UPDATE 2-Ladenburg’s Bove cuts Wachovia earnings estimates
June 4th, 2008 | by admin |(Recasts from paragraph 2, Adds details, background, sharemovement)
June 4 (Reuters) - Veteran bank analyst Richard Bove cuthis earnings outlook on Wachovia Corp (WB.N: Quote, Profile, Research), citing likelylosses of $900 million on an accounting adjustment related tolease treatments and management changes at the fourth-largestU.S. bank.
The company had lost control of its operating environmentwith problems showing up in leasing, bank-owned life insurance,telemarketing and bank secrecy procedures among other sectors,Bove, analyst with Ladenburg Thalmann Co, said in a note toclients.
“It is likely that a new chief executive at the companywill take a more dramatic approach to loan loss recognition.Particularly at risk are the bank’s construction portfolios inFlorida and Southern California,” Bove wrote.
On June 2, the U.S. bank ousted Chief Executive KenThompson, who had been CEO since April 2000. Lanty Smith, thebank’s chairman, was named interim chief executive.
“Someone had to pay and Mr Thompson was culpable,” he said,adding that Smith had strongly supported Thompson up to the dayhe fired him.
The selection of Lanty Smith as operating CEO was a badchoice as Smith, and the board that he heads, have been partand parcel of every bad decision that the company has made fortwo decades, Bove wrote.
Terming the decision to select Smith as “disappointing,”the analyst said the board should have considered WallaceMalone, the former CEO of a bank Wachovia acquired in 2004, whowas regarded as one of the best bankers the country has everproduced.
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