The announcement on Tuesday by the Munich-based mortgage lender came days after the German government put together a new euro50 billion (S$100 billion) rescue package for distressed lender.

Mr Funke had come under fire for allegedly failing to reveal the depth of the problems that forced the government to cobble together a second bailout days after it had agreed to an initial plan.

Hypo said in a statement that Mr Funke's responsibilities will be carried out by the company's board. A successor is to be named later in the day. -- AP