Ms Cruz had been with the firm for 25 years

The investment bank, which earlier this month revealed a $3.7bn (�1.76bn) loss from US sub-prime mortgage exposure, said Ms Cruz would leave on Saturday.

The 52-year-old had previously been touted as a successor to current chief executive John Mack.

Morgan is just the latest bank to part with senior figures in recent weeks.

'Cruz missile'

Former Merrill Lynch chief executive Stan O'Neal retired with immediate effect on 30 October, and Citigroup's Charles Prince resigned on 4 November.

The bank says it is reducing its sub-prime loans exposure

Both were also said to have paid the price for allowing their firms to become overexposed to sub-prime mortgage debt.

Ms Cruz had been with Morgan Stanley since 1982, and was nicknamed "Cruz Missile".

She was paid $30m (�14.5m) last year, making her number one on Fortune magazine's list of the 25 highest-paid corporate woman.

"The captains are going down with the ship, whether they are rising stars or not doesn't matter," said David Easthope, a senior analyst at business consulting group Celent.

"The losses are so large and embarrassing to the organization that they are getting rid of people to satisfy the public perception that they are fixing things."