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Barclays (BARC.L) retail operations in Italy, Spain, France and Portugal will return to profit in two years and could deliver 500 million pounds ($805 million) of annual earnings once a turnaround of the business takes hold.
Barclays has already shut 443 of its branches in mainland Europe this year and will cut about 1,500 jobs across the business by the end of the year, achieving the bulk of a revival plan set out in February.
Barclays Chief Executive Antony Jenkins wants the turnaround efforts to return the loss-making European retail business to profit in 2015.
"That will happen. I'm confident on that occurring," Curt Hess, head of the bank's Europe retail and business banking, which covers Italy, Spain, Portugal and France, said.
"I feel we could probably get to half a billion (pounds) of profitability in terms of my four markets," he told Reuters in an interview on Friday, adding that could be achieved earlier than 2020.
Hess said his division had not missed anything on the revival program, known as Transform, including a target to cut annual costs by more than a fifth to 650 million pounds by 2015.
The plans are part of a restructuring and root and branch review of Barclays' businesses after the financial crisis and the scandals that have followed it, such as benchmark interest rate rigging.
In the years before the crisis, Barclays had expanded aggressively in mainland Europe, but it hit problems as Spain, Portugal and Italy fell into recessions, driving up losses from bad loans. The bank's European retail business has lost almost 2 billion pounds over the last four years, reports Reuters.
"Between the expansion, the assets not generating what we wanted in terms of a full customer relationship, and you add on the issues around the economy and it almost became a perfect storm," Hess said.
The euro zone pulled out of its longest recession this year, but the economy stagnated in the third quarter as France and Italy contracted and unemployment in the bloc is above 12 percent.
Barclays will refocus in the four European countries on a smaller, more profitable mass affluent segment, or "Premier" account customers.
Hess said he aimed to add 100,000 Premier customers in Europe in the next two years to the 185,000 it already has. That, together with lower costs, more use of technology and new products should drive profits higher, he said.
The turnaround also includes the run-down of 23 billion pounds of legacy loans in Europe, however, which will remain a drag. About half of those are in Italy, and one-third in Spain.
Hess said this was expected to run down by about 8 percent a year but he wants to accelerate that by selling books of loans, including some potentially significant ones, but that will depend on whether buyers emerge.
Barclays sold a portfolio of 14 Spanish branches, assets of 300 million euros and 10,000 customers to Caja Rural Castilla-La Mancha last month.
Hess, who is from New York and joined Barclays in 2007 from Citigroup (C.N), said he expects the business to deliver return on equity above the cost of capital by 2017 or 2018 after a low return on equity expected in 2015.
Under Jenkins' Transform plan, Barclays will cut almost 2,000 staff across the European retail business and get rid of 500 branches, leaving it with about 650 branches, less than half the number in 2010.
The bank has this year shut 161 branches in Spain, 145 in Italy, 116 in Portugal and 21 in France.