
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, July 28, 1994                   TAG: 9407300028
SECTION: BUSINESS                    PAGE: B10   EDITION: METRO 
SOURCE: MAG POFF STAFF WRITER
DATELINE:                                 LENGTH: Medium

SIGNET TO SPIN OFF UNIT

Signet Banking Corp. said Wednesday that it will create a new corporation to house its national credit card business, which is one of the largest in the country.

The move will result in some layoffs in Signet's core banking business at the end of the year, following a voluntary retirement program, transfers of personnel to the new company and attrition. Teri Temples, a spokeswoman for the bank, said the layoffs could occur throughout Signet's system, including its Roanoke-based western region.

Signet Banking of Richmond filed Wednesday with the Securities and Exchange Commission for a public stock offering of a 19.9 percent interest in the new company. The offering could be completed by early fall.

The remaining interest in the credit card company will be distributed on a tax-free basis to Signet shareholders, probably by the end of the year.

The new company, to be called OakStone Financial Corp., will be headquartered in Northern Virginia, with operations centers in Richmond and Fredericksburg. The company will apply for a listing on the New York Stock Exchange.

Temples said customers will not be affected by the changes.

The credit card business is one of the 15 largest U.S. issuers of MasterCard and Visa credit cards, as measured by loans outstanding. At the end of June, Signet had about 4 million accounts and $6.6 billion in managed loans outstanding.

Signet Chairman Robert Freeman said the decision to spin off the credit card business comes after a year of study.

Freeman said Signet intends to implement a comprehensive core bank improvement program that will focus on cost reductions and revenue initiatives.

Revenue initiatives, he said, will include development of selected national product strategies in the areas of student lending, equity and mortgage lending and installment lending.

He said the transactions will enhance shareholder value by creating two strong and independent financial institutions.

Richard Fairbank, who heads Signet's credit card division, will serve as chief executive officer of the new credit card bank. When the spinoff is complete, Fairbank will assume the additional title of chairman.

Signet's board of directors will serve as the interim board of OakStone until the spinoff is complete and a separate board is established.

Signet's common stock closed at $39.25 a share on Wednesday, up $1.75 from Tuesday's close on the New York Stock Exchange.

Signet expects to take special one-time charges during the third quarter in connection with cost-reduction measures (an early retirement plan and employee severance) and termination of some data processing services related to the separation of the businesses.

by CNB