Associates First Capital Corp.'s agreement this week to purchase J.C. Penney Co.'s entire Visa and MasterCard portfolio illustrates a reversal of fortunes in the credit card business.

Associates, a Dallas-based subsidiary of Ford Motor Co., has been one of the most aggressive acquirers of bank card accounts. Last year it bought $670 million of receivables from Norwest Corp. and $343 million from Comerica Inc.

Associates would bulk up even more with $740 million on more than 500,000 accounts from J.C. Penney, which decided it could not build a big enough portfolio of MasterCard and Visa accounts to stay in the business long term.

When the sale closes, Associates National Bank in Delaware, with outstandings of $5 billion, will climb one place, to 16th, on the list of bank card issuers, according to The Nilson Report of Oxnard, Calif.

"Anytime there is a bid, Associates is there, whether it's a Visa- MasterCard or a private-label portfolio," said David Robertson, president of the newsletter. "They are committed to being in this business, and they look for opportunities to expand their portfolio."

Having decided to exit the MasterCard-Visa realm, J.C. Penney will focus on its proprietary card program. The retailer, which issued the cards through J.C. Penney National Bank in Delaware, scaled back in a related area last year, divesting a transaction processing subsidiary.

"The decision to sell was not really about the economics of the program," said J.C. Penney spokesman Duncan Muir this week. "We wanted to redeploy capital into our core business."

James L. Accomando, president of Accomando Consulting Inc. in Fairfield, Conn., said the strategy makes sense. "Credit cards are a way to facilitate sales in stores, but the stores' responsibility is retail sales, not necessarily developing of or processing credit card transactions," he said.

Although terms of the portfolio sale were not disclosed, Mr. Muir said the current state of the market enabled J.C. Penney to command a good price. One industry expert estimated Associates would have paid a premium of around 15% on the receivables.

"Part of our strategy to grow is to buy quality portfolios that we feel we can fit in our organization and that we think we can bring some value to," said Fred Stern, senior vice president of Associates.

Some experts said a cobranding tie-in between J.C. Penney and Associates may be in the cards.

"We don't speculate on the future, but we already have a good business relationship with J.C. Penney and would hope to expand on it," said Mr. Stern.

He said the company is continuously exploring cobranding and other relationships like those it has with Amoco and GTE.

"It's definitely premature to speculate, but Associates is a really good program manager and partnership marketer," said Mr. Accomando.

Mr. Accomando pointed out that J.C. Penney had the resources to launch its own program, but rules do not permit a retailer to serve as the issuing bank in a cobranded partnership.

"Others have tried to develop value-added or cobranded programs with J.C. Penney," he said, "but Associates would definitely be a good home for the J.C. Penney program."

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