Fraud unlikely at Crestar, chairman says Signet was swindled out of $81 million


April 27, 1996|By Bill Atkinson | Bill Atkinson,SUN STAFF

RICHMOND -- Crestar Financial Corp. Chairman Richard G. Tilghman told shareholders yesterday that the huge fraud that has rocked a competing bank could not have happened at the company he runs.

Mr. Tilghman said Crestar -- with assets of $18 billion -- has checks and balances that would have detected the fraud that has cost its neighbor, Signet Banking Corp., $81 million.

Upon learning about the fraud, Mr. Tilghman said, "My first question to our chief credit officer was: 'What can you tell me to assure me that this would not happen to this institution?' " he told shareholders at the company's annual meeting. "In general, we do have good controls in place."

Signet, and six other large banks lent $323.5 million to a former Philip Morris Cos. Inc. employee who allegedly said he was still with the company and needed the money to finance a top secret research project for the tobacco giant.

The project never existed, and the banks are scrambling to recover their money.

Mr. Tilghman was upbeat about Crestar's performance, and its move into Baltimore last year with the acquisitions of Loyola Capital Corp. and the assets and branches of Chase Manhattan Bank of Maryland.

"Together, Loyola and Chase brought us $1.9 billion in deposits and 25 new branches," Mr. Tilghman said. "More important, they brought us nearly 80,000 new customer households."

While Mr. Tilghman expects merger activity to diminish for all banks, he said the company wants to expand in Baltimore. "We like the Baltimore market," he said after the meeting. "We'd like to have a greater presence."

He declined to comment on whether the company is in negotiations with any Baltimore area bank or savings and loans.

While the company's outlook for 1996 is positive, Mr. Tilghman warned that "earnings growth is not coming as easily as it did for most of last year."

He said the company is going to have to "work even harder for every dollar of earnings as the year unfolds."

"Competition is getting more intense," he said. "Perhaps most significantly, we're not looking for robust economic growth in our region."

The meeting didn't go without incident. Outside Crestar's headquarters, members of International Union of Gas Workers picketed and chanted: "Crestar Bank has got to go."

The union is accusing Crestar of siding with Washington Gas Light Co., which has been locked in a bitter labor dispute with union members. The union has threatened to withdrawal millions in deposits from the bank.

Pub Date: 4/27/96

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