Barclays' shares were the biggest gainers on the FTSE 100 as the City cheered Antony Jenkins' pledge to transform the bank and hand nearly a third of its profits to shareholders.
But controversy still raged over bonuses, as the bank announced a £1.8bn payout across the group, nearly three-quarters of which goes to investment bankers, where the average payout was £55,000.
The plans to reshape the bank will come at the cost of 3,700 jobs, largely in Europe and Asia, as Mr Jenkins seeks to trim £1.7bn from the bank's cost base. He also confirmed plans to close the controversial Structured Capital Markets unit, which has been under fire for selling sophisticated tax avoidance schemes to clients, and trading in "soft" commodities such as food.
The decision will cost the bank £500m in revenue, but the businesses were deemed to pose too great a risk to the reputation of a bank battered by the Libor interest rate fixing scandal and the mis-selling of payment protection insurance policies. Mr Jenkins, formerly head of retail, said he "took responsibility" for the latter.
Another four other business lines will go because they are "uneconomic", while trading deemed to be close to regulators' definition of "proprietary trading" under the US Volcker rule will cease.
The bank is closing 340 branches on the Continent and pulling out of investment banking. It is also scaling back investment banking in Asia, although Barclays will maintain a presence in those regions to serve big international clients.
Mr Jenkins said the bank had to provide "a greater share" of the bank's earnings for investors. That included a pledge to work towards paying out 30 per cent of profits in dividends and to reduce the proportion of revenue paid out in salary and bonuses to investment bankers to a percentage in the "mid-30s". Last year the "compensation ratio" fell to 39 per cent from 47 per cent.
Mr Jenkins said he was firmly committed to the "universal" banking model: "The investment bank will remain a very large and important part of the group. We are well-positioned to become one of an increasingly small group of global investment banks."
Significantly, however, he said he supported the Government's plan to "electrify" the ring-fence it is setting up to protect retail depositers and small businesses. That puts it alongside Lloyds in taking a stance opposite to that of the British Bankers' Association, the main trade association, which was fiercely opposed to the plan when it was announced.
While the dividend was hiked to 6.5p from 6p last year, Barclays is still paying out substantially more to bankers than shareholders.
During 2012 the bank made adjusted pre-tax profits of £7bn, up 26 per cent, with the company's investment bank and wealth management division the top performers.
Statutory pre-tax profits slumped to £246m from £5.9bn, although that figure includes changes in the value of Barclays' own debt.
The shares closed the day up 25.85p at 327.35p as investors cheered.
Mr Jenkins said Barclays must change and would change: "Change is needed across industry, and Barclays is leading that change. I am totally committed to this. We have a clear goal to make Barclays the go-to bank and a clear plan to transform Barclays."
Ian Gordon, analyst at Investec, said: "The numbers are solid and the strategic outlook offers a beacon of light in the sector gloom."
The move to pull out of controversial business also received a cautious welcome from campaigners. Christine Haigh, from the World Development Movement, said: "As Barclays itself recognises, public opinion does not see food speculation as an acceptable activity."
However, she warned: "Without strong new regulation, Barclays is free to start speculating again at any time. Other banks, like world leader Goldman Sachs, are also free to carry on regardless."
David Hillman, from the Robin Hood Tax Campaign, said: "We're pleased Barclays is finally taking action to rebuild its tarnished reputation, but this will be an uphill struggle while big bonuses keep on coming."