Great Western Financial Corp. said Monday that it had agreed to sell its $220 million of credit card loans to an affiliate of Associates Corporation of North

The deal, which is expected to be completed later this month, would be the largest credit-card-portfolio purchase since 1991. The market has been relatively dormant since the 1988-90 period, when well over $10 billion of card loans changed hands, including single portfolios of more than $1 billion.

Great Western, the nation's second-largest thrift company, did not disclose the premium that Associates agreed to pay. But Great Western said it expected to realize a net gain of about $43 million, including the recovery of loss reserves.

Premiums Edge Up

Robert K. Hammer, chairman of R.K. Hammer Investment Bankers of Newbury Park, Calif., said Great Western probably would get close to 120% of the portfolio's receivables, a sign that premiums are edging back up to where they were at the top of the market.

It has become a buyer's market, observers said, with banks hungry for assets but few willing to give up their profitable card portfolios. Great Western signed its contract within two months after it sent out proposals.

Earlier this year. MBNA Corp. of Newark, Del., and Banc One Corp.'s Indiana subsidiary each bought a $20 million portfolio, which was more in keeping with the recent trickle of deals. They reportedly paid premiums of 20% or more.

Associates, the Dallas-based finance company owned by Ford Motor Co., plans to add Great Western's 178,000 Visa accounts to the 3.3 million accounts and $2.6 billion of receivables at Associates National Bank (Delaware).

Great Western will continue to offer cards, under its own name, as an agent of Associates.

Great Western is suffering through the stubborn California recession, but the motivation of the transaction is said to differ from the need to raise capital that generated the spate of deals by New England banks a few years ago.

Robert E. Hyer, of Smith Barney, Harris Upham & Co., who represented Great Western in the sale, said current portfolio sales are driven by the need to stay competitive with powerful national marketers like General Motors Corp. and American Telephone and Telegraph Co., which currently sponsor bank-issued credit cards.

Sellers "are looking at keeping their retail customers happy that have other relationships with the bank," Mr. Hyer said. "The only way they can do that profitably is to team up with somebody that can provide a good agent program."

James F. Montgomery, chairman and chief executive of Chatsworth, Calif-based Great Western, said credit cards have "always been important" but "it has not been possible for us to achieve the economies of scale this business demands today."

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