Merrill Lynch, a global investment bank, is replacing Stan O'Neal, the company's chairman and CEO, days after the bank posted some of its biggest losses in its 93-year history.
O'Neal is the first Wall Street CEO to lose his job as a result of a US housing mortgage crisis that is raising fears of a recession in the US.
He is said to have recieved $161.5 million in stock options and retirement benefits on his departure, the company said on Tuesday.
O'Neal, 56, was the second-highest paid Wall Street CEO in 2006, and had been chief executive of the company since December 2002.
The company said that O'Neal "decided to retire" immediately and the board of directors have elected Alberto Cribiore, another board member, as an interim non-executive chairman.
'Change in leadership'
"Mr O'Neal and the board of directors both agreed that a change in leadership would best enable Merrill Lynch to move forward and focus on maintaining the strong operating performance of its businesses," Merrill Lynch said in a statement.
The firm also said Cribiore would chair a search committee to recruit a new CEO from within or outside its ranks to oversee an estimated $1.7 trillion in client assets.
Cribiore is a managing partner and founder of Brera Capital, a global private equity firm.
He said that Ahmass Fakahany and Gregory Fleming will continue as Merrill Lynch co-presidents and chief operating officers.
O'Neal's departure came after Merrill said last Wednesday that it was writing off $7.9bn of mainly mortgage-backed securities, resulting in a third-quarter operating loss of $2.24bn.
Investors shaken
The earnings news startled investors after Merrill forecast on October 5 it would take a much lower $4.5 billion writedown.
O'Neal at the time admitted: "We can do a better job in managing this risk."
With his exit, Wall Street loses the only African-American head of a major investment bank, a man who rose from poverty in the south of the US to the top echelons of corporate America.
He said: "I have been very fortunate to spend the past 21 years at Merrill Lynch.
"The company has provided me with opportunities that I never could have imagined growing up, culminating with my leadership of the company over the past five years."
John Challenger, chief executive of Challenger, Gray & Christmas, a global outplacement consultancy, said O'Neal's departure could will not be the last from a powerful figure amid the country's financial woes.