UBS Sells Brazilian Unit to Esteves for $2.5 Billion

April 20 (Bloomberg) -- UBS AG, Switzerland’s largest bank, agreed to sell its Brazilian unit UBS Pactual to Andre Esteves, the former head of the unit, for $2.5 billion to reduce risk and strengthen its balance sheet.

The sale of the business, which UBS agreed to buy for $2.6 billion in 2006, will lead to a “small loss,” the Swiss bank said today from Zurich. The price represents a premium to book value and will be paid in cash and partly through the assumption of liabilities by Esteves’s BTG Investments, UBS said.

Chief Executive Officer Oswald Gruebel, who was recruited out of retirement in February, is scaling back business and last week announced an additional 7,500 job cuts as he tries to restore profitability. UBS had the biggest credit-related writedowns of any European bank and last year recorded the largest-ever loss by a Swiss company.

The sale of Pactual will strengthen Tier 1 capital by 1.3 billion Swiss francs, cut risk weighted assets by 3 billion francs, and reduce total assets by 6.3 billion francs, UBS said.

UBS has operations in more than 50 countries and is conducting a review to exit risky businesses and locations after a first-quarter loss of almost 2 billion Swiss francs ($1.7 billion).

-- Editors: Christian Baumgaertel.

To contact the reporter on this story: Warren Giles in Geneva at wgiles@bloomberg.net

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