The announcement comes hard on the heels of the sudden resignation of Chief Executive Martin Taylor last Friday.

Industry analysts said Mr Large's move to the back seat position of a non-executive deputy chairman highlighted the need for new management to fill a vacuum at the troubled bank.

Martin Taylor's sudden recognition shocked the City

"It leaves them looking for some pretty striking leadership," said Ian Poulter of stockbroker Williams de Broe.

Barclays' problems were brought into focus by hefty losses in Russia earlier this year and its involvement in bailing out Long-Term Capital Management Corp (LTCM), the US hedge fund which nearly collapsed in September.

There had been widespread speculation that Mr Large's role might be scaled back following reports of clashes with Mr Taylor and other senior executives.

However, a Barclays spokesman denied there had been any major falling out.

Acting Group Chief Executive and Deputy Chairman, Sir Peter Middleton, said in a statement: "I look forward to working with Andrew Large again in his new role and will value his advice."

Mr Taylor said last Friday it was time for him to stand down as chief executive and "allow the new management team to take the business forward".

Barclays shares have been hit hard by his surprise exit as investors fretted over the gap at the top of the bank, which may slow its drive to improve profitability.

Barclays said last week it expected 1998 profits of not less than £1.9bn ($3.17bn) - around £200m lower than most analysts' estimates.

Barclays has underperformed the FTSE share index by some 15% in the first 11 months of 1998, mainly due to concerns over its investment banking business.

Mr Large joined the board of Barclays last May, having previously chaired the now-defunct watchdog organisation, the Securities and Investments Board.

He will assume non-executive responsibilities on January 1.