SYDNEY (Reuters) - ANZ Group's ( ANZGF ) new CEO Nuno Matos warned of more "ugly" changes to come at the Australian lender after the announcement of 3,500 job cuts on Tuesday, but said the decisions would safeguard its future growth.

The bank said it would take a A$560 million ($369 million) restructuring charge, following one of the largest rounds of job cuts in the sector in recent years.

ANZ, which at 43,000 employees has a bigger workforce than its larger rivals Westpac and National Australia Bank, said it would also sack 1,000 contractors and review consultants and third-party contractor agreements.

The job cuts to take place by next September are the first major changes ordered by Matos, who joined ANZ in May after previously heading HSBC's personal banking and wealth operations.

ANZ is the smallest of Australia's "Big Four" banks based on its market valuation and its share price has lagged rivals over the past 12 months.

"I hate to do this but it's for the future of the company," Matos said of the job cuts at the Financial Review Asia Summit in Sydney. "Those decisions are very tough to take. We don't want to take them because they're going to impact people, our people, their families, and it should be the last resort."

He said reducing staff numbers would reduce duplication and complexity and included stopping projects not aligned to ANZ's priorities.

"At this point in time our change will be more elevated and ugly, so we are very careful in terms of how fast we can go," he said. "This is about being fast and safe at the same time."

ANZ shares rose 1% in early trade on Tuesday but later pared gains to be down 0.5% to A$32.81.

The bank is due to release a strategic review on October 13.

'PERFORMANCE-DRIVEN CULTURE'

Matos said ANZ would move towards implementing a more "performance-driven culture" across its workforce after cutting about 8% of staff.

ANZ said the job cuts would mostly not affect customer-facing roles and the bank would meet its commitment to retaining Suncorp Bank jobs after the A$4.9 billion merger finalised last year.

Atlas Funds analyst Michael Haynes, whose firm holds shares in ANZ, said the job cuts would increase profitability. But given they would take place over 12 months, investors might not see all of the cost-out benefits until 2027 given the company's September-end financial year, he added.

Matos said ANZ would also increase its focus on non-financial risk work that had arisen after a bond trading scandal at the bank highlighted cultural problems within its markets trading business.

Citigroup analyst Thomas Strong said the job cuts could improve productivity in ANZ's retail bank and technology divisions.

Finance Sector Union National President Wendy Streets criticised the job losses and said they were unnecessary.

"When the FSU asked ANZ who will actually do the work of the 3,500 sacked staff, the bank had no answer, except to say the work will simply stop," Streets said.

"That's not a plan, that's chaos."

($1 = 1.5177 Australian dollars)