Robert Steel's honeymoon as the new C.E.O. of Wachovia Corp. is officially and unequivocally over.
The nation's fourth largest bank reported a staggering $8.9 billion loss during the second quarter, adding that it will cut its dividend again and slash 6,350 jobs.
Overall revenues fell 14 percent, to $7.5 billion, at the Charlotte, North Carolina-based bank, which also announced it will end its wholesale mortgage operations.
"These bottom-line results are disappointing and unacceptable," said chairman Lanty Smith in a statement. "While to some degree they reflect industry headwinds and weaker macroeconomic conditions, they also reflect performance for which we at Wachovia accept responsibility."
Added Steel, who came on as C.E.O. on July 9: "In the short term, the entire organization is focused on protecting, preserving and generating capital; reinforcing Wachovia's strong liquidity position; and reducing risk."
Wachovia has plunged over 75 percent since former C.E.O. Kennedy Thompson spearheaded the bank's purchase of Golden West Financial Corp. in 2006 for $24 billion. The 2008 second-quarter losses include $936 million of losses from capital markets, a $975 million charge for tax treatment of leveraged leases, and a $590 million charge for legal matters, according to Reuters.
"Steel is clearly trying to get his arms around this,'' Joseph Gordon, president of Gordon Asset Management in Durham, North Carolina, which owns Wachovia shares, told Bloomberg. "We aren't advising any clients to buy until they fess up and go full transparency on Golden West and their commercial lending problems.''
Wachovia said it plans to cut 6,350 full-time jobs and leave about 4,400 positions open in an effort to cut expenses. The job cuts amount to roughly 5 percent of the bank's 120,000 employees. The bank will cut 2,000 retail mortgage jobs and 4,400 more jobs in 2009, Reuters reported.
The bank's $8.9 billion quarterly loss amounted to 4.20 dollars per share—much higher than Wall Street forecasts.