Wall Street is growing increasingly skeptical that Bank One Corp. can turn its First USA credit card subsidiary around.

The company's chairman, John B. McCoy, "thinks he can turn around First USA," said Katrina Blecher, an analyst at Brown Brothers, Harriman & Co. in New York, on Friday. "I disagree with him."

The situation has deteriorated so much that "we put the odds of a sale of Bank One in its entirety as between 50% and 75%," said Susan Roth, an analyst at Donaldson, Lufkin & Jenrette & Co., in a written report.

On top of the bad news of last Wednesday, when Bank One further reduced its 1999 earnings projection and said it is taking longer to come to grips with First USA's problems, the company announced the resignation of the head of the WingspanBank.com Internet banking program. (See article on page 6.)

Bank One shares rose $1.25 Friday, to $36.25.

As talk among analysts turned to the possibility that Chicago-based Bank One might be vulnerable to a takeover, Frank Suozzo, a buy-side analyst with Alliance Capital Management LP, said, "If someone on the outside wanted to make an aggressive bid, it could put Bank One into play. It would be hard to fight a takeover given the wide differentials" in stock valuations between Bank One and possible suitors.

The analysts said possible buyers might be Citigroup Inc., Chase Manhattan Corp., or Wells Fargo & Co. Those companies declined to comment Friday, though Chase spokesman Ken Herz, pointed out that Chase "intends to be one of the consolidators in the credit card industry."

Ms. Blecher, who joined Mr. Suozzo and other analysts in a roundtable discussion with American Banker reporters and editors, contended that a takeover is much more remote because members of management including president Verne Istock, who came to Bank One in the acquisition of First Chicago NBD Corp. last year, adamantly oppose a sellout.

Meanwhile, Mr. McCoy declared in a phone message to his staff Friday that "our credit card and consumer lending businesses are still strong and valuable franchises and they are not for sale," according to a spokesman.

Bank One now says 1999 earnings will be about 15% below the analysts' consensus estimate. In August it said its third-quarter earnings would be 7% to 8% below expectations, and they declined in that period by 12%.

Mr. McCoy on Friday dismissed talk of selling all or part of Bank One, saying in the internal message: "Bank One is still a strong company regardless of all the conversations that are occurring. I want to assure you that we still intend to capitalize on our strength, execute our plan, and control our own destiny."

Aside from the resignation of the WingspanBank executive, James Stewart, which takes effect at yearend, Bank One several weeks ago announced the departure of First USA chairman Richard Vague.

Other senior executive departures were announced over the summer.

"There is going to be a management vacuum" at First USA, Mr. Suozzo said. He and others pointed out that William Boardman, who previously oversaw Bank One's acquisition strategy and was put in charge of First USA, has not run a credit card company.

"Responsibility goes to the top and senior management hasn't yet accepted full responsibility," said Ronald Mandle, an analyst for Sanford C. Bernstein.

When it acquired First USA in 1997, Bank One expected the unit to continue increasing earnings by 20% a year.

It was seen as the engine behind the bank's plan to increase overall earnings 15% a year.

First USA until this year was credited for providing one-third of Bank One's revenue growth.

"They got too far ahead of themselves, they became uncompetitive on a price basis," Mr. Suozzo said.

He attributed some of the problems to a conversion of processing systems to those of First Data Corp. And, he added, it cut back on direct mail.

Most important, "they priced themselves out of the market," Mr. Suozzo said, referring to sharp increases in fees that caused many cardholders to leave.

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