Aug. 4 (Bloomberg) -- Wachovia Corp., the fourth-biggest U.S. bank, dropped 9.9 percent after Morgan Keegan & Co. urged investors to sell because the new chief executive officer will need more time to rebuild the bank's finances.

Wachovia fell $1.87 to $17.11 at 4 p.m. in New York Stock Exchange composite trading, retreating from a seven-week high reached last week. The shares declined as much 11 percent after analyst Robert Patten said investors should act before Wachovia CEO Robert Steel met earlier today with analysts.

Wachovia had advanced 31 percent last week on renewed speculation that Goldman Sachs Group Inc. may bid for the bank, based in Charlotte, North Carolina. Analysts have said Steel, 57, may decide to sell assets including the brokerage and mutual funds after more than $9 billion in losses. The former U.S. Treasury official was named CEO in early July.

Shoring up Wachovia's finances ``will take time, in what is a difficult and volatile market and would probably not come without more pain for existing shareholders,'' Patten said in his report. ``The reality is there are no easy fixes near-term at Wachovia.'' He rates the bank at ``underperform.''

Steel didn't offer ``earth-shattering news'' at a meeting in Wachovia's midtown Manhattan office, said Gerard Cassidy, an analyst at RBC Capital Markets, who rates the shares ``sector perform.''

``Bob Steel is a set of fresh eyes and he showed that he has no baggage to the way business has been done in the past,'' Cassidy said. ``He wasn't defensive at all and recognized the shortcomings of the mistakes that were made in the past.''

Independence Desire

When asked about a possible takeover bid, Steel indicated he would do what's right for shareholders while also emphasizing his desire to retain the bank's independence, Cassidy said.

Steel said he will replace Chief Financial Officer Thomas Wurtz within two months, then name a successor for Chief Risk Officer Donald Truslow, with no more changes after that, Fox- Pitt Kelton Cochran Caronia Waller analyst Andrew Marquardt said in a note after the meeting. The departures were previously announced.

Wachovia had dropped 50 percent this year through last week, paring a 2008 loss that stood at 79 percent in the middle of last month.

To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net

Last Updated: August 4, 2008 17:19 EDT