NEW YORK, US - WACHOVIA Corp, the fourth-largest US bank, named Treasury Undersecretary Robert Steel chief executive on Wednesday, and said mortgage and legal problems will result in a US$2.6 billion (S$3.5 billion) to US$2.8 billion second- quarter loss, much larger than many analysts expected.

Mr Steel, 56, had been the Treasury Department's undersecretary for domestic finance since October 2006 and has played a key role in helping Treasury Secretary Henry Paulson try to address the nation's housing crisis, a big cause of Wachovia's current problems.

Like Mr Paulson, Mr Steel previously worked at Goldman Sachs Group Inc, retiring as vice chairman in February 2004.

Mr Steel's hiring ends more than five weeks of leadership uncertainty at Wachovia, following the ouster in early June of Ken Thompson as chief executive.

It may also dampen speculation that the Charlotte, North Carolina-based bank might be sold soon. Mr Lanty Smith, who will remain chairman and led the search for Mr Thompson's replacement as interim chief executive, affirmed his commitment to Wachovia's independence on Wednesday.

'At least now the market knows how big the losses are going to be and having a number is better than having no number,' said Mr James Ellman, president of hedge fund Seacliff Capital in San Francisco.

'But it may also be a negative for the stock, because many of us had thought Wachovia would be sold. If you put a new CEO in place, it means the board will usually want to let the guy have a chance.'

Mr Steel and Mr Smith were unavailable for immediate comment, a Wachovia spokesman said.

Despite the worse-than-expected results, Wachovia shares rose 46 cents to US$14.75 in after-hours trading. The shares had fallen US$1.25, or 8 per cent, to US$14.29 during regular trading, leaving them down 63 per cent for the year. -- REUTERS