* Jenkins sacked after three years in post
* Row with investment bank boss undermined position -source
* Chairman to assume executive duties until successor found
* Investors had expected Jenkins to be given more time
* Shares up 2 percent
* Graphic: http://link.reuters.com/weg25w (Adds further details on background to departure)
By Matt Scuffham and Sinead Cruise
LONDON, July 8 (Reuters) - Barclays Chairman JohnMcFarlane has fired the British bank's chief executive after hehad lost the support of non-executive directors in a clash overstyle and the pace of the bank's turnaround.
The move comes just three months after McFarlane joined thebank and three years after Antony Jenkins was promoted to CEO,having been the bank's retail chief. McFarlane, who had signaledhis intention to speed up Barclays' turnaround efforts when hetook the post in April, will assume executive duties until apermanent successor is appointed.
McFarlane said on a conference call on Wednesday he hadspoken to Jenkins last week about his position after independentdirectors of the bank complained to him about the CEO'sleadership style.
Nicknamed "Saint Antony" for his drive to clean up thegroup's culture after an interest rate-fixing scandal, Jenkins'understated approach, in contrast to the brash style of hispredecessor Bob Diamond, rubbed board members up the wrong way.
Jenkins' position was also undermined by a row with the bossof Barclays' investment bank, Tom King, over the future of thebusiness.
Jenkins wanted to slash the investment bank's assets moreaggressively, according to a person familiar with the matter,but King resisted saying he would retire early from the bank ifsuch a strategy was pursued.
The source said that McFarlane intervened to ensure thatKing would stay and that the disagreement appeared to haveundermined Jenkins's position.
Reuters could not immediately reach Jenkins for comment.King declined to comment.
Jenkins' exit, which will be soothed with a payoff of morethan 2 million pounds ($3 million), was confirmed at a boardmeeting late on Tuesday.
Barclays is the fourth major European bank to change CEOthis year. Deutsche Bank, Credit Suisse andStandard Chartered also named new leaders amid investordisquiet over low share prices and stubbornly high costs.
Although shares in Barclays have underperformed rivals sinceJenkins' appointment in August 2012, he was expected by manyanalysts to be given longer to implement a turnaround strategyinvolving the divestment of non-core assets, improving returnsand cutting costs.
"The announcement came as a surprise ... but was notcompletely unexpected, with returns from the investment bankingdivision still disappointing. The chairman comes with a goodreputation and I would back him in his decision," said DavidSmith, co-manager of Henderson High Income fund, which has astake in Barclays.
The investment bank's performance improved in the firstquarter as volatility drove trading, but revenue rose just 2percent, less than Wall Street rivals such as Goldman Sachs.
Shares in Britain's third-biggest bank by market valueclosed up 2 percent at 260 pence, having dropped the previoussession to a two-month low.
The move echoes McFarlane's actions at insurer Aviva,where he took over the full-time running of the insurer in May2012 having delivered a damning assessment of Chief ExecutiveAndrew Moss's five years in charge.
Warning signs were evident when McFarlane highlighted thepoor performance of Barclays shares in a letter to shareholdersafter joining the bank in April.
Shares in Barclays are trading at just 0.7 times the valueof the bank's assets. In comparison, British rival Lloyds, which only has a small investment banking business, istrading at 1.3 times.
McFarlane said under Jenkins shareholder value creation hadbeen pushed "too far into the future". He said the bank was inno rush to appoint a successor and the most important thing wasto find the right person, adding it would be good to findsomeone familiar with investment banking.
INVESTMENT BANKERS WELCOME MOVE
The 68-year-old Scot faces a host of challenges as theBritish bank grapples with regulatory pressures, such as ademand to separate domestic retail banking operations fromriskier investment banking operations, while trying to improveits overall performance.
Jenkins' successor will be tasked with accelerating therun-down of Barclays' non-core assets. The bank also needs toresolve allegations over alleged past misconduct, while bringingreturns back above its cost of capital and deciding how big tokeep its investment banking operation.
One senior Barclays executive said the move was seenpositively by its investment bankers, noting McFarlane hadrecently told staff of his commitment to the business. Jenkinshad presided over cuts to the investment banking operationsinvolving hundreds of job losses.
"It's the best possible public message that we could havewished for. He got rid of the guy who was questioning this,"said the executive, speaking on condition of anonymity.
With his background in retail banking, Jenkins had littleaffinity with Barclays' investment bankers and McFarlaneindicated his successor will need to have a more establishedtrack record in investment banking.
He also emphasized the importance of the investment bank inBarclays' strategy, seeming to rule out any chance of Barclaysexiting it altogether.
"It will be good to have someone that has some familiaritywith the investment banking business as it's such an importantpart of the business," McFarlane said.
Candidates to replace Jenkins could include Finance DirectorTushar Morzaria, appointed in July 2013 having been chieffinancial officer of JP Morgan Chase's corporate andinvestment banking division.
Morzaria has struck up a strong relationship with McFarlane,according to industry sources.
Another internal candidate could be Jonathan Moulds, theformer Bank of America Merrill Lynch executive who wasappointed to the newly created role of chief operating officerin January. ($1 = 0.6487 pounds) (Additional reporting by Steve Slater, Nishant Kumar, SineadCruise, Simon Jessop and Paul Sandle; Editing by David Holmesand Susan Fenton)
Barclays (BARC)