Germany announced Wednesday it is replacing the head of its foreign intelligence service, which has been rocked by revelations it helped the US National Security Agency spy on European targets.

Gerhard Schindler, 63, will take early retirement from July 1, leaving the reins of the BND service to Bruno Kahl, a trained lawyer and currently high-ranking finance ministry official.

"The BND faces major challenges in coming years," said Peter Altmaier, chief of staff of Angela Merkel's chancellery, in a statement.

These "include the development of its profile given the changing security challenges" as well as the "organisational and legal consequences of the work of the NSA investigation committee," he added.

Altmaier did not spell out the reasons for Schindler's departure and government spokesman Steffen Seibert declined comment when asked at a regular press briefing.

But German media speculated that the change was down to a combination of factors that included the BND's controversial cooperation with the NSA.

An investigation committee said in a report seen by AFP in October that the NSA had handed lists of European government offices as targets for espionage to the BND, with the request for the results be sent back to the United States.

Although the report found that the BND whittled down the list of thousands of NSA targets over the years, it still maintained cooperation with Washington.

Beyond the consequences of the NSA scandal, German media said the change at the top of the BND was also partly motivated by the need for reform at the service to increasingly cover cybersecurity, and to oversee a complex move of the headquarters from the western city of Pullach to Berlin.

Kahl is a trusted aide of Finance Minister Wolfgang Schaeuble, and has been leading a ministry division in charge of privatisations, investments and federal real estate.