By Sarah White
LONDON, Aug 30 (Reuters) - A promised return to stability for scandal-hit Barclays is the last thing its shamed investment bank can expect from a cultural revolution likely to bring battles over power and pay.
New chief executive Antony Jenkins, from the less racy world of credit cards and retail lending, could hardly be further from the Masters of the Universe who were epitomised by his predecessor Bob Diamond and blamed for the breaches that cost him his job.
While Jenkins has made plain he wants cultural change after Barclays Plc was fined by regulators for rigging Libor benchmark interest rates, few suspect he would scrap a division that makes most of the British bank's profit before tax.
One Barclays investment banker described Jenkins's appointment as "very sensible", taking the political and public heat off the bank as a whole. He also has the merit of being an insider.
"At least this guy knows what it is that keeps Barclays together," one ex-Barclays debt banker said.
"There's going to be some reactionary stuff and a look at the culture, but why would you chuck away a massive amount of profitability?" the banker added.
But Jenkins' rise to the top underscores how the investment bank has lost the clout it enjoyed internally under former trader Diamond and a reorganisation is on the cards that will not please all.
Though he declined to outline how the investment bank will look, Jenkins has already said the division needs to adjust to pressures from weak economies and increased regulation.
Pay, in particular, is likely to come under further scrutiny as part of a cultural overhaul, sources at the bank and rivals said. Of the 238 key Barclays staff paid an average 1.5 million pounds each last year, nearly all worked at the investment bank.
Pay constraints, and the departure of investment bank champion Diamond and key lieutenant Jerry del Missier, could bring simmering tensions to the boil and potentially mean some staff quit even in a moribund market for hiring.
"The question is really who has the power to keep the investment bank from imploding," said one former Barclays investment banker, now working at a fund but still in touch with ex-colleagues.
Former Barclays employees said the bank's purchase of the U.S. operations of Lehman Brothers when it collapsed in 2008 had created some rivalries between the Barclays "old guard" and ex-Lehman staff.
The rivalry had been kept in check by Diamond, Del Missier and Rich Ricci, who heads the investment bank, the former Barclays banker said. The fact that Ricci had stayed in July when the others left had averted a bloodbath, he said.
"There's been a lot of disarray already and that's going to continue," he added.
The Lehman acquisition helped boost Barclays' standing as a top investment bank, allowing it to kickstart a move into advising on mergers and acquisitions as former Lehman executive Skip McGee led a big hiring round.
The bank was eighth in global fee rankings at the end of the second quarter of this year and had gained ground on rivals in debt markets, according to Thomson Reuters data.
Some bankers said changes made sense at the investment bank, which employs more than 20,000 of the nearly 140,000 Barclays staff.
The former Barclays debt banker said his team would get chewed out every morning for lagging in industry league tables, which measure banks against each other.
"We needed to be higher every day, and we'd go off and do whatever we needed to do to get higher," he said.
And to Barclays' advantage, those unhappy with a shake-up are unlikely to find a different story elsewhere as the broader industry shifts to taking on less risk after the 2008 financial crisis.
Few are likely to find attractive jobs at other investment banks as they also cut back to address regulations and the impact of the euro zone debt crisis.
"There are not many firms looking to hire. In previous years you might have seen an exodus, but that's not really viable now - you'll see some sporadic departures but that's pretty much it," said Zaheer Ebrahim of headhunters Kennedy Group.