Birmingham have parted company with manager Garry Monk, the club have announced.
Monk's future was cast into doubt earlier this week after it emerged his relationship with chief executive Xuandong Ren had deteriorated.
The former Swansea, Leeds and Middlesbrough manager had taken over at St Andrew's during March 2018 and guided the club to safety despite a deduction of nine points for a breach of the Football League's profitability and sustainability rules.
A statement from the club read: "The board of directors believe this to be in the long term interests of the club.
"We thank Garry for his efforts and we wish him the best for the future.
"Pep Clotet has been appointed caretaker head coach and the remainder of the coaching and backroom staff – including Sean Rush, Darryl Flahavan, Ryan Needs and James Beattie – stay in place.
"The board of directors are hopeful that over time the team can adopt a fresh and modern footballing philosophy, whilst maintaining the club's core values.
"It is our intention to drive the club forward and challenge for promotion. As part of an overall review of club operations, we will also seek to enhance our recruitment and scouting strategy."
Birmingham's statement reflected on the "significant challenges" the club had faced balancing the books off the field, but maintained there would be improvements to the squad, with the owners "committed to continued investment – we will do so sensibly and effectively".
The club said there would be a renewed focus on youth development "even more so than before".
The statement added: "We are certain these young players – as those in our first team already – will be hungry to succeed as we begin a new chapter.
"The board of directors feel that it is vitally important for everybody at the club to be sharing the same vision and commitment to the plans and processes."
