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Text size [+][-]  Friday March 19 2010GLOBAL EDITION

Considered view
02 Jun 2008 17:48

New broom risk

Context News

Wachovia ousted Ken Thompson as its chief executive on June 2. It appointed its chairman, Lanty Smith, as its interim CEO. Smith will head a search committee to find a new chief executive.

Thompson was stripped of his chairman role in May after the bank reported a $708m first-quarter loss and cut its dividend by 41% in April. It also raised $8bn of capital at the time. Thompson was the architect of Wachovia’s $26bn acquisition of Golden West Financial in 2006, which saddled the company with a large portfolio of option adjustable-rate mortgages.

 

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Its board finally ejected the architect of the disastrous Golden West acquisition. But shareholders should remain wary. Wachovia kept Thompson around long enough to raise its latest slug of capital. But a new boss may decide it needs more – further diluting investors.

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