The touted alliance between Fifth Third Bancorp and Kroger Co. is mired in differences between the corporate cultures of the Cincinnati-based companies.

The two teamed up in 1993 to pilot a credit card that offers Kroger customers rebates for shopping at the store and making purchases with the card.

It was a novel idea then for a supermarket company and a credit card issuer to market a financial product together.

Fifth Third was praised and admired for snagging the deal, which the bank hoped would transform it from a regional issuer with card customers in Kentucky, Ohio, and Indiana to a national player. Kroger's stores - there are now 1,300 of them, in 17 states in the South and Midwest - were supposed to fuel that effort.

The partners first tested their product in Dallas and Houston, slowly adding markets, and emerged from the pilot phase in August 1994.

Along the way, however, Fifth Third had to reevaluate its expectations for the joint venture, which has garnered only little more than 110,000 accounts.

Paul J. Novak, vice president of Fifth Third's credit card product management, said he was hoping Kroger marketing regions would adopt the credit card program quicker. So far the program has spread to three cities in Ohio - Columbus, Toledo, and Cincinnati - and to Louisville, Ky. and Nashville. Memphis is slated to be next.

Kroger's highly decentralized management structure, which includes 10 marketing divisions, seems to be at the root of the problem.

According to Kroger spokesman Paul Bernish, each division decides whether to add the credit card feature to the stores in its jurisdiction, and also whether Fifth Third will be the bank partner.

In Atlanta, for example, Kroger considered asking another bank to manage the program for a region that encompasses a number of states. The Atlanta office also wanted a bank that would issue the Visa brand rather than MasterCard, the brand Fifth Third is issuing exclusively for this program.

To speed up the growth of the program, Fifth Third announced a more generous rebate structure last month.

Previously, Kroger cardholders earned a 1% rebate, capped at $500, for purchases they made with the card in Kroger stores. Now they may earn the 1% rebate on all purchases they make with the card and on all balance transfers. The 2% rebate on purchases exceeding $2,499 did not change.

"It may not have been a strong enough hook," before, said Mr. Novak, "Now there is a strong incentive to put everything on this card."

The Kroger card is competitively priced with no annual fee and a 14.65% interest rate on standard cards and 11.65% on gold cards.

But even with the more generous rebate structure, Tim Ballinger, who helped to launch the Kroger card as senior vice president of Fifth Third's credit card business, says the product may still not reach its potential if it's not marketed properly.

Mr. Ballinger, who left Fifth Third about a year ago to join General Electric Federal Credit Union as vice president of business development, said that "if the card isn't getting a lot of play in the (Kroger) stores, the rebate isn't strong enough on its own merits" to increase the number of people carrying the card.

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