National City Corp. is considering a restructuring of its underperforming transaction-processing subsidiary.

It is not certain how many of the 12,000 employees of the unit, National Processing Inc., would lose their jobs, but the restructuring moves are likely to be significant, said National City chairman and chief executive officer David A. Daberko.

He said an announcement is planned within a month.

National Processing provides a variety of services to other companies, including credit card and check processing, ticket processing for airlines, and other administrative services.

National City owns 88% of the Louisville, Ky.-based subsidiary, and the rest is publicly held. The unit has not performed well since its initial public offering in August 1996.

National Processing earned $3.4 million in the third quarter, 56% lower than a year earlier. The $9.9 million earned through the first nine months of the year represented a 35% drop from a year earlier.

The company blamed the decline on "severe operating problems" and warned that "continued difficulties are likely for the foreseeable future."

In an interview Mr. Daberko said he wants to turn National Processing around. Overhead costs, he said, would be a primary target.

"There are a lot of opportunities in this company," he said. "It has not been consolidated as fully as it could be."

Mr. Daberko said the merchant credit card and airline processing businesses are doing well, but other areas are not, and he did not rule out discontinuing certain lines. "Not many of those other businesses run very well," he added.

The restructuring would be part of a plan to reduce expenses. National City's overhead expenses in the third quarter were $25 million higher than initially were projected, Mr. Daberko said. National Processing contributed $5 million of that overrun, he said.

"This is a company that has 12,000 employees (National City Corp. has 28,000) but contributes about 2% of our revenue," Mr. Daberko said. "This business has not been rigorously managed from the cost side."

Fred Cummings, an analyst with McDonald Investments, said many of National Processing's businesses are labor-intensive and highly competitive, with low profit margins.

National Processing has lost customers, including Wal-Mart Stores and Dillard Department Stores. Unable to keep costs down, the processing company has been outbid by competitors such as First Data Corp., which won the Wal-Mart account two years ago.

"Some of us have questioned where they're going" with the business, said Diana Yates, an analyst with A.G. Edwards, St. Louis. However, she said, a restructuring could allow the company to "move forward and give them a clean slate."

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