* Part of continuing restructuring in face of tough economy
* BNP outlining 2014-2016 strategy to investors in Paris
* Bank will take measures based on Russia sanctions -CEO
* French banks most exposed to Russia -BIS statistics (Recasts with Ukraine jobs, adds Poland cost savings)
By Lionel Laurent and Matthias Blamont
PARIS, March 24 BNP Paribas, France's biggest listed bank, said it would reduce Ukraine staff by 1,600 by 2015 as part of a restructuring of its local unit in the face of a tough economic environment.
International banks exposed to Eastern Europe have been in the spotlight since Moscow formally annexed Ukraine's Crimea last week, triggering U.S. and European Union visa bans and asset freezes against a group of Russians and Ukrainians.
French lenders have the overall biggest exposure to Russia, according to Bank for International Settlements data . BNP owns a minority stake in a consumer-finance joint venture with Russia's Sberbank and also owns Ukrainian lender UkrSibBank, while Societe Generale - BNP's smaller domestic arch-rival - owns Russian bank Rosbank.
"Over the past few years we have had to adapt to the Ukrainian economic environment," BNP Chief Executive Jean-Laurent Bonnafe told journalists ahead of an investor presentation of its 2014-2016 strategy in Paris, which made a brief reference to the planned staff reductions.
Despite having already reduced UkrSibBank's loans outstanding and closed 84 of its branches in 2013, Bonnafe said the overall mood was "business as usual" and the focus was on preserving employee security.
On Russia, the CEO said BNP would comply with sanctions and distance itself from "a number of" counterparties, without giving specific details. The sanctions would likely hurt the Russian economy, he added.
BNP is still forging ahead with a plan to increase its exposure to Central and Eastern Europe, however, thanks to the pending acquisition of Polish bank BGZ. BNP has already begun cutting costs in Poland, however, since identifying 95 cost-saving initiatives in 2012.
BNP, seen by investors as robustly capitalised and conservative compared with rivals like Deutsche Bank or Barclays, is in the early stages of a new plan to cut costs and shift more resources to North America and Asia as European banks struggle with new regulation and economic uncertainty.
The new strategy will deliver a double-digit percentage rise in overall earnings over the next three years, an increased dividend payout and an improved return on equity (ROE) of 10 percent by 2016, the bank has said.
BNP's investor presentation said its investment banking arm would post a compound annual growth rate of revenue above 6 percent over the next three years thanks to the new plan.
Although some investment banks such as UBS and Royal Bank of Scotland have exited entire product lines rather than compete on all fronts, BNP is committed to keeping a broad array of business lines and to growing its client base, the bank said at an investor event to present its new strategy.
"We have decided to keep a diversified business," Alain Papiasse, BNP's head of corporate and investment banking, said.
The bank has already seen a net increase in full-time staff in Asia of 400 over 2013 as part of a planned hiring spree.
In addition to the planned revenue growth, BNP's investment bank is expecting a drop in its cost-income ratio of nine points by 2016, to 60 percent. No details on cost-saving measures were given but the bank said it would merge some sector-specific teams and cross-sell capital markets and custody expertise.
BNP has directly profited from rivals' restructuring in some cases: the bank has agreed deals with Credit Agricole and RBS to take over their equity derivatives portfolios.
But some analysts have said that BNP's profit targets are relatively underwhelming. Societe Generale expects to reach an ROE of 10 percent by 2015, a year earlier than BNP, while UBS and Deutsche Bank are respectively targeting 15 percent in 2016 and 12 percent in 2015.
Shares of BNP were down 1.1 percent at 1127 GMT, slightly underperforming a 0.6 percent fall for the STOXX Europe 600 banks index. (Reporting by Lionel Laurent; Editing by Natalie Huet, Andrew Callus and Sofina Mirza-Reid)