UniCredit chief executive Alessandro Profumo resigned late Tuesday night, right before its board was to discuss his status at a special meeting.
Chairman Dieter Rampl will be interim CEO.
Both parties agreed that "the time is right for a change of leadership," Italy's largest bank said in a statement Wednesday on its Web site.
According to Italian news agency Ansa, Profumo had lost the confidence of key stockholders over his management of the bank since the global financial meltdown began in late 2007.
In additon, Profumo was under fire for Libya having increased its stake in UniCredit to more than 7.5% That surpasses the 5% ceiling set in the group's statute, Ansa reported.
Profumo had been chief executive since UniCredit's founding in 1997. During that time, its market capitalization rose from €1.5 billion to about €37 billion ($49 billion).
But its 2005 purchase of Germany's HVB group left it exposed during the financial crisis. HVB suffered in the subprime loan crisis that triggered the credit crunch.
Ansa also reported that Profumo and Rampl had clashed over Profumo's management style, with some critics calling him "Mr. Arrogance."