Vang-Jensen is being replaced immediately by Anders Bouvin, who was the bank's UK chief up until today. Meanwhile, Andrew Copsey is replacing Bouvin as acting chief executive of Handelsbanken UK.
The Swedish bank revealed the board had reached a unanimous decision to give Vang-Jensen, who was appointed to his role last year, his marching orders. Board chairman Par Boman described the move as being "purely related to the individual".
Boman continued: "All managers at Handelsbanken, particularly the branch managers, must have a very high degree of autonomy.
"Being the most senior manager at the bank therefore requires a special type of leadership, considerably more complex than traditional management. Thus, it is possible to be an excellent leader and manager, as Frank Vang-Jensen has been, but not fulfil the requirements of chief executive of Handelsbanken."
Shareholders, however, were less confident in Boman's assessment. Shares in the company, which is listed in Stockholm, are currently down 1.8 per cent at 106.7 SEK.