Business

Wachovia treasurer leaving

Wachovia Corp.'s treasurer has landed at the Carlyle Group, the latest sign of the private-equity world's interest in the battered financial sector.

Starting Aug. 1, James Burr will be a managing director in the private-equity giant's global financial services group, based in New York. He's leaving as the Charlotte bank searches for a new CEO and wrestles with rising loan losses.

The Carlyle Group, based in Washington, is among the private-equity firms that have signaled an interest in investing in banks and other financial services companies in need of fresh capital. These buyout firms, which purchase companies outright or take smaller stakes looking to make a return at a later time, are eyeing potential bargains as financial stocks trade at multi-year lows.

Burr's knowledge “will prove invaluable as Carlyle seeks out the best opportunities to deploy capital in the struggling financial services sector,” Olivier Sarkozy, the co-head of Carlyle's 10-person global financial services group, said in a statement.

Seattle-based Washington Mutual Inc. has lined up an investment with private-equity firm Texas Pacific Group, but banks in recent months have largely raised capital by tapping mutual funds and other institutional investors through offerings of common and preferred stock. Banks need the capital to absorb rising loan losses and writedowns from securities that have lost value.

A deterrent to taking big stakes in a bank is a federal law that requires investors that acquire a more than 24.9 percent stake to register as a bank holding company, requiring a heavy regulatory burden. Owning more than 9.9 percent also comes with more scrutiny. The Federal Reserve, though, is reportedly looking at ways to make it easier for private-equity firms to pump capital into the banking system.

Greg Lyons, partner with Goodwin Procter in Boston, said he doesn't expect a wave of private-equity investments, but he suspects the Fed is trying to be proactive. “I think the Fed is trying to get ahead of this, instead of getting run over,” he said.

Wachovia raised about $8 billion in capital in April. Spokeswoman Christy Phillips-Brown declined to comment on whether it would need an additional investment.

With Burr's departure, Greg Norwood, one of his lieutenants, will serve as Wachovia's interim head of the treasury department, Phillips-Brown said. The bank will launch a search for a permanent successor, considering internal and external candidates, she said.

Burr was promoted to treasurer in 2006 after his predecessor, Tom Wurtz, became chief financial officer. The treasurer's responsibilities include monitoring the bank's asset and liability structure and capital planning.

“Private equity can play a significant role in recapitalizing financial services firms buffeted by today's tough markets,” Burr said in a statement. “This is a wonderful opportunity to join a remarkable team of proven executives who really understand what the problem is and how to be a part of the long term solution.”

Carlyle has made a number of high-profile banking hires in recent years, including Sarkozy, a former UBS investment banker, and Jim Hance, Bank of America Corp.'s former chief financial officer.

Burr is the highest-level official to leave Wachovia since the ouster of chief executive Ken Thompson this month. Bob Maneri, a managing director with Victory Capital in Cleveland, said he had expected executives to wait until a new CEO was chosen before departing.

“Whoever comes in will want to put their mark on the company,” he said.

Wachovia Corp.'s treasurer has landed at the Carlyle Group, the latest sign of the private-equity world's interest in the battered financial sector.

Starting Aug. 1, James Burr will be a managing director in the private-equity giant's global financial services group, based in New York. He's leaving as the Charlotte bank searches for a new CEO and wrestles with rising loan losses.

The Carlyle Group, based in Washington, is among the private-equity firms that have signaled an interest in investing in banks and other financial services companies in need of fresh capital. These buyout firms, which purchase companies outright or take smaller stakes looking to make a return at a later time, are eyeing potential bargains as financial stocks trade at multi-year lows.

Burr's knowledge “will prove invaluable as Carlyle seeks out the best opportunities to deploy capital in the struggling financial services sector,” Olivier Sarkozy, the co-head of Carlyle's 10-person global financial services group, said in a statement.

Seattle-based Washington Mutual Inc. has lined up an investment with private-equity firm Texas Pacific Group, but banks in recent months have largely raised capital by tapping mutual funds and other institutional investors through offerings of common and preferred stock. Banks need the capital to absorb rising loan losses and writedowns from securities that have lost value.

A deterrent to taking big stakes in a bank is a federal law that requires investors that acquire a more than 24.9 percent stake to register as a bank holding company, requiring a heavy regulatory burden. Owning more than 9.9 percent also comes with more scrutiny. The Federal Reserve, though, is reportedly looking at ways to make it easier for private-equity firms to pump capital into the banking system.

Greg Lyons, partner with Goodwin Procter in Boston, said he doesn't expect a wave of private-equity investments, but he suspects the Fed is trying to be proactive. “I think the Fed is trying to get ahead of this, instead of getting run over,” he said.

Wachovia raised about $8 billion in capital in April. Spokeswoman Christy Phillips-Brown declined to comment on whether it would need an additional investment.

With Burr's departure, Greg Norwood, one of his lieutenants, will serve as Wachovia's interim head of the treasury department, Phillips-Brown said. The bank will launch a search for a permanent successor, considering internal and external candidates, she said.

Burr was promoted to treasurer in 2006 after his predecessor, Tom Wurtz, became chief financial officer. The treasurer's responsibilities include monitoring the bank's asset and liability structure and capital planning.

“Private equity can play a significant role in recapitalizing financial services firms buffeted by today's tough markets,” Burr said in a statement. “This is a wonderful opportunity to join a remarkable team of proven executives who really understand what the problem is and how to be a part of the long term solution.”

Carlyle has made a number of high-profile banking hires in recent years, including Sarkozy, a former UBS investment banker, and Jim Hance, Bank of America Corp.'s former chief financial officer.

Burr is the highest-level official to leave Wachovia since the ouster of chief executive Ken Thompson this month. Bob Maneri, a managing director with Victory Capital in Cleveland, said he had expected executives to wait until a new CEO was chosen before departing.

“Whoever comes in will want to put their mark on the company,” he said.

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