Wachovia CEO Thompson Forced Out

Updated from 11:06 a.m. EDT.

Wachovia(WB) CEO Ken Thompson is stepping down at the board's request, just weeks after he was stripped of the chairman title in the wake of massive losses.

Chairman Lanty Smith, who took over the role from Thompson last month, will take on the CEO role on an interim basis. Smith cited "a series of previously disclosed disappointments and setbacks" for making the move and said new leadership would "revitalize and re-energize" the Charlotte, N.C.-based bank.

"Wachovia is a strong institution and well positioned even in the face of the unprecedented conditions in the financial services industry," Smith said in a company statement. "The board is confident that we are putting in place the right interim leadership to move the company forward, and no other senior management changes are currently contemplated."

Ben Jenkins, currently vice chairman and president of the general bank, will serve as interim chief operating officer, Smith said.

Cramer: I've Been Too Upbeat On Wachovia, AIG

Wachovia, like many of its rivals, has taken its lumps in the credit crunch that has consumed financial markets since last summer. The bank last month disclosed its first-quarter loss was actually $708 million, 80% higher than it originally had reported in April.

Many of the bank's problems stem from its 2006 acquisition of Golden West Financial, a California-based mortgage lender best known for originating option-adjustable rate mortgages, in which borrowers can choose the size of the payment they make each month.

As a result of its woes, Wachovia last month slashed its dividend and raised $7 billion in capital through offerings of common and preferred stock. It was one of several big banks to raise capital after difficult first quarters, including Washington Mutual(WM), National City(NCC), Bank of America(BAC) and JPMorgan Chase(JPM).

"Our recent successful capital raising actions provide us the solid foundation and flexibility we need in an environment which remains extremely challenging for Wachovia and the entire banking industry," Smith said. "Despite continued hurdles, we have confidence in our strong liquidity, good capital position and solid business model."

WaMu on Monday stripped CEO Kerry Killinger of his chairman title, the same move that preceded Thompson's departure at WaMu.

Banks increasingly are trying the split Chairman-CEO structure amid rising shareholder anger during the credit crisis. Citigroup(C) named Vikram Pandit to succeed the ousted Charles Prince as CEO, but gave Prince's chairman title to Sir Win Bischoff. Former Bear Stearns Chairman James Cayne gave up the CEO title to President Alan Schwartz prior to the bank's collapse and subsequent sale to JPMorgan Chase.

Wachovia shares were falling 2.3% to $23.25 in recent trading.

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