Norwest Corp. has plans to instill a more conservative culture at auto finance company Fidelity Acceptance Corp., according to a company official.

James R. Berens, president of Norwest Financial, said his company's decision to jump into the auto finance business in a big way, with its $340 million agreement to buy Fidelity Acceptance from BankBoston Corp., doesn't mean Norwest is prepared to absorb large credit losses.

Norwest announced the deal last Tuesday. The Minneapolis-based banking company agreed to pay 13.9 times Fidelity's year-to-date annualized earnings.

The purchase is expected to close in the third quarter. It would increase $83.6 billion-asset Norwest's auto finance business to more than $1.4 billion of assets. It would also bring the number of Norwest's relationships with car dealers to about 4,000.

Mr. Berens said Norwest wants to bring Fidelity's loss rate-a whopping 7.5% last year-down to Norwest's loss rate on auto loans, which was a little more than 2% in 1996.

Norwest's auto finance business would grow from 79 locations in 15 states to 229 locations in 32 states. But the transaction would also increase the bank's exposure to a volatile business.

Mr. Berens insisted that despite financial difficulties at subprime auto lenders such as Mercury Finance Co. and Jayhawk Acceptance Corp., the business is a good one. The acquisition would further diversify Norwest's consumer finance portfolio, he added.

"We feel we can be a player in the industry," Mr. Berens said. "I don't think it's different than other things we do. There are people who operate well and there are those who don't."

Mr. Berens said he expects writeoffs of consumer loans to continue to increase across the industry, but he says Norwest, which has been in the consumer finance business since 1982, has done a good job of managing losses.

"We think it is an industry we want to be in if it's properly run and controlled," Mr. Berens added.

Norwest has been active in subprime auto finance since 1994 when it acquired Edina, Minn.-based Community Credit, which retained its name.

Mr. Berens said Fidelity, based in Kansas City, Mo., will operate as a unit of Community Credit, but it will also retain its name. Eventually the companies may merge, Mr. Berens said, but in the short term Norwest believes both have sufficient name recognition.

Creating a bigger auto finance unit is key to providing a broad base of loan products, Mr. Berens said. Norwest has been successful cross-selling products among its bank, mortgage company, and consumer finance customers, and Mr. Berens said providing new-car and used-car loans is an essential part of the credit mix.

Once the company is integrated, there may be opportunities to expand it to other states, Mr. Berens said. Norwest has been in the midst of opening new Community Credit locations. It had expanded its presence from three states to 15 in three years, opening 29 offices in that time.

Mr. Berens declined to disclose revenue projections, but Norwest said the acquisition would add to earnings in its first full year of operations.

BankBoston had put Fidelity Acceptance up for sale last fall. A deal to sell to Mercury was called off in February because Mercury was being investigated for improper accounting practices.

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