CHICAGO - Going against its credo that outsourcing saves money, Continental Bank Corp. has expanded its in-house public relations staff and severed a contract with an outside consultant.

The Chicago-based company says it has ended a long-standing relationship with Ogilvy Adams & Rinehart, a financial communications firm.

According to industry sources, Continental had been paying between $250,000 and $400,000 a year to the New York-based firm.

Helpful in Hard Times

Continental - which has farmed out much of its legal services, data processing, and auditing functions - had used Ogilvy Adams for about five years.

The bank said the firm helped direct it through a turbulent transition period in which it was redefining itself as a business bank and dropping its retail operations.

Kurt Stocker, head of corporate relations, said that as Continental's fortunes have revived, his department's priorities have shifted from conventional corporate communications activities aimed at protecting" the company to promoting products.

Marketing Support Added

Last year Continental earned $222 million, rebounding from a $76 million loss in 1991.

Under the new setup, Continental's public relations area has assigned marketing communications specialists to support the bank's calling officers.

Five separate "account managers" will handle communications for corporate banking, corporate finance, metropolitan Chicago banking, private banking, and investment banking.

Ad Spending Reduced

Four of these executives were already on staff. In addition, the bank hired Jeffrey Smith, a former director of media relations at Ameritech Services, and two staff assistants as part of its effort to back up corporate finance.

Continental spent $9 million on advertising and public relations in 1992, down from $10 million and $12 million in the two previous years.

Despite the "insourcing" moves, the company will continue its high-profile advertising campaign developed by Minneapolis' Fallon McElligott agency. Continental also works with Kelley Habib John, a direct marketing firm in Boston.

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