Business

Wells Fargo chairman to retire

Wells Fargo & Co. said Tuesday that Dick Kovacevich will step down as chairman at the end of 2009, after agreeing last fall to stay to help the bank deal with the financial crisis.

CEO John Stumpf, 56, will replace him at South Carolina's largest bank on the basis of deposits.

Kovacevich, 65, has been with the San Francisco-based company for 23 years and will retire in early 2010.

He agreed last November to continue as chairman for an interim period to focus on the crisis facing the financial services industry and the company's acquisition of Wachovia last year.

Wells Fargo said Stumpf will become chairman on Jan. 1.

Stumpf, who has been at the company for 27 years, replaced Kovacevich as CEO in 2007 and had been chief operating officer since 2005. Stumpf will retain his CEO position when he becomes chairman.

The bank has fared better than most of its peers during the past year, but also like others it faces future loan losses as unemployed customers default on loans.

Still, its latest second-quarter earnings after payment of preferred dividends was $2.58 billion, or 57 cents per share, to beat the 34 cents per share forecast of analysts surveyed by Thomson Reuters. Its quarterly revenue of $22.5 billion also beat their forecast.

Last fall, Wells joined other banks that took federal money to shore up the financial services industry, accepting a $25 billion infusion. As of late July, Wells could not yet say when it could pay back the money. Stumpf said in April there were "rays of hope" for repayment.

The money was part of the federal government's effort to help the banking industry recover from a home-lending spree that triggered the worst financial crisis since the Great Depression of the 1930s.

The bank's lead director, Phil Quigley, called Kovacevich's leadership "bold, determined and visionary," in a Tuesday statement.

Kovacevich said Stumpf is "the best person in the country to be leading our company through the challenges and enormous opportunities ahead."

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