Wachovia ousts chief executive

Action signals bank might post loss in 2d quarter

CHARLOTTE, N.C. - Wachovia Corp. stock fell to the lowest since July 1995 after the bank ousted chief executive Kennedy Thompson, signaling the company might report a second-quarter loss.

Wachovia, the nation's fourth-biggest bank, dropped as much as 4.5 percent in New York trading, adding to a slide that has cost the lender more than half its market value in 12 months. Shares recovered to lose just 40 cents, or 1.7 percent, to close at $23.40.

Analysts speculated the Charlotte, N.C.-based company will be vulnerable to a takeover or other form of distress sale. Wachovia said yesterday it isn't "in crisis."

The bank had already stripped Thompson, 57, of the chairman's role on May 6 after shareholders - incensed by the biggest quarterly loss since 2000 - demanded his removal at April's annual meeting.

He joins half a dozen CEOs at financial companies including Citigroup Inc. and Merrill Lynch & Co. who lost their jobs to the global credit crunch. Thompson's ouster may foretell a sale of Wachovia or some assets, analysts said.

"We figure since he's leaving there'll be a big loss provision for the second quarter," said David Hendler, senior analyst at CreditSights Inc. "They need to present a different picture on the company, which is, 'We're in the restructuring mode.' "

JPMorgan Chase & Co., Wells Fargo amp; Co., U.S. Bancorp, and non-US banks including Banco Santander SA may be looking at purchasing Wachovia, Hendler said. Wachovia's market value is about $50 billion. Deutsche Bank AG analyst Mike Mayo said in a research note yesterday that the stock's true value may be more than $40 a share. Wachovia chairman Lanty Smith, 65, was appointed interim CEO, Wachovia said, citing "a series of previously disclosed disappointments and setbacks" for the change. A four-member search committee headed by Smith will seek a replacement CEO. Ben Jenkins, vice chairman and president of Wachovia's largest subsidiary, its general banking unit, will become chief operating officer, reporting to Smith. Wachovia's board asked Thompson to leave "several days ago" and acted yesterday, Smith said during a news conference. No single event precipitated Wachovia's decision, Smith said, adding that while the bank isn't immune to industry conditions, which continue to deteriorate, Wachovia doesn't face any crisis or need to raise more capital. Thompson has $7.2 million of stock options that will vest upon his departure. He will also receive severance pay of $1.45 million, equal to 16 months of his base salary, Wachovia said in a regulatory filing.