CEO at Wachovia ousted

A shake-up at the top echelons of Wachovia Corp., which led to Ken Thompson’s departure yesterday as chief executive, has a Richmond connection.

Benjamin P. Jenkins III, a name known in Richmond banking circles in the late 1990s, was named interim chief operating officer of the Charlotte, N.C.-based bank.

Jenkins, the vice chairman and president of the general bank for Wachovia, was based in Richmond as head of First Union Corp.‘s mid-Atlantic region, overseeing operations in Virginia, Maryland and Washington. He moved here from Roanoke in 1997 and left in 1999 to head Florida operations.

First Union bought Wachovia Corp. in 2001 and took the Wachovia name. Wachovia is the nation’s fourth-largest bank.

A company spokeswoman said Wachovia would not comment beyond the statement it issued.

The ouster of Thompson marks the first executive departure stemming from the mortgage crisis at a commercial bank.

Top executives at Merrill Lynch & Co. and Citigroup Inc., who presided over huge losses from exposure to bad mortgages, also lost their jobs, but they were in investment banking, said Neil B. Murphy, banking consultant and professor emeritus at Virginia Commonwealth University.

“These guys [at Wachovia] wandered away from traditional deposit and lending, and stubbed their toes,“ Murphy said.

Wachovia, one of the largest employers in the Richmond area, employed more than 5,300 people as of the first of the year here. Its Wachovia Securities unit, with headquarters in Richmond, is in the process of moving to St. Louis after the company acquired a broker based there.

Many analysts believed Thompson’s credibility was seriously damaged when he said the bank’s roughly $25 billion purchase of Golden West Financial Corp., a deal he made at the height of the nation’s housing bubble in 2006, was on solid footing.

He later acknowledged the timing of the deal “was not the best,“ and Wachovia was forced to set aside $2.8 billion to cover losses from problem loans.

Michael Jones, chairman and chief investment officer of Riverfront Investment Group in Chesterfield County and a former chief investment officer at Wachovia Securities, said Thompson was instrumental in bringing discipline to acquisition strategies.

“The Wachovia-First Union merger [in 2001] was transformative, innovative and brilliant. No one should ever forget how important that was in the evolution of the organization.“

However, last month the company said it lost $707 million in the first quarter, nearly doubling the losses it initially reported.

“A lot of times, success and failure are credited to the reigning CEO of any company, and today’s news happens to be on the negative side, with negative implications for Wachovia’s CEO,“ said Steve Marascia, an analyst at Anderson & Strudwick in Richmond who follows the banking industry, though not specifically Wachovia.

Wachovia Chairman Lanty Smith said yesterday that “this was a step that was taken after very careful consideration” and one that was precipitated by no single event but rather a “series of previously disclosed setbacks.“

Pat Fishe, a finance professor at the University of Richmond, said “the bank has made a decision based on what it thinks is best for the future for its shareholders.“

The board of the bank said it asked Thompson, 58, to retire and replaced him as CEO on an interim basis with Smith, who succeeded Thompson as chairman last month in a move the bank said “strengthens independent leadership” at the company.

Thompson’s exit took effect yesterday after 32 years at the bank. He will not receive any incentive pay for the 2008 fiscal year, but according to a filing with the Securities and Exchange Commission, he will get a severance of $1.45 million and accelerated vesting of $7.25 million in restricted stock.

A search for the next chief executive began immediately.

Wachovia shares lost 40 cents, or 1.7 percent, to close at $23.40 after trading to a near 13-year low of $22.72 earlier in the day. Shares of the bank’s stock have fallen 58 percent in the past year.

Staff writers John Reid Blackwell, Greg Edwards and The Associated Press contributed to this report.