(Adds Sky news report on job cuts, paragraph 4)
By Steve Slater
LONDON May 7 (Reuters) - Barclays Plc is set to announce plans to cut thousands of jobs and shrink its investment bank as Chief Executive Antony Jenkins tries to get his turnaround plan for the British bank back on track after a bad 10 months.
Jenkins, who took the CEO hot seat in August 2012 after investment banker Bob Diamond was ousted following a scandal over the rigging of benchmark interest rates, will lay out a revised strategy for Barclays on Thursday.
His original plan to cut jobs and improve profitability, set out to much fanfare less than 15 months ago, needs some significant revisions.
Sky News said almost 10,000 jobs will go in the investment bank by the end of 2016.
Barclays has already said it will cut 12,000 jobs across the group this year. Sky said Jenkins will increase that number to 15,000, including a quarter at the investment bank, and will cut another 6,000 in the unit over the next two years.
UK rules forcing the bank to hold more capital than expected, a slump in trading revenues, an exodus of U.S. investment bankers and another row about their bonuses has left Jenkins needing to revise his strategy and make deeper cuts.
"They've got to bring one very big hare out of a very small hat," one shareholder in the bank said on Wednesday.
The shareholder added he was looking for concrete evidence on how the bank's return on equity will move back above cost of equity, which is estimated at 10.5 percent. Barclays' group RoE was just 4.5 percent for the whole of last year and 6.4 pct in the first quarter, including 4.7 percent in the investment bank.
Analysts said Jenkins could cut several thousand jobs from the investment bank's 26,000 workforce, while some estimated up to 7,500 needed to go to save over 1 billion pounds a year.
Barclays will also set up a "bad bank" portfolio of assets it deems non-core, to be sold or run down as part of the strategic review, a person familiar with the matter said.
That process will be run by Eric Bommensath, co-head of Barclays' investment bank, and is likely to include 56 billion pounds of assets already marked as non-core and could include some retail banking businesses in France, Italy, Spain and Portugal.
Jenkins is expected to release more aggressive cost-cutting targets, but may have to delay his targets on profitability and cost-efficiency ratios by a year, analysts said.
In the first quarter, only UK retail banking and the bank's star business, its Barclaycard credit card arm, achieved returns on equity above Jenkins' target.
The investment bank is under most scrutiny as tougher rules requiring banks to hold more capital to cover risky assets mean it consumes half of the bank's capital, hurting the returns it can deliver.
A grim first quarter, when investment bank income slumped 28 percent due to a drop in fixed income, currencies and commodities revenues, has added to the pressure for radical action.
"Barclays management have been given all the reasons required to embark on fundamental restructuring of the investment bank in particular," said Jason Napier, analyst at Deutsche Bank. (Additional reporting by Chris Vellacott; Editing by David Holmes, Keiron Henderson and Eric Walsh)