THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Thursday, May 30, 1996 TAG: 9605300346
SECTION: FRONT PAGE: D1 EDITION: FINAL
SOURCE: BY JAN CIENSKI, THE ASSOCIATED PRESS
DATELINE: RICHMOND LENGTH: 38 lines
The two top executives of Signet Banking Corp. gave up a half million dollars in bonuses as a result of losses from what investigators have called an $81 million loan scam.
Signet Chairman Robert M. Freeman told shareholders Tuesday that he and company President Malcolm S. McDonald had lost their bonuses when the bank last month reduced its 1995 earnings to account for the alleged fraud.
``I can tell you the Signet employees most hurt by this are me and Mac,'' Freeman said during the shareholders' annual meeting.
Freeman said his bonus would have amounted to $300,000, and McDonald's $200,000. Their compensation is tied to the bank's financial performance.
Richmond-based Signet was one of several banks that together allegedly lent $323 million to Edward J. Reiners, a former Philip Morris Cos. employee. Reiners is accused of concocting a tobacco research venture to fraudulently get the loans.
Signet is facing lawsuits of more than $105 million from other banks and from shareholders accusing it of breaking its own policies and security procedures.
Signet said it hopes to recover about $46 million of the money.
Vernon Plack, an analyst with Scott & Stringfellow of Richmond, said the fraud losses will have no long-term effect on Signet. ``It's an unfortunate, and I believe a one-time event. It does not speak of any underlying problems.''
The bank has branches in Virginia, Maryland and Washington, and assets of $12 billion.
KEYWORDS: SIGNET BANK by CNB