Wachovia announced today that CEO and chairman, G. Kennedy “Ken” Thompson had retired, at the Board of Director’s request. Thompson worked 32 years at the bank, and acted as chairman and CEO from 2000 to May 2008. (Click here for the official release). And you can read the internal memo, sent to employees, here.
Ben Jenkins, currently Vice Chairman and President of the General Bank, will serve as interim CEO. Jenkins, a 37-year veteran with the firm, will oversee all of Wachovia’s lines of business including wealth management.
Some Wall Street analysts have taken Thompson’s ouster as evidence that the bank might be on the block, and if so, that JPMorgan would be the most likely buyer, says a story in today’s Birmingham Business Journal. According to the story, Merrill Lynch research analyst Edward Najarian says not only has JPMorgan CEO James Dimon expressed interest in expanding the branch network in the Southeast, where Wachovia has a strong presence, but Dimon “would also likely find WB’s over 14,000 retail brokers an attractive asset.” Deutsche Bank analysts Mike Mayo and Chris Spar also note in a research report today that Wachovia has the California, Texas and Florida brokerage presence that JPMorgan has said it wants. But Wachovia reps shouldn’t fret just yet: Citigroup Global Markets analyst Keith Horowitz says the sale of Wachovia is a “low probability event.”
The news of Thompson’s ouster comes a month after he was asked to step down as Chairman of the Board of Directors. At that time the firm said he would maintain his role as President, CEO, and Director. The Chairman post was awarded to Lanty Smith, who has served as a Wachovia director since 1987 and is chairman of the Executive Committee. Smith, a dabbler in private equity and venture capitalism, is also chairman and CEO of Raleigh, N.C.-based merchant banking firm, Tippet Capital.
According to Smith, “no single precipitating event caused the board to reach this decision,” to oust Thompson. But Smith went on to say, “a series of previously disclosed disappointments and setbacks cumulatively have negatively impacted the company and it’s performance.” Smith will also head up the search committee for Thompson’s replacement.It remains to be seen whether fresh leadership can revive the bank. Analysts say finding a replacement might not be a an easy task and the bank “is facing a loss of credibility among investors following the 41 percent dividend cut and the dilutive common stock issuance that the bank announced during the first-quarter earnings,” says one Morgan Keegan analyst in the Birmingham Business Journal story. (In the first quarter Wachovia raised $7 billion in new capital through an offering of common and convertible preferred stock and cut it’s dividend to 37.5 cents a share from 64 cents after reporting a $350 million net loss.)