LONDON (AP) _ Britain's Big Four banks are suffering from the country's recession and high interest rates, which have sharply increased Britons' failure to pay their credit card and other debts.

The banks' troubles were underscored Tuesday by the news that Midland Bank PLC's chief executive was stepping down after the bank posted a net loss of $346 million for 1990.

Midland also announced it was cutting its dividend, the first such cut by a British bank since the Great Depression.

Midland's results were the worst of Britain's four major commercial banks, lending analysts to speculate that it would become a takeover target. But National Westminster Bank PLC, Barclays Bank PLC and Lloyd's Bank PLC also posted disappointing 1990 profits.

The second half of the year was particularly difficult, the banks said. They already have undertaken drastic cost-cutting programs which involve closing branches and cutting thousands of jobs.

''The bad debts, of course, have come like an avalanche on all the banks,'' outgoing Midland Chief Executive Sir Kit McMahon told BBC Television.

Keith Brown, an analyst at Morgan Stanley International, said blamed the recession for the poor results of the big four banks.

''We've had the bankruptcy of a number of highly leveraged companies, a large number of small businesses going out of business, and the personal sector not being able to meet its obligations,'' Brown said.

High interest rates were largely to blame, Brown said.

Norrie Morrison, an analyst with Kleinwort Benson Securities, took a more positive view. He said the bad debts are cyclical and that the banks' margins and costs have improved.

The banks have already set aside billions of dollars for bad Third World debts.

There is no chance of a major bank failure because the Bank of England would not allow it, and the commercial banks are well capitalized, Brown said.

Midland said McMahon, 63, would be replaced Wednesday by Brian Pearse, Barclays' deputy group chief executive and finance director.

McMahon told a news conference that he was stepping down largely because of an aborted plan to merge Midland and HongKong Bank.

HongKong Bank, which holds a 14.6 percent stake in Midland, had been expected to merge its operations with Midland after a 1987 share buying standstill agreement expired in December. But the banks broke off talks then, citing financial difficulties within the two banks.

The banks, however, voiced support for continued close commercial ties, and McMahon said he couldn't rule out their merger in the future.

Midland's loss was an improvement over a loss of $418 million a year earlier.

But the bank was hit by $1.3 billion in loan charges in the troubled British market, more than double the charges a year earlier.

Britain's base lending rate stood at 15 percent for a year before the government began reducing it in October. It now stands at 13 percent.

McMahon has welcomed the recent rate cuts, but like other bank chairmen, he said further cuts ''will be necessary if the present very difficult conditions are to be eased significantly.''

Midland halved its dividend to 17 cents per share in what was the first dividend cut by a British bank since the Great Depression.

McMahon said Midland was committed to bringing down its costs, and that the group was on its way to meeting its target of 4,000 job cuts by the end of 1991. About 1,800 jobs were cut within the past year, leaving a current work force of about 60,600.

Britain's three other large commercial banks reported the following results for 1990:

--Natwest's net profit nearly doubled to $707 million, or 25 cents a share, but before the gain from a sale of a subsidiary, after-tax profit fell 13 percent to $405 million. Provisions for bad domestic debts doubled to $1.25 billion. The bank cut 400 jobs during the year, bringing the number of employees to 112,600.

--Barclays said its net profit fell 10 percent to $817 million, or 47 cents a share. It tripled its domestic loan provisions to $2.4 billion. It said it would cut 5,000 jobs in Britain this year. Over five years, Barclays has cut its current domestic work force of 85,300 by 15 percent, and closed 110 branches, or 4 percent of them.

--Lloyd's set aside $1.4 billion for bad domestic debts, nearly four times the 1989 amount, but it still managed to post a net profit of $783 million, or 46 cents a share, compared with a loss of $1.07 billion. The bank cut 4,000 jobs last year and another 1,000 so far this year. It currently employs 76,400.