Another CEO Falls, Will Jamie Move In For The Kill ?
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Thompson, 57, has been with the bank for most of his 32-year career. He has run the company for the last 8 years. Firm Chairman Lanty L. Smith said: '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'. As The Wall Street Journal points out, the last 6 weeks have been particularly rough on Wachovia, with a $700m first-quarter loss, a slashed dividend, an accounting charge of up to $1bn related to leveraged leases and job losses over at its investment banking unit.
The search is now on for Thompson's replacement, with vice chairman Ben Jenkins an obvious candidate. Other runners might include Robert Kelly, CEO of Bank of New York Mellon, and US Bancorp's CEO Richard Davis.
The bigger question now, however, is whether Wachovia will remain independent, and the answer to that really depends on how hard a rival really tries to acquire it. A deal with Citi (a one-time obvious candidate for a Wachovia takeover) is clearly out of the question ( Vikram Pandit already has his hands full). Bank of America is also a non-starter, as both bank's are based in North Carolina and a deal would give immediate rise to anti-trust concerns. So that leaves JPMorgan Chase. Although busy bedding down Bear, JPMorgan Chase CEO Jamie Dimon would not let that get in his way if he truly thought that he could get Wachovia for a song. The reality, however, is that it could cost up to $20bn, in addition to the purchase price, to mark-to-market Wachovia's balance sheet. And that is probably too rich - even for Jamie. Wachovia, then, will probably be sailing its ship alone - at least for now.
