US bank Wachovia has named Robert Steel, a senior US Treasury official, as its new chief executive.

The news came as the fourth-biggest US bank announced that mortgage and legal problems would lead to a $2.6-2.8bn loss in the second quarter of the year.

In June, Wachovia joined a series of banks that had split with their chief executive when Ken Thompson left.

Wachovia has been hard-hit by the US housing crisis and lost $708m in the first three months of 2008.

It Bank's No 2 to stand down early ...
Wachovia boss latest bank victim ...
Wachovia stung by credit losses ... had to raise an extra $8bn of capital and cut its dividend.

'Challenges ahead'

Mr Steel, previously an under secretary for domestic finance, played a key role in helping Treasury Secretary Henry Paulson to manage the housing crisis.

"Clearly, there are challenges ahead in our current climate, but I am encouraged that most areas of the company continue to perform well," Mr Steel said in a statement.

Analysts welcomed Mr Steel's appointment.

"The Wachovia board really reached for a star and they caught one," said Eugene Ludwig from consulting firm Promontory Financial Group.

The previous chief executive, Ken Thompson, had been criticised for his $24.2bn acquisition of Golden West Financial Corp, a specialist mortgage lender, in October 2006.

Rising default rates from Golden West's loans have been a big contributor to Wachovia's problems.

(BBC)

<< Back