The chief executive of Sachsen LB, the German bank that needed a €17.3 billion (£11.7 billion) bailout by its competitors after being hit by US sub-prime losses, resigned yesterday.

Herbert Seuss, 67, will leave the bank on September 15. Two management board members, Yvette Bellavite-Hoevermann and Werner Eckert, also left the company. Sachsen LB said yesterday that the chief executive’s departure was designed “to maintain the interests of the state of Saxony and of the Saxon communities”.

On Sunday, Germany’s biggest regional bank, Landesbank Baden-Württemberg, agreed to buy Sachsen LB for €250 million. Sachsen faces the prospect of investigation by German prosecutors over how a small regional bank lost billions of euros on high-risk investments in American mortgages.

France’s President Sarkozy yesterday criticised banks that played with arcane financial instruments and then sought to recoup their losses by hitting retail customers with higher charges.

In a speech to French employers, he said banks would also have to take a role in promoting healthier economic activity. He said: “For banks, playing their part does not mean lending more to speculators than to companies and households. It does not mean tightening credit to the economy to compensate for the excessive risks they have taken on the financial markets.”

Crédit Agricole, France’s second-largest financial services group, disclosed that its investment banking arm, Calyon, is facing €670 million of potential losses on credit investments. It also reported €100 million of indirect exposure to US sub-prime loans in its asset management arm.

Meanwhile, WestLB, the German bank, reported a €38 million first-half pretax loss after a series of blunders by its proprietary trading desk.

German prosecutors are investigating seven current and former board members of the Düsseldorf-based bank over the loss of €604 million on spread positions on ordinary and preferred shares.

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