STOCKS NEWS EUROPE-Barclays needs to axe 7,500 jobs - Bernstein

Barclays Plc (LSE: BARC.L - news) needs to cut about 7,500 jobs in its investment bank, or almost 30 percent of its staff, to get its profitability back above its target as tougher regulations squeeze income, analysts at Bernstein say.

Barclays is due to release details of a review of its investment bank on May 8, which is expected to see thousands of jobs go to cut costs.

Cuts are mainly needed in the European fixed income, currencies and commodities (FICC) business, which is probably loss-making and takes up 60 percent of the investment bank's capital, Bernstein analyst Chirantan Barua says in a note on Wednesday.

"That's where a fundamental shake-up is required...we expect 6,500 to 7,500 FTEs (full-time equivalent jobs) to go, with more than 5,000 in the European FICC business," Barua says. That would save about 1 billion pounds in annual costs, reduce compensation to about 33 percent of income by 2016, and should see the business deliver a return on equity of 10-12 percent, he estimates.

Barua says new regulations have destroyed 20-30 percent of income in FICC, which is likely to cut Barclays' annual income in that area to 4.5-5.5 billion pounds over the next three years, down from an average of 7.8 billion from 2009-12.

Some investors have said they want to see Barclays take aggressive action to cut costs in the investment bank. The bank's shares are up 0.3 percent at 248.1 pence by 0740 GMT, outperforming a 0.2 percent fall in the STOXX Europe 600 bank sector.

Reuters messaging rm://steve.slater.thomsonreuters.com@reuters.net (Reporting by Steve Slater)