Swedish bank Swedbank said on Tuesday it had removed Chief Executive Michael Wolf from his post with immediate effect.
The bank did not give a reason for its decision, but shareholders have criticised Wolf after a local newspaper reported that two members of his management team were involved in property dealings.
Birgitte Bonnesen will serve as acting CEO and remain in her position as head of Swedish banking as it searches for a replacement for Wolf.
Bonnesen told CNBC that the loans controversy had "some influence but was not the prime reason why the board had asked Michael to leave."
She added that the checks and balances were in place and working at Swedbank but that "a control station had failed" when it came to the issue of the loans.
Wolf was instrumental in restoring confidence in the bank, which was rocked during the financial crisis due to Swedbank's large exposure in the Baltics.
Bonnesen told CNBC that Swedbank will now look at "transforming" its big retail operations "to meet our customers in a new world that is digital."