* Barclays boss says has options to reach 3 pct leveragetarget
* Warns lending may suffer if it has to hit target quickly
* Bank of England says no plan that restricts lending willbe accepted
* Barclays targets 14 pct RoE for investment bank
By Steve Slater
LONDON, June 28 (Reuters) - Barclays warned onFriday it may have to cut lending if it is forced to act quicklyto meet new financial targets imposed by regulators, but theBank of England said it will not accept any plans that hurtlending.
The central bank's Prudential Regulation Authority (PRA)last week surprised investors by telling banks they needed tohave a 3 percent leverage ratio, and said Barclays fell shortwith a ratio of only 2.5 percent after adjustments.
The ratio measures capital against total loans and somebankers argue it penalises low-risk, high-volume businesses liketrade finance and mortgage lending.
The PRA gave Barclays and mutual Nationwide, the only othermajor lender to fall short, until the end of July to say howthey will improve.
Barclays Chief Executive Antony Jenkins said on FridayBarclays would achieve the target by 2015 under its existingplans.
"We have options to accelerate with minor income effects,but an aggressive acceleration requirement from the PRA wouldrequire additional actions," he said, adding that might includesqueezing "lending to the UK and other economies, which issomething we want to avoid."
That creates a dilemma for the regulator, which is trying toencourage banks to lend to revive economic growth. Barclays andNationwide were the only two firms whose net UK lending was morethan 1 billion pounds ($1.5 billion) in the first quarter.
A Bank of England spokeswoman said in a statement: "We havemade it very clear that any plans that restrict lending to theeconomy will not be accepted."
Jenkins said he expected to reach agreement with the PRA inthe next four weeks.
"Given our starting point, we expect the July discussionswill center on possible acceleration," he told analysts andinvestors before the start of a presentation.
Jenkins said the leverage ratio was a "crude" measure andshould only be used to supplement a capital measure based on howrisky assets are perceived to be, or risk-weighted assets (RWA).
Barclays said in its presentation its investment bank plansto continue to shrink and reshape to improve returns and cutrisk, and estimated the unit's risk-weighted assets would dropto 210-230 billion pounds by the end of 2015, from 257 billionat the end of last year.
The investment bank contributes the bulk of Barclays'profits, but the business has come under fire for creating theaggressive risk-taking culture which bosses say they are tryingto rein in.
The investment bank is targeting a return on equity of 14percent by 2015, excluding its legacy assets. That is above thegroup's RoE target of 11.5 percent.
The investment bank has retrenched in mainland Europe andAsia and said its main focus is on the United States andBritain. Its advisory business has cut staff and monthly costsby 15 percent in the year to the end of April. In commoditiesand equities, staff cuts were 18 percent and 16 percentrespectively.