By Nikolaj Gammeltoft, Bloomberg
Fifth Third Bancorp named William Isaac as chairman, putting the former Federal Deposit Insurance Corp. leader in charge of the board after Ohio’s largest bank posted its third straight quarterly loss.
Isaac, 66, the FDIC chairman from 1981 to 1985, takes over from Kevin T. Kabat, 53, who will continue as president and chief executive officer, the Cincinnati-based bank said yesterday in a statement. Isaac, an Ohio native, has been a banking-industry consultant and a participant in at least one group of private investors trying to buy distressed lenders.
“Bringing Bill on board as non-executive chairman improves our already strong corporate governance practices and provides support to Kevin and his leadership team in the ever-changing financial landscape,” said lead director James P. Hackett in the statement.
Fifth Third posted a $10 million first-quarter loss, with Kabat predicting credit would improve in the second quarter and that write-offs for the full year would be “significantly below” 2009 levels. The bank took $3.4 billion from the U.S. Treasury Department’s Troubled Asset Relief Program, and hasn’t yet repaid the funds.
The decision to split the chairman and CEO jobs is “about corporate governance,” Fifth Third spokeswoman Debra Decourcy said. “It’s not about performance.”
Separately, David Moffett, head of an investment group including Isaac that aimed to buy failed banks, is leaving his post and the venture may disband after raising about a third of its $1 billion goal, according to two people with direct knowledge of the matter.
Moffett was CEO of BSE Management LLC, where Isaac is chairman. No decisions on the future of the group have been made, according to the people, who declined to be identified because the discussions are private. BSE was one of at least a dozen investment groups hoping to buy lenders as banks close at the fastest pace since 1992.
Fifth Third fell 26 cents, or 2 percent, to $13 in Nasdaq Stock Market trading. The shares gained 33 percent this year.