Swedbank's board will instead propose its current deputy chair Lars Idermark as new chairman ahead of the bank's annual general meeting on Tuesday.
"We regret that Anders Sundström does not have the support that the nomination committee has aimed at, but we want to emphasize that Anders Sundström has been of crucial importance for Swedbank’s positive development ever since he first was elected to the Board," Lennart Anderberg, nomination committee chairman, wrote in a statement.
In a Wednesday morning press conference, Sundström told reporters that he respected the nomination committee's change of heart and added, "I'm not bitter. I'm really proud of what we leave in terms of Swedbank."
Sundström's departure comes on the heels of the firing of Swedbank's CEO Michael Wolf, who was sacked in February and later reported by the bank on suspicion of financial crimes to Finansinspektionen, Sweden's financial supervisory authority.
Wolf denied any wrongdoing and said the report is part of a "smear campaign."
Sundström was critical of the "media circus" that he said surrounded the bank for the past several months and called out shareholders, though not by name, for publicly criticizing him. During his news conference, Sundström hinted that internal politics may have been in play for his removal as chairman.
"I have asked the nomination committee who (of the shareholders) demanded my departure, but it has not been reported to me," he said.
Swedbank is one of Sweden's largest banks, with some 4 million private individuals holding bank accounts at the institution. The bank also has a presence in the Baltic states of Estonia, Latvia and Lithuania.