After reporting substantial losses last week, Wall Street investment bank Lehman Brothers has announced two of its top executives are leaving.

President and chief operating officer Joseph Gregory and chief financial officer Erin Callan are stepping down, effective immediately, the bank said in a statement today.

Herbert (Bart) McDade III will replace Mr Gregory as president and Ian Lowitt will succeed Ms Callan.

“This has been one of the most difficult decisions either of us has ever had to make,” chairman and chief executive officer Richard Fuld, Jr, said.

Ms Callan will be rejoining the Investment Banking Division in a senior capacity, the bank added.

The bank did not say whether Mr Gregory would remain with the firm.

Lehman announced a $2.8 billion (£1.4 billion) quarterly loss on Monday and announced a $6 billion cash call earlier in the month.

The bank has been forced to write down losses linked to the subprime mortgage market and has struggled to recover from the credit crunch.

Mr McDade joined the firm in 1983 and became global head of debt capital markets in the investment banking division in 1998.

“Bart, who has been my partner for 25 years and has proven himself to be the firm’s best operator, is the right individual to take on this responsibility and lead the firm to the next level. His experience in both fixed income and equities capital markets will benefit the firm, especially during these challenging times,” Mr Fuld added.