NEW YORK (Reuters) – Washington Mutual Inc (WM.N: Quote, Profile, Research, Stock Buzz), the giant U.S. savings and loan hammered by mortgage losses, named veteran banker Alan Fishman as its new chief executive, succeeding the embattled Kerry Killinger, who agreed to retire.
Killinger, who has presided over the thrift’s rapid decline during the past year, becomes the latest high-profile casualty of the credit crisis.
WaMu’s board is counting on Fishman, chairman of mortgage broker Meridian Capital Group and former president of Sovereign Bancorp (SOV.N: Quote, Profile, Research, Stock Buzz), to revive the sprawling thrift amid an economic slowdown.
WaMu officials did not return calls seeking comment.
WaMu’s board stripped Killinger of his chairmanship earlier this year after shareholders voted to divide the CEO and chairman roles. Killinger was named CEO in 1990, became chairman the following year, and helped expand a sleepy Seattle-based S&L into one of the largest consumer banks and mortgage lenders in the United States.
Killinger was told on Thursday by WaMu’s board chairman, Stephen Frank, and another director that the board wanted him to retire, the Wall Street Journal reported on its website Sunday.
The company announced the change on Monday. It also announced it had entered into an agreement with its chief U.S. regulator, the Office of Thrift Supervision, concerning the bank’s operations.
WaMu will provide a multiyear business plan to the OTS. It said the plan “will not require the company to raise capital, increase liquidity or make changes to products and services.”
In July, Washington Mutual posted a quarterly loss of $3.33 billion and said losses through 2011 in its one-family residential mortgage portfolio would probably be toward the high end of its prior forecast of $12 billion to $19 billion.
Its shares have fallen nearly 70 percent this year, and investors have widely speculated that WaMu would seek a buyer.
Earlier this year, the thrift set plans to raise $7.2 billion from outside investors led by private equity firm TPG [TPG.UL]. It took that deal over a $7 billion takeover offer from JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz), a source told Reuters at the time.
The Journal said WaMu’s board decided it needed an outsider to signal a fresh start at the thrift.
Fishman, 62, joined New York-based Meridian in 2007. Before than, he was president and chief operating officer of Sovereign, the second-largest U.S. savings and loan.
Fishman will receive a $10 million signing bonus, of which $2.5 million is in performance-linked stock. His salary will be $1 million, with options to buy 5 million shares.
Killinger is expected to retire under the terms of his contract with no extra severance benefits, the Journal said. The move comes after senior-level management shake-ups at banks such as Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz), Merrill Lynch & Co (MER.N: Quote, Profile, Research, Stock Buzz) and Wachovia Corp (WB.N: Quote, Profile, Research, Stock Buzz). On Sunday, Lehman Brothers Holdings Inc (LEH.N: Quote, Profile, Research, Stock Buzz) announced its fourth management changes in the past three months.
By Joseph A. Giannone
(Additional reporting by Paritosh Bansal; Editing by John Wallace)