A new contender has entered the battle for dominance of the consumer finance arena.

Commercial Credit Co.'s planned acquisition of Security Pacific Financial Services would fortify its position as the third-largest finance company in the United States, ranked by number of branches. Its $1.6 billion deal for the BankAmerica Corp. unit was unveiled Monday.

Till now, Commercial Credit has been a distant No. 3 to the industry leaders, Associates First Capital Corp. of Irving, Tex., and American General Finance Inc. of Evansville, Ind. The deal, slated to close in the third quarter, would make Commercial Credit a much more formidable contender.

"It puts them on a bigger scale, gets them into the West Coast, and gives them a base of branch managers," said Peter J. Shimkus, an analyst at Duff & Phelps Inc., Chicago.

Commercial Credit would increase its branch network 40%, to more than 1,000 outlets in 32 states. Its managed receivables would climb 14%, to more than $9.7 billion.

By contrast, Associates has 1,500 U.S. branches and $41.8 billion of receivables. American General has 1,400 branches and $7.4 billion of receivables. Volume of receivables varies widely from company to company, depending on how actively they securitize loans, so branches are considered a more consistent way to rank finance companies.

The consumer finance market has seen several banner years, in part because Wall Street's hunger for high-yield product to securitize has funneled capital into these companies. Now, "you're starting to see the efficient buying the weak," said Mr. Shimkus.

Household International, Prospect Heights, Ill., made a bid last month for third place with its announced acquisition of Transamerica Corp.'s San Francisco-based consumer finance group. But when the deal closes, Household will have only 970 branches, putting it a notch below Commercial Credit.

"The smart money is paying up" for branches, said Michael Durante, analyst at Prudential Securities, New York, because running a successful consumer finance business relies on close customer contact.

Commercial Credit is "one of the best in the industry" at pulling in profits from branches, Mr. Shimkus said. The Baltimore-based finance company is expected to pump up volume at its new branches through its "excellent" technology and efficient cross-selling, Mr. Shimkus said.

"They have so many products to cross-sell," he noted. Commercial Credit's parent Travelers Group Inc. also counts Smith Barney and Primerica Financial Services as subsidiaries. Cost savings were not a driving force behind the acquisition, said Commercial Credit chief executive Robert Willumstad.

He said he is planning to keep most of the existing branches and a "very large" number of field employees. "You don't pay the kind of premium that we did if you're going to liquidate a company," he said.

He intends to increase volume at former Security Pacific branches by offering products that BankAmerica wouldn't sell, including high loan-to- value credits and noncredit insurance products.

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