "AT&T should have been the one being relieved of carrying the burden of this portfolio instead of getting a huge premium," he said.

Citibank tried to counter that concern by pointing out it will pay a lower premium than the 27% Banc One Corp. paid this year for First USA Inc.; saying it will bring its 2.9% operating-expense ratio to bear on a company that was up at 4.7%; and focusing on the marketing opportunities.

It said the earnings impact would be "1.8% dilutive in 1998 and 0.4% accretive in 1999."

Mr. Siddiqui, who joined Citibank this year from Providian Financial Corp., said Citi and AT&T can benefit mutually from their respective data bases.

For example, the telecommunications company receives 40 million service- request calls a year. In each one, "customers are giving us some information about their situation," said Mr. Siddiqui. "With data mining we can design products to meet their needs."

He said access to AT&T's proprietary customer information gives Citibank a leg up on competitors. The rest of the industry, he said, "is marketing to the same people," because lenders rely on standard credit bureau data to identify prospects.

Mr. Siddiqui also sees a benefit in retaining AT&T Universal's management; Mr. Srednicki is one of several in the group who have Citibank backgrounds. "We all speak the same language," Mr. Siddiqui said.

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