(New throughout, adds byline)

By Jonathan Stempel

NEW YORK, May 8 (Reuters) - Wachovia Corp (WB.N: Quote, Profile, Research), battered by mounting losses from mortgages and other debt, said on Thursday Chief Executive Ken Thompson had given up the chairman's title to focus on day-to-day operations at the fourth-largest U.S. bank.

Lanty Smith, a director since 1987 and lead independent director since 2000, was named non-executive chairman.

Thompson will remain on the board of directors, and be responsible for management of the Charlotte, North Carolina bank. He will also retain the title of president. The board approved the change today, a Wachovia spokeswoman said.

Wachovia announced the change after a difficult month in which it cut its dividend, reported a first-quarter loss that it later nearly doubled to $708 million, and faced up to $1.14 billion of costs for legal and regulatory problems.

Mounting loan losses also helped push Wachovia last month to raise $8.05 billion of capital. Meanwhile, a Wall Street Journal report said federal prosecutors are investigating Wachovia in a probe related to alleged laundering of drug proceeds.

"Wachovia has faced a litany of negative announcements," said Kevin Fitzsimmons, an analyst at Sandler O'Neill & Partners LP in New York, who has a "hold" rating on the bank. "The board may be taking a more hands-on approach to getting Wachovia through this environment rather than just rely on Ken Thompson."

In a statement, Thompson said the change frees him "to focus 100 percent of my time and attention on guiding the company through the current environment and building and delivering enhanced value." Wachovia said the change also enhances corporate governance.