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* New Barclays CEO Jenkins to release strategic plan Feb. 12
* Culture needs radical change, staff told to sign up orleave
* Investor focus on how bank can cut costs, lift returns
* Investment bank to stay, but 2,000 jobs seen axed
By Steve Slater
LONDON, Feb 8 (Reuters) - When Barclays' new bossAntony Jenkins wanted to tell his senior bankers what was instore for them, he gathered all 125 around him on speciallybuilt tiered seats, styled like an ancient Greek agora toguarantee eye contact and conversation.
The British bank's reputation was battered and it had tochange, but to transform attitudes across 140,000 staff Jenkinsknew his top bankers had to buy into his plan - or quit.
Other big organisations had faced profound change and had toadapt, including Kodak and the Roman Empire, he told them. Notall of them succeeded.
To drive home his message, the away-day last November endedin a room displaying unflattering newspaper headlines about thetroubles his 300-year-old bank had recently endured.
Jenkins spread his message wider to all the bank's stafflast month, telling them they should leave if they do not wantto sign up to the new regime. "The rules have changed," he saidin a memo.
He will unveil his grand plan, dubbed Project Transform, tothe wider world on Tuesday at London's Edwardian RoyalHorticultural Halls, an exhibition space where daylight floodsin through a high glass-vaulted ceiling.
Officially, the bank is keeping quiet about exactly whatJenkins will say. But sources say the message for investors willbe his plans to boost profitability, cut underperforming areasand slash costs. That could see him axe about 2,000 investmentbank jobs, almost 10 percent of its 23,300 staff, as it retreatsin Asia and trims in all areas.
In an attempt to placate politicians, regulators and thepublic, Jenkins is expected to promise profound change in thebank's standards and culture.
"He's absolutely right to identify culture as his singlebiggest challenge. That more than anything will define hissuccess," said a former senior executive at the bank, whodeclined to comment publicly about the bank.
"It was aggressive indeed and it was a very driven cultureunder Bob Diamond," he said, referring to Barclays' now oustedCEO. But he added it was an issue for all investment banksrather than just Barclays, and it was no different at UBS, Deutsche Bank or RBS.
TALL ORDER
But implementing change across Britain's fourth-biggest bankwill be a tall order.
"Fundamental change in culture is very difficult to do inany business at any time. You are asking an awful lot of peopleto do things differently, and the difficulty is defining how youwant them to behave."
Emails released by regulators when the bank was fined forrigging the benchmark Libor interest rate showed a cavalierattitude among Barclays traders. "Done ... for you big boy," oneof the bank's traders told a trader at another firm, and inreturn he was promised a bottle of Bollinger champagne.
Jenkins will have to dodge the fall-out from past problems.
Barclays was rocked by a $450 million fine for its Libormanipulation in June that felled its chairman, Marcus Agius,along with Diamond; its bill to compensate customers formis-sold products has hit 3.5 billion pounds; and a UK lawmakeron Tuesday re-opened criticism of how it advised clients on"industrial scale tax avoidance".
It is also being investigated over a controversial 5.3billion pound ($8.3 billion) fundraising from Qatar four yearsago that kept Barclays free from a state bailout. Last week theFinancial Times said that included scrutiny on an allegation thebank lent Qatar money to invest in the bank and didn't discloseit.
"The recent comments about the Qatari deal made me ratheredgy. I don't think we can be 100 percent confident of askeleton-free closet just yet," said one of the bank's 25biggest investors, who declined to be named.
Lawmakers are also concerned that cultural problems at thebank are ingrained.
"It doesn't seem to matter what the scandal is, Barclaysseems to have a finger in each pie, quite a big one," AndrewTyrie, chairman of the Britain's Parliamentary Commission onBanking Standards (PCBS), said this week.
Even before the Libor scandal erupted, Barclays'relationship with the Financial Services Authority was understrain, it has emerged, with the FSA chairman warning Agiusmonths earlier that his bank was often "at the aggressive end ofinterpretation of the relevant rules and regulations".
Criticism has not just been aimed at the investment bank -standards have also come under fire at its retail bank foraggressive sales tactics. And last year an independent reportcriticised an aggressive management culture at its U.S. wealthmanagement arm.
LONG JOURNEY
Jenkins says he can't be sure there won't be more problemsfrom legacy issues, but bank insiders say he believes all thebig issues are on the table.
He expects it will take five years to rebuild his bank - oneyear to stabilise, three years to improve returns and longer tocarry forward momentum and rebuild the brand - but he warnedlast week it may take a decade.
He is keen to have potential distractions out the way beforeTuesday, and in the last two weeks has announced he will nottake a bonus for 2012, set aside another 1 billion pounds formis-selling, and said Finance Director Chris Lucas and generalcounsel Mark Harding will step down.
Hundreds of investment bank jobs have been cut in the lastfortnight too. Almost 300 staff have gone in Barclays' advisoryand underwriting unit, or about 10 percent - with cuts deeper inAsia but shallower in the United States - and that was likely tobe mirrored across the investment bank, one senior source said.
Jenkins has made clear he will cut pay and axe activitieswhere there is a risk of reputational damage, including taxadvisory and trading agricultural commodities.
David Walker, who was picked as chairman three weeks beforeJenkins became CEO, this week said new non-executive directorswere lined up. John Sunderland, head of the remunerationcommittee, appears at risk after being slammed by politiciansfor defending a past payout to Diamond.
SHREDDING BAD BEHAVIOUR
Jenkins, 51, joined Barclays in 1983 on its managementdevelopment programme but left in 1989 and has spent most of hiscareer - 19 years - at Citigroup in London and New York.
He returned to Barclays seven years ago to turn around itsBarclaycard credit card arm and took on all its retail andcommercial banking in November 2009.
The Oxford University graduate, who grew up in the centralEnglish town of Stoke-on-Trent, is softly spoken, prone tomanagement-speak and is meticulous in his planning, colleaguessay.
"He can and will be ruthless if needed," one formercolleague said. "He had incredible appetite for detail andinterpreting that in a strategic format and being able to comeup fairly quickly and decisively with a way forward that wouldsuit his business plan."
His choice of the Roman Empire is likely to have been tohighlight a particular problem. After two centuries ofprosperity, the empire underwent a crisis that threatened itsexistence, which many blamed on an over-reliance on mercenaries- a criticism that has been levelled at banks for theirproblems.
"When you grow a business too quickly you hire people frommany different places, and some of them ... you really have toqualify as mercenaries," former UBS CEO Marcel Roehner toldTyrie's commission last month.
Jenkins this week told the same commission he would tacklepay and challenge bad behaviour with an "iron will" and "shredsituations where we were too short-term focused or tooaggressive."
"It's very hard for organisations that have a sense of theirown success to recognise when the environment has changed andthey need to change their behaviours," he added.
CHANGES AFOOT
Jenkins' arrival and first 5-1/2 months in the job have beenwell received by British politicians and regulators - who werekeen to have a retail banker at the helm and effectively forcedthe removal of Diamond.
Investors, too, have responded well and Barclays shares areup 59 percent since Jenkins started on Aug. 30, more than doublethe rise in Europe's bank index over that time. Theshares now trade at around 0.7 times book value, still adiscount to around 1 times for its peers.
"It is fair to say that investors are in a more forgivingmood right now ... it feels like there's an end in sight to allthe egregious stuff we have come across," said another of thebank's top 25 investors.
That shareholder and others said they like the universalbanking model, but want action to cut pay so that dividends andreturns can bump up.
Jenkins will not axe the investment bank and said there hadbeen no internal talk about selling it. Nor will he cut it asaggressively as at UBS, which is shedding 10,000 jobs, but he isexpected to lower ambitions.
The business, built by Diamond into a debt market powerhouseand using the purchase of the U.S. arm of Lehman Brothers as alaunch pad for equities and advisory, is one of the top globalfirms and is expected to deliver 4 billion pounds of profitswhen 2012 results are released on Tuesday, out of group earningsof 7 billion pounds.
But like its rivals, it faces higher regulatory costs andmodest growth prospects, which most in the industry regard as astructural rather than a cyclical change.
Change will not be limited to that high-profile division, asJenkins needs to show how he can deliver a sustainable return onequity of 11.5 percent. The keen technology and gadgets buff isexpected to set out how IT advances can improve service and cutcosts.
The British retail bank and Barclaycard operations areperforming strongly and should help the bank deliver a return oninvestment of near 9 percent for 2012, up from 6.6 percent in2011.
But a big task for Jenkins is to limit losses and shrink thebank's troubled operations in Spain, Portugal, Italy and France,which it has failed to sell in recent years. Its wealthmanagement and African businesses are both consideredpotentially top class but in need of a jump-start, analystssay.($1 = 0.6368 British pounds)
