The chief executive of German state bank SachsenLB, due to be taken over by another German state bank after running into trouble with the exposure of a Dublin subsidiary to US subprime mortgages, will step down.

SachsenLB said in a statement yesterday that chief executive Herbert Suess would leave at his own request, handing over to Joachim Hoof on September 15th.

State-backed Landesbank Baden-Wuerttemberg (LBBW) agreed on Sunday to buy SachsenLB hours before a deadline set by the German regulator which would have triggered its insolvency.

The news of Mr Suess's resignation came as ratings agency Moody's said credit markets were experiencing an unprecedented loss of confidence due to the lack of transparency over where exposures lie rather than underlying credit quality problems.

Moody's investors' service president, Brian Clarkson, said yesterday: "I've been in the marketplace for 20 years . . . What we're experiencing is an extreme lack of confidence and lack of liquidity. I have never seen this before. A lot of it has to do with transparency: it's not clear who owns what."

He said there were also questions over valuations of illiquid securities, although not necessarily from a credit standpoint.

Some structured vehicles - such as the Cheyne Finance fund run [ in Dublin] by British hedge fund Cheyne Capital Management - have been forced to sell assets due to losses even though the securities they hold have not been downgraded.

"It's not that a lot of the things people are holding aren't money-good, they are. If you hold them to maturity they will pay interest and principal on a timely basis."

Ratings agencies have come under fire for not being quick enough to react to the problems in the US subprime mortgage market which have roiled equity and credit markets in July and August.

The turbulence is likely to see investment banks in the City of London and on Wall Street cut between 10 and 15 per cent of staff. The bulk of cuts are expected to take place in structured credit and leveraged finance sections, although recruitment experts said that other investment banking areas could also be affected.

"Unlike previous cycles, all the financial institutions are interrelated because of the credit market, so there will be a major decrease in activity across all areas and the inevitable job cuts," said Russ Gerson, chief executive of Gerson Group, a Wall Street executive-search firm.