Charles Prince, the chairman and chief executive of one of the world's biggest banks, Citigroup, has resigned.
He will be replaced as chairman by former US Treasury Secretary Robert Rubin, while Sir Win Bischoff will serve as interim chief executive.
Investor calls for Mr Prince to go have increased since the bank reported a 57% drop in quarterly profits, after losses in the sub-prime mortgage market.
He is the second head of a leading US bank to step down within a week.
The head of Merrill Lynch, Stan O'Neal, resigned after reporting heavy losses.
After Mr Prince stepped down, Citigroup revealed that it was facing losses of between $8bn and $11bn in previously undisclosed losses due to a decrease in the value of its $55bn portfolio of sub-prime loans.
And it warned that there could be further losses to come in its trading positions in sub-prime mortgages if its hedging operations did not succeed.
Citigroup shares fell 4.85% to $35.90 in New York trade on Monday.
'Structure is broken'
"Given the size of the recent losses in our mortgage- backed securities business, the only honourable course for me to take as chief executive officer is to step down," Mr Prince said on Sunday.
But some analysts say that the sub-prime losses were just the last straw.
Citibank founded in 1812
Group has 200 million customer accounts
Owns Diners Club and Schroder Salomon Smith Barney
More than 300,000 staff worldwide
Owns $55bn of sub-prime debt
"When you look at the trillions of dollars in assets that Citi has and you're talking about potential exposure of maybe $15bn: it's bad but it's not the end of the world," said Bill Smith from Smith Asset Management in New York.
"The actual structure of Citigroup is broken - it's too big, it's too bloated and we think it should be broken up into three or four pieces," he added.
The board of Citigroup paid tribute to Mr Prince, with Alain Belda saying: "We thank Chuck for his unwavering commitment to Citi, its employees and its shareholders."
Mr Prince's resignation follows the sudden increase in the projected losses suffered by the group.
Earlier, Citigroup had reported that net income (profits) dropped to $2.38bn from $5.51bn a year earlier, in the three months to the end of September.
On Monday morning, Citigroup shares rose 5.8% in value on their Japanese stock market debut, hours after Mr Prince's departure was confirmed.
From a tentative starting price of 4,330 yen, based on Friday's New York close, they traded at 4,580 yen.
Citigroup has been one of the most active participants in the sub-prime mortgage-backed securities market, buying billions of dollars worth of mortgages and then selling them on to international investors.
SUB-PRIME CRISIS EXPLAINED
Sub-prime loans are offered to those with inferior credit records or unpredictable earnings.
The debt has been repackaged and sold around the world.
Rising interest rates trigger record defaults, casting doubts on the value of the debt.
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But since August the credit market for these types of securities has frozen up, leaving many big banks holding unsold mortgage securities whose value has taken a tumble.
The lack of a market has made it difficult for companies to evaluate the size of their potential losses.
In its statement, Citi said that its securitized mortgage-backed debt obligations "are not subject to valuation based on observable market transactions."
Instead, it has had to estimate the fair value of those securities, based on assumptions about future house prices and cash flows from the underlying mortgages.
Overall, there are over $1 trillion worth of sub-prime mortgage-backed securities outstanding, and the Federal Reserve has estimated that the financial sector as a whole could lose at least $100bn.