UPDATE 1-Ocwen Financial to spin-off BPO operation

Dec 19 (Reuters) - Loan servicing firm Ocwen Financial Corp (OCN.N) said it plans to spin-off its knowledge-based business process outsourcing operation, Ocwen Solutions.

Ocwen Solutions will be a separate publicly traded company once the spin-off is complete, the company said, adding that it is targeting the second quarter of 2009 to complete the tax-free transaction.

As an independent company, Ocwen Solutions will be better positioned to pursue business opportunities with other servicers, and will also have the option of offering its stock to potential acquisition targets, Ocwen Financial said.

Ocwen's stake in Bankruptcy Management Solutions Inc and Global Servicing Solutions LLC will remain with Ocwen Financial, it added.

Shares of the company were flat at $8.02 in midday trade on the New York Stock Exchange. (Reporting by Santosh Nadgir in Bangalore; Editing by Deepak Kannan)