Wachovia, one of America's biggest banks, said its chief executive Ken Thompson is leaving the bank as its board of directors seeks to stem hefty losses tied to troubled mortgage loans.
The North Carolina-based bank said Thompson was departing with immediate effect after eight years as CEOat the request of the company's board. It said new leadership was needed to revitalise the bank.
'Wachovia announced today that its current chairman, Lanty Smith, has been appointed interim chief executive officer, succeeding Ken Thompson, who is retiring at the request of the board,' the bank said.
Smith said 'no single precipitating event' had caused Thompson's departure, but he said a 'a series of previously disclosed disappointments and setbacks' had hurt Wachovia's finances.
The bank has formed a special committee to recruit a permanent successor to Thompson who spent over three decades climbing the corporate ladder at Wachovia.
Like other US banks, Wachovia has seen its profits squeezed dramatically by the housing market slump and mortgage-related losses.
Such losses have roiled domestic banks and big foreign banks that snapped up US mortgage securities during the housing boom.
Wachovia's earnings declined late last year and it announced a first-quarter loss of $393m, compared with a profit of $2.3 billion the same time last year.
Some analysts said Wachovia and its rivals will struggle to turn their finances around during the second quarter as the housing market remains stuck in a rut and the wider US economy is also struggling for momentum.
As mortgage losses have increased, Wachovia and its competitors have sought new capital to bolster their balance sheets.
Wachovia raised $8.05 billion in April through a special stock offering and other banks have won capital injections from investors, including state-run investment firms based in China and Singapore.
A smaller bank, Washington Mutual, also announced a management overhaul yesterday, saying it was splitting the roles of its chairman of the board and CEO after posting a first quarter loss of $1.14 billion.
WaMu said Kerry Killinger would continue to serve as CEO, but would no longer be board chairman, a post which will be assumed by independent director Stephen Frank.
Wachovia is the fourth-largest US bank by assets and has a market worth of around $46.6 billion.
Larger banks such as Citigroup and Merrill Lynch have suffered bigger mortgage-related losses. Both banks ousted their respective CEOs, Charles Prince and Stanley O'Neal, last year and installed new chief executives in a bid to boost their fortunes.
