* Project Mango part of broader review
* Bank fined $450 million in June in Libor scandal
* Needs to convince public, politicians
By Steve Slater
LONDON, Nov 30 Barclays could axe as
many as 3,500 investment bank staff and cut its advisory or
equities operations in Asia as part of a broader strategic
review aimed at fixing the bank's culture in the wake of the
The future shape and size of the investment bank is seen as
the most critical part of Chief Executive Antony Jenkins'
review, as it contributes more than half of group profits but
conducts the "casino" activities politicians and regulators are
cracking down on.
The British bank was fined $450 million in June for rigging
Libor interest rates, which forced its chairman and chief
executive to quit.
Barclays' reforms are not expected to be as radical as those
of rivals UBS and Royal Bank of Scotland, who
are pulling back sharply, but sources say tough choices loom.
Jenkins will need to take action to cut costs and ensure the
business is profitable under tougher new rules, and show the
public and politicians that he has tackled culture and conduct,
Activities that make low returns or lack scale are at
threat, and the bank has said it will also stop anything that
may harm its reputation, like tax advisory and agricultural
Jenkins is not due to unveil his "Project Transform" until
February, but Project Mango, as the investment bank revamp has
been named by the unit's boss Rich Ricci, is close to being
"Barclays is at an interesting crossroad," analysts at
BernsteinResearch said in a note to clients.
"On one hand, the bank seems likely to be one of the winners
as competitors exit FICC (fixed income, currencies and
commodities) ... on the other hand, the unit has faced increased
hostility from regulators and investors alike, especially
following the Libor crisis."
All investment banks are reassessing their shape and size,
but regulatory change has created an uncertain backdrop.
The Bank of England told UK banks this week they need more
capital and U.S. regulators signalled they will toughen rules
for foreign firms, both potentially shifting how Barclays views
The actions of rivals may also sway plans - UBS's pullback,
for example, could open gaps that Barclays may want to exploit.
"There will be a lot of stuff in the middle that's marginal.
He (Jenkins) may not want to commit to what happens to those
areas until the regulations are clearer," said Gary Greenwood,
analyst at Shore Capital.
Goldman Sachs analysts said Barclays could cut 15 percent of
investment bank staff, or 3,500 of its 23,300 employees, and
adjust its equities and equity capital markets operations
outside the United States and selected European markets, and its
M&A advisory across the Asia Pacific.
"We consider a broad-based but organic realignment of the
unit - including balance sheet shrinkage and the exit from
subscale operations as well as cost cuts and staff reductions -
the most likely strategic outcome," they said in a recent note.
The business would struggle to deliver a sustainable return
above its cost of capital due to new capital rules and a 900
million pound annual hit from having to separate retail and
investment banking operations under new UK rules, requiring the
bank to "shrink to fit", Goldman said.
Ricci, who helped build up the investment bank into a debt
market powerhouse and helped lead a push to be one of a handful
of top global firms, is assessing the business in 54 parts,
helped by financial advisory and accounting firm Deloitte.
Project Mango - named after a fruit that in some cultures is
seen as a symbol of attainment - involves screening activities
first for reputational risk, then assessing culture and
leadership, and then deciding whether they deliver decent
sustainable returns, he said.
"We've turned the analysis on its head. We've put the
reputational risk analysis very front and centre," Ricci told
lawmakers on Wednesday as part of an inquiry into banking
There would be "demonstrable change" from the review, he