Mr Martin Taylor, the chief executive of Britain's second-biggest bank, Barclays, has unexpectedly resigned as the bank issued a lower-than-expected profits forecast.

The market reacted to Mr Taylor's sudden departure by selling Barclays shares hard, pushing the price down 9 per cent before a partial recovery left them just some 7 per cent lower at 1,383 pence. Mr Taylor (46) said it was time for him to stand down "to allow the new management team to take the business forward" but did not elaborate.

Apart from the surprise of Mr Taylor's departure, Barclays also unsettled the market by saying it expected 1998 profits of not less than £1.9 billion sterling - around £200 million to £300 million lower than most analysts' estimates.

Barclays has under-performed the FTSE All-Share Banking Index by 15 per cent so far this year, mainly because of poor results at its investment banking division.

Barclays did not name a permanent replacement for Mr Taylor, regarded as a high-flier when he was named to the job five years ago at the age of 40.

Mr Peter Middleton, formerly chairman of Barclays' investment bank, BZW, will take temporary charge and then assume the chairmanship of the bank next year when current chairman Mr Andrew Buxton retires.

"Obviously the stock is going to wobble because of this problem with senior management," said Lehman Brothers analyst Mr Ian McEwan. "Most of the senior people now in charge are effectively in caretaker roles."

Mr Taylor had been in the top spot at Barclays for five years and had appeared to weather the most recent storm - a massive £250 million loss on Russian government paper - pointing to the fact that Barclays had not been alone among major banks in getting that market wrong.

But at the same time Barclays Capital, the investment banking unit which had incurred the Russian loss, said that its other trading was also having problems.

That was a blow for Mr Taylor who had insisted that the unit must improve its returns to be viable.

Mr Taylor's worst moment at Barclays was also related to investment banking.

In October, 1997, he announced that the bank would sell the equities business of BZW just months after he had talked of developing the BZW business into a global player. He was criticised for the handling of the sale, which left the business in limbo and increased losses.