By Steve Slater
LONDON, May 7 (Reuters) - Barclays Plc is set toannounce plans to cut thousands of jobs and shrink itsinvestment bank as Chief Executive Antony Jenkins tries to gethis turnaround plan for the British bank back on track after abad 10 months.
Jenkins, who took the CEO hot seat in August 2012 afterinvestment banker Bob Diamond was ousted following a scandalover the rigging of benchmark interest rates, will lay out arevised strategy for Barclays on Thursday.
His original plan to cut jobs and improve profitability, setout to much fanfare less than 15 months ago, needs somesignificant revisions.
UK rules forcing the bank to hold more capital thanexpected, a slump in trading revenues, an exodus of U.S.investment bankers and another row about their bonuses has leftJenkins needing to revise his strategy and make deeper cuts.
"They've got to bring one very big hare out of a very smallhat," one shareholder in the bank said on Wednesday.
The shareholder added he was looking for concrete evidenceon how the bank's return on equity will move back above cost ofequity, which is estimated at 10.5 percent. Barclays' group RoEwas just 4.5 percent for the whole of last year and 6.4 pct inthe first quarter, including 4.7 percent in the investment bank.
Analysts said Jenkins could cut several thousand jobs fromthe investment bank's 26,000 workforce, while some estimated upto 7,500 needed to go to save over 1 billion pounds a year.
Barclays will also set up a "bad bank" portfolio of assetsit deems non-core, to be sold or run down as part of thestrategic review, a person familiar with the matter said.
That process will be run by Eric Bommensath, co-head ofBarclays' investment bank, and is likely to include 56 billionpounds of assets already marked as non-core and could includesome retail banking businesses in France, Italy, Spain andPortugal.
Jenkins is expected to release more aggressive cost-cuttingtargets, but may have to delay his targets on profitability andcost-efficiency ratios by a year, analysts said.
In the first quarter, only UK retail banking and the bank'sstar business, its Barclaycard credit card arm, achieved returnson equity above Jenkins' target.
The investment bank is under most scrutiny as tougher rulesrequiring banks to hold more capital to cover risky assets meanit consumes half of the bank's capital, hurting the returns itcan deliver.
A grim first quarter, when investment bank income slumped 28percent due to a drop in fixed income, currencies andcommodities revenues, has added to the pressure for radicalaction.
"Barclays management have been given all the reasonsrequired to embark on fundamental restructuring of theinvestment bank in particular," said Jason Napier, analyst atDeutsche Bank. (Additional reporting by Chris Vellacott; Editing by DavidHolmes and Keiron Henderson)
Barclays (BARC)