Barclays targets an extra £6bn in revenue

The plans come as Diamond, formerly head of investment banking at the bank, said that "ringfencing" the sector's retail bank operations from wholesale banking was do-able though not ideal.

His comments came ahead of George Osborne's Mansion House speech in the City last night where the Chancellor gave his backing to ringfencing - or "subsidiarisation" - of those operations. The Independent Commission on Banking suggested such a move in its initial findings two months ago.

Barclays, which has instigated measures to ringfence operations in anticipation of the changes, said yesterday it continued to discuss the reforms with regulators. Diamond said: "Retail ringfencing would not be our first option, but we can see ways it would work, though clearly there's a lot more work to do on the details."

Barclays said in a statement that it wanted to generate additional income of between 4.3 billion and 6.4bn by 2013 compared with 2010. The top end of that range would be 20 per cent higher than the bank's 31.4bn revenue last year.

Diamond, who took over the helm at Barclays from Sir John Varley at the start of 2011, repeated his plan to lift the bank's return on equity (RoE) to 13 per cent by 2013 through a mixture of cost-cutting and quitting certain business streams. He added that Barclays's RoE of 7.2 per cent in 2010 was unacceptable. He plans to cut the investment banking division's credit market exposure and allocate capital to areas that generate returns above the cost of equity.

Antony Jenkins, head of retail and business banking, said the group will cut 20 per cent of its near-600 branches in Spain and 16 per cent of its Spanish staff as it tries to turn around its European retail banking arm. He said the bank was not actively looking at European acquisitions amid speculation it could pick up a Spanish regional bank cheaply.