The Nobel Foundation, under pressure to cut costs following sluggish returns on capital in recent years, is slashing the value of its prestigious prizes for the first time in 63 years while also looking to trim in other areas, such as expenses related to its annual banquet.

IBNA: According to news, winners of the 2012 Nobel Prizes will be paid 8 million Swedish kronor, or about $1.1 million, representing a 20% decline from the 10 million, or $1.4 million, paid out last year. The Nobel Foundation typically gives out prizes each year in six categories spanning medicine to literature to chemistry.

The Nobel Peace Prize, the most popular of the prizes, has become one of the world's most coveted distinctions.

The cut comes as organizers cope with economic instability, particularly in the equity markets where the Nobel Foundation has traditionally put a high concentration of its assets. In recent years, overhead expenses and prize money have outrun investment returns.

The last time the Nobel Prize payout was lowered was in 1949, and the value of the awards has gradually increased in the years that followed. Many Nobel laureates, including big-name winners like U.S. President Barack Obama, have given at least a portion of the prize money to charity.

"The value of the Nobel Prize lies in our ability to award the right persons, but one should not underplay the prize money," Lars Heikensten, the foundation's executive director, said Monday. "The Nobel Prize is and has been a big prize and we have the ambition to grow in the future."

The move comes as Aung San Suu Kyi is preparing to finally receive in person her Nobel Peace Prize later this week. The Myanmar opposition leader was awarded the prize in her absence in 1991. She was held under house arrest by Myanmar's former military regime for most of the past two decades, and when she was free, she refused to travel abroad out of fear the junta would not allow her back in the country.

The prize-money adjustment is likely to draw some attention in the short term, but it may take more than cost cuts to dent a Nobel brand that has been well regarded for more than a century.

"I believe the Nobel Prize is the number one brand of its kind in the world," said Rickard Wahlund, a professor at the Stockholm School of Economics.

In addition to cutting prize money, organizers—who currently operate on about a $17 million annual budget--will target other expenses, including administration and festivity costs. Mr. Heikensten said negotiations with suppliers to the Nobel banquet, held in Stockholm in December each year, in order to lower costs are under way.

Mr. Heikensten said the Nobel Foundation expects to see a modest return on capital in coming years, and is tweaking its investment strategy so that 50% of the capital is invested in equity, 20% in fixed-income securities and 30% in alternatives, such as real estate.

"We have traditionally held a high proportion of equity and that has not given a good return over the last decade," Mr. Heikensten said.

The Nobel Foundation, set up in 1900, manages the assets available for the awarding of the Nobel Prizes. Alfred Nobel, the Swedish chemist and engineer who invented dynamite, set up the prize in 1895 by setting a large portion of his estate aside to be distributed in future years in the form of prizes to those making contributions for the "benefit of mankind."

A related prize in economic science, handed out by the Swedish Riksbank, will also be lowered since its payout must mirror the Nobel Prizes.

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