Wachovia Corporation, the fourth-largest US bank, has stripped its president and chief executive officer Kennedy Thompson of the role of chairman and appointed Lanty Smith as non-executive chairman of the board of directors.

Lanty Smith, the bank's lead independent director and head of Raleigh, NC-based merchant bank Tippet Capital, will take over as chairman. Thompson,  under fire for buying a California lender at the peak of the housing market boom in 2006, will continue to serve as president and CEO of Charlotte, North Carolina-based Wachovia Corporation.

Thompson, 57, remains on the board and retains full management responsibility and the change is effective immediately, Wachovia spokeswoman Christy Phillips Brown said in a statement.

"At this challenging time for the financial services industry and for Wachovia, my management team and I are pleased that Lanty agreed to assume the role and responsibilities of chairman, freeing me to focus 100 per cent of my time and attention on guiding the company through the current environment and building and delivering enhanced value for the benefit of our shareholders, customers and employees," Thompson said in the statement.

Like many other banks, Wachovia has floundered in the credit crunch that overtook US financial markets since last summer. Wachovia last week disclosed its first-quarter loss of $708 million, 80 per cent higher than it originally had reported in April.

Many of the bank's problems stem from its 2006 acquisition of Golden West Financial, a California-based mortgage lender that started option-adjustable rate mortgages, in which borrowers can choose the size of the payment they make each month.

Wachovia last month slashed its dividend and raised $7 billion in capital through offerings of common and preferred stock.

Several other big banks, including Washington Mutual, National City, Bank of America and JPMorgan Chase, were forced to raise capital after difficult first quarters..

"Lanty's deep knowledge of Wachovia and his commitment to our shareholders and other vital constituencies have made him an extremely effective lead independent director.  He will be a highly constructive chairman of the board as we all work toward our common mission of building value for our shareholders," said Thompson. 

Smith has served as a director since 1987 and as lead independent director since 2000. He also serves as chairman of the executive committee, and in the past he has chaired the audit committee. 

Wachovia Corporation, one of the largest diversified financial services companies in the US, had assets of $808.9 billion and market capitalisation of $53.8 billion as of 31 March 2008.

Wachovia provides a range of retail banking and brokerage, asset and wealth management, and corporate and investment banking products and services to customers through 3,300 retail financial centers in 21 states from Connecticut to Florida and west to Texas and California, and nationwide retail brokerage, mortgage lending and auto finance businesses.

Wachovia has over 40 international offices to serve corporate and institutional clients .Its retail brokerage operations, Wachovia Securities, manages more than $1.1 trillion in assets and has 18,600 registered representatives and 1,500 offices nationwide.