GE Capital Corp.'s retail credit unit said it will take over the private-label credit program of Ethan Allen Inc., a national home furnishings chain.

GE Capital's Retailer Financial Services said this week that it had signed a long-term agreement to provide a $150 million facility for Ethan Allen's program.

Trend to Third Parties

The Danbury, Conn.-based retailer becomes the latest retailer to turn over its credit card operations to a third-party specialist. The trend has particularly benefited General Electric Co.'s finance subsidiary, which in recent months has acquired several significant financial service businesses, including credit card portfolios.

Per its agreement with Ethan Allen, Stamford, Conn.-based GE Capital will provide customer service, account origination, and marketing support.

As reported Wednesday by American Banker, GE Capital ranks first among finance companies in capital funds and earnings, and is second to General Motors Acceptance Corp. in assets, with $93 billion at yearend 1992.

The GE group reported $110 billion of assets and $9.5 billion of equity capital at Sept. 30.

Huge Private-Label Business

GE Capital also ranks first among third-party, private-label card issuers, according to The Nilson Report, an Oxnard, Calif., newsletter Nilson reported that GE Capital had $12.8 billion of outstandings and 57 million accounts in 1992, with half of those accounts active.

Separately, Ethan Allen announced an aggressive bid for credit card receivables. It said it would not charge cardholders an annual fee and would tier its finance charges as some banks do.

Under the pricing plan, unique to the furnishings market, Ethan Allen customers buying more than $3,000 of merchandise will pay 12.9% interest; those buying less than $3,000 pay 16.9%.

"Consumers can plan for their investment in home furnishings just as they would any other major purchase - like a car or appliance - and think about it in terms of convenient monthly payments," said M. Farooq Kathwari, chairman and president of Ethan Allen.

The retailer has offered its U.S. customers a credit card for 10 years at a fixed interest rate. Mr. Kathwari said the company switched its pricing to make it easier for consumers to finance larger purchases.

Ethan Allen has 30,000 open accounts and 88,000 cards with $75.5 million in outstandings, which will not be transferred to GE Capital.

A Good Fit

Mr. Kathwari said Ethan Allen had talked to a number of third-party providers before picking GE Capital. "We found that GE Capital would make sense," he said. "They offer a comprehensive program."

"Ethan Allen's many recent innovations in merchandising, store display, and advertising called for the strategic development of a complementary consumer financing program," said David D. Ekedahl, senior vice president and general manager of GE Capital's retail credit unit, in a press release.

GE Capital's third-party, private-label credit card program, which serves more than 300 companies with 70 million cardholders, got a major boost this month when it announced acquisition of the credit card receivables and operations of Exxon Company U.S.A.

In October, GE Capital also won a contract to supply private-label cards for Venture Stores Inc., O'Fallon, Mo.

Private-label cards account for 46.6% of all credit cards in the United States, according to The Nilson Report. Those issued by third-party companies accounted for 32% of outstandings on all retail credit cards in 1992, according to the newsletter.

GE Capital offers auto financing, consumer credit, mortgages, and aircraft leases.

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