After heavy losses and pressure from shareholders to return to profitability, directors at two large U.S. banks - Wachovia Corp. and Washington Mutual Inc. - on Monday announced top-level management changes.
Wachovia's board ousted chief executive Ken Thompson while Washington Mutual said Kerry Killinger will step down from his role as chairman while retaining his chief executive duties. In the last quarter, Wachovia and Washington mutual lost more than $700 million and $1.1 billion respectively.
Thompson is retiring at the request of the bank's board of directors which cited a series of disappointments and setbacks and need for new leadership. Replacing Thompson will be the company's current chairman, Lanty Smith who will serve as interim CEO.
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 in a statement. The Board believes new leadership will help to revitalize and reenergize Wachovia and enable it to realize its potential.
The bank has recently been forced to raise capital through stock sales after being hard hit by tough conditions in the financial industry triggered by the housing downturn. Early last month Wachovia restated its latest quarter's loss, raising it 80 percent to $708 million. The company also cut shareholders' dividends by 41 percent in April.
Smith said Thompson had led the company with the highest integrity, loyalty and dedication. Wachovia appointed current Vice Chairman Ben Jenkins as interim chief operating officer.
Meanwhile, as WaMu's Killinger takes on his more focused role as CEO, the bank said independent director Stephen Frank will become chairman.
WaMu, as the bank is known, is stepping up measures to improve its corporate governance after reporting a $1.14 billion loss in the latest quarter due to credit losses and a decline in the mortgage market. The bank set aside $3.51 billion for loan losses.
The actions taken today by the Board are the result of a deliberate review of how best to enhance WaMu's corporate governance policies and practices, Frank said. They also reflect the Board's commitment to listening to feedback from our shareholders.
The company also said on Monday that it adopted a majority voting standard and appointed three new directors on the company's board. It is also looking for other individuals with financial services and leadership experience.
Shares of Wachovia fell 94 cents, or 3.95 percent to $22.86 in afternoon trading. Washington Mutual fell 11 cents, or 1.22 pct to $8.91.