NEW YORK ( TheStreet) -- Investment bank profits could get hit hard if tougher capital rules proposed by G-20 nations are accepted.

A report by JPMorgan Chase, cited by the Financial Times on Wednesday, says investment banks' return on equity could be crushed, falling to 11% in 2011 from the current 15% level. JPMorgan predicts this will lead to slashed bonuses and layoffs as well.

If accurate, the report is a dire message for firms like JPMorgan Chase ( JPM - Get Report), whose position in the investment banking world has been strengthened by the financial crisis, as well as competitors like Bank of America ( BAC - Get Report) and its Merrill Lynch arm, Citigroup ( C - Get Report), Goldman Sachs ( GS - Get Report), Morgan Stanley ( MS - Get Report), Deutsche Bank ( DB), Credit Suisse ( CS - Get Report) and UBS ( UBS).

Banks that have a traditional lending division to fall back on, including JPMorgan, BofA, Wells Fargo ( WFC - Get Report) and Citi, stand to be affected less than strict investment banking peers.

Traditional credit will be a better place to be than investment banking, the FT quotes JPMorgan banking analyst Kian Abouhossein as saying.

The statement is a sharp twist from recent quarterly reports showing booming investment banking profits, with continued stress from lending operations. But by 2011, those stresses may have eased and the tough G20 capital proposals may be in place.

Participating countries are still negotiating the proposals, which also include limits on executive compensation.

-- Written by Lauren Tara LaCapra in New York.