The departure from Morgan Stanley of Zoe Cruz, Wall Street’s highest-paid female executive, has heightened fears that the firm is poised to unveil further mortgage-related writedowns.

Her exit comes just three weeks after John Mack, the bank’s chief executive, is thought to have reiterated that she was his favoured successor. However, Ms Cruz, 52, was responsible for the division which made the loss-making mortgage investments and appears to have been sacrificed as the latest high-profile Wall Street victim of the credit crisis.

Morgan Stanley announced on November 7 that it had lost $3.7 billion (£1.8 billion) on mortgage related securities in the two months to October 31 - the first two months of its fourth quarter. The bank also disclosed that it had $6 billion worth of similar securities remaining on its books. At the time, these writedowns appeared not to have harmed Ms Cruz’s chances of succeeding Mr Mack, as she was still his preferred choice on November 9.

But she has been forced out after Morgan Stanley’s mortgage-related losses grew in November, analysts believing that the writedown for the month could exceed $2 billion.

Richard Bove, an analyst at Punk Ziegel, said: “This must mean that Morgan Stanley is going to report writedowns much greater than previously anticipated.”

Ms Cruz, who was born in Greece and studied at Harvard, is married to Ernesto Cruz, a fixed-income executive at Credit Suisse. The couple have three children.

She joined Morgan Stanley in 1982 as a bond trader and became a managing director in 1990 before taking charge of the fixed income, commodities and foreign exchange division in 2000. She was promoted to co-president in 2005.

Ms Cruz, who earned about $30 million last year, will not receive any severance pay as part of her departure package. However, she will walk away with tens of millions of dollars in shares and stock options after working at the bank for 25 years.

Robert Scully, the other co-presi-dent, has also been replaced as part of the latest reshuffle. The two new co-presidents are Walid Chammah and James Gorman, the executives responsible for running Morgan Stanley’s international and wealth management operations.

Ms Cruz is the latest in a lengthening line of senior executives to have lost their job through the credit crisis. The most high-profile casualties so far are Stan O’Neal of Merrill Lynch and Chuck Prince of Citigroup, who were both forced to resign their top jobs at the firms.

The golden girls

Executives on Forbes magazine’s list of 100 Most Powerful Women
3 Ho Ching, chief executive, Temasek Holdings (Singapore)
5 Indra Nooyi, chairman/chief executive, PepsiCo (United States)
7 Cynthia Carroll, chief executive, Anglo American (Britain)
8 Patricia Woertz, chairman, Archer Daniels Midland (US)
9 Irene Rosenfeld, chairman/chief executive, Kraft Foods (US)
10 Patricia Russo, chief executive, Alcatel-Lucent (US)
34 Zoe Cruz, co-president, Morgan Stanley (US)

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