Kennedy Thompson, former CEO of Wachovia Corporation, center, talks to reporters in a
2006 file photo (AP).

Wachovia CEO Latest Casualty in Credit Crisis

June 02, 2008 04:48 PM
by Cara McDonough
The fourth-largest bank in the United States forces CEO Kennedy Thompson into retirement after major losses in the past year.

30-Second Summary

The Charlotte, N.C.-based bank on Monday issued a statement, citing “a series of previously disclosed disappointments and setbacks” as the reason Thompson stepped down at the board’s request. The bank’s stock dropped 81 cents following the announcement.

Wachovia Chairman Lanty Smith was appointed interim CEO.

Thompson had already been stripped of his chairman title in April after shareholders—angry about the company’s first quarterly loss since 2001—demanded his removal at their annual meeting. Wachovia has lost more than half its market value in the past year, according to Bloomberg.

In separate banking news, Washington Mutual announced that Kerry Killinger will remain CEO but step down as chairman of the board following an 80 percent decline in market value over the last year. Stephen Frank, an independent director, will take over as chairman.

Reshuffling efforts are becoming the norm as the U.S. housing slump continues to take its toll.

Merrill Lynch’s longtime CEO Stan O’Neal resigned in October after unveiling the company’s worst-ever quarterly report. Citigroup’s Chief Executive Charles Prince met the same fate in November after the group’s third quarter earnings fell over 50 percent.

Do the reorganization attempts at major U.S. financial institutions work? Perhaps, says Deutsche Bank analyst Mike Mayo.

“At a minimum, we consider that a new CEO is the first step toward revitalizing the company and getting a fresh perspective on addressing its problems,” he said in a note to clients.

Headline Links: Thompson and Killinger step down, Wachovia stock slides

Background: Big banks hit big lows

Opinion & Analysis: Wachovia’s announcement “refreshing”

Reference: Wachovia’s own words


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