The Credit Union National Association said it is preparing to sell part or all of its credit card unit.
Peter Crear, interim president of the trade group, said last week that a request for proposals should go out by April 24. He expects final recommendations to be made by late June or early July and a contract to be signed by mid-August.
He said he is confident the timetable can be met, in spite of recent management and financial shake-ups at the CUNA card services unit.
The unit, the nation's top processor for credit unions, is part of the trade group's for-profit subsidiary, CUNA Services Group. It services $5.5 billion of receivables and more than five million accounts.
The card services unit lost $19.7 million last year as a result of capital investments and a technology deal that was scratched. In January, the unit's top executive, Keith Floen, resigned.
Since then, Greg Moser, acting executive vice president for card services, has been handling day-to-day operations. He will see the unit through the bidding process, Mr. Crear said.
In late December, CUNA contracted with First Annapolis Consulting in Annapolis, Md., to outline strategic alternatives. The consultant presented four to the CUNA Services Group board Feb. 13 and to shareholders Feb. 23. Shareholders favored two possibilities that the association is now pursuing.
The first is to form a joint venture between the card services unit and a leading processor or credit union service organization, Mr. Crear said. Bank One Financial Card Services is currently processing 2.2 million credit union accounts.
In this scenario, the chosen partner would buy a percentage of the card services business.
Under the second alternative, a partner would buy the entire business.
Alan Pohlman, executive vice president of Carmody & Bloom, Ridgewood, N.J., noted that the card services unit has a "fairly sizable portfolio (that) several entities will probably be interested in." Among these, he said, would be First Data Corp., Equifax Inc., and the card services unit of Banc One Corp., the current provider.
For First Data, which is the largest credit card processor, Mr. Pohlman said: "This would be a huge breakthrough in terms of handling the small credit union entity."
First Annapolis also made shorter-term recommendations that the card services unit said it has adopted, including a comprehensive internal operating review aimed at cutting costs.
In addition, the unit said it has postponed a June 1996 conversion of 673 credit unions to Bank One's Triumph software, to avoid putting those credit unions through a second conversion in the event Bank One is not selected as a joint venture partner or buyer.
