ZURICH -- UBS AG said Monday it will sell Banco Pactual back to one of the Brazilian investment bank's original owners at a loss, a move that will lift the Swiss bank's capital.
UBS said Pactual will be sold for $2.5 billion to BTG Investments, a firm run by Andre Esteves, the former Pactual partner who briefly ran UBS's troubled fixed-income business before exiting the Swiss bank last summer.
UBS said the sale is in keeping with its strategy to reduce risk and strengthen its balance sheet, a push reinforced by new Chief Executive Oswald Grübel, who was hired in February to steer UBS through what now amounts to over $50 billion in write-downs.
The move shows that Mr. Grübel, who last week said he wants to cut spending by up to 4 billion Swiss francs ($3.43 billion) by next year -- including through an 11% reduction of its work force -- won't shirk from further painful steps to restore UBS's profitability.
Despite incurring a loss on the sale, UBS said the move will bolster its Tier 1 ratio -- a measure of capital strength -- by 0.6%, meaning its first-quarter ratio will stand at roughly 10.6%.
"The increase in the Tier 1 ratio, albeit only 60 basis points, is welcomed as the Tier 1 ratio had fallen to around 10% after the first-quarter loss," said Peter Thorne, analyst at independent brokerage Helvea.
UBS said Pactual will be sold for $2.5 billion to BTG Investments, a firm run by Andre Esteves, the former Pactual partner who briefly ran UBS's troubled fixed-income business before exiting the Swiss bank last summer.
UBS said the sale is in keeping with its strategy to reduce risk and strengthen its balance sheet, a push reinforced by new Chief Executive Oswald Grübel, who was hired in February to steer UBS through what now amounts to over $50 billion in write-downs.
The move shows that Mr. Grübel, who last week said he wants to cut spending by up to 4 billion Swiss francs ($3.43 billion) by next year -- including through an 11% reduction of its work force -- won't shirk from further painful steps to restore UBS's profitability.
Despite incurring a loss on the sale, UBS said the move will bolster its Tier 1 ratio -- a measure of capital strength -- by 0.6%, meaning its first-quarter ratio will stand at roughly 10.6%.
"The increase in the Tier 1 ratio, albeit only 60 basis points, is welcomed as the Tier 1 ratio had fallen to around 10% after the first-quarter loss," said Peter Thorne, analyst at independent brokerage Helvea.
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