Barclays Caps Bonuses as Profit Falls ; Cash bonuses at the investment banking division capped at £65,000

LONDON—U.K. banking group Barclays PLC said Friday it would cap investment banker bonuses as its 2011 full-year net profit slumped on a sharp drop in investment banking revenue.

The London-based bank said net profit for 2011 fell 8% to £3 billion ($4.75 billion). Adjusted return on equity, a closely watched metric among investors and analysts, fell to 6.6% from 6.8% a year earlier, well below the bank's 2013 target of 13%. Chief Executive Bob Diamond said the bank's 2011 return on equity was "unacceptable" and warned that the 13% target might not be achieved by 2013.

In an apparent effort to offset political scrutiny over banker pay, Barclays said it cut its cash-and-share bonus pool at Barclays Capital by nearly a third to £1.5 billion. Cash bonuses at the investment banking division were capped at £65,000.

Source: WSJ