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The head of the world's largest bank has resigned after the institution warned of further losses stemming from the sub-prime mortgage crisis.

Citigroup chairman and chief executive Charles Prince said he felt he should step down given the size of the recent losses recorded by the bank in the wake of the housing market crash in the US.

News of his departure comes just days after the head of rival bank Merrill Lynch, Stan O'Neal, resigned after reporting similar heavy losses.

Mr Prince's resignation came as Citigroup revealed that it was facing previously undisclosed losses of between $8 billion and $11 billion (£3.8 billion and £5.3 billion) as a result of a decline in the value of its $55 billion (£26.3 billion) portfolio of sub-prime loans.

The expected loss comes on top of the $6.5 billion (£3.1 billion) write-down announced by Citigroup for the last quarter, amid fears that the full impact of the global credit crisis - prompted by problems in the sub-prime sector - has yet to be felt.

Rising default levels in the US sub-prime market, which makes home-loans available to those on low incomes or with poor credit ratings, has led banks to become more wary about who they lend cash to and fuelled speculation about the extent to which financial institutions are exposed to bad debts in the sector.

Citigroup, which has been heavily involved in the sub-prime mortgage backed securities market, has bought billions of dollars worth of mortgages and sold them on to international investors.

Announcing his decision to stand down from the bank after four years at its helm, Citigroup chief Mr Prince said: "We have made strong progress in our strategy for building for the future, evidenced in the momentum we have achieved in most of our businesses.

"Nevertheless, it is my judgment that given the size of the recent losses in our mortgage- backed securities business, the only honourable course for me to take as chief executive officer is to step down."

Mr Prince will be replaced as Citigroup chairman by former US treasury secretary Robert Rubin, while the chairman of Citigroup's European business, Sir Win Bischoff, will serve as the bank's interim chief executive.