Boss ousted in shakeup at Wachovia

June 2, 2008 5:41:24 AM PDT
Wachovia's board of directors has asked Chief Executive Ken Thompson to retire.

He joins Stanley O'Neal at Merrill Lynch & Co. and Charles Prince at Citigroup Inc., who both presided over huge losses tied to exposure to bad mortgages and were subsequently forced out from their perches at the top of Wall Street institutions.

"It has been an honor to serve this great company for 32 years and to lead it for the past eight years," Thompson said in a statement issued by the bank. "Together we achieved great successes and overcame tough challenges."

The board of the Charlotte-based bank said it asked Thompson, 58, to retire and replaced him on an interim basis with Chairman Lanty Smith. Smith had already replaced Thompson as chairman last month in a move the bank said "strengthens independent leadership" at the company.

"Wachovia is a strong institution and well positioned even in the face of the unprecedented conditions in the financial services industry," Smith said in the statement. "The board is confident that we are putting in place the right interim leadership to move the company forward."

Smith said there were no other senior management changes planned.

The change at Wachovia comes after a dismal start to 2008 that followed a weak 2007.

Wachovia posted a $393 million first-quarter loss and a 41 percent cut to its dividend. The longtime bank executive's credibility was damaged further when he said the bank's roughly $25 billion purchase of home lender Golden West Financial Corp., a deal he made at the height of the nation's housing bubble in 2006, was on solid footing.

He later acknowledged the timing of the deal "was not the best," and Wachovia was forced to set aside $2.8 billion earlier this year to cover losses with problem loans. Meanwhile, Wachovia's share price has tumbled from its 52-week high of $54.95 to close Friday at $23.80.

"No single precipitating event caused the board to reach this decision, but a series of previously disclosed disappointments and setbacks cumulatively have negatively impacted the company and its performance," Smith said.

The bank's shares fell more than 2 percent, or 50 cents, to $23.30 in premarket trading, following the descent of European bank shares Monday.

The company's business lines - its general bank, wealth management, the corporate and investment bank and capital management - will report to Ben Jenkins. Currently the bank's vice chairman and president of its general bank, Jenkins will serve as Wachovia's interim chief operating officer.


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