Zurich

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.

John Mack is leaving Credit Suisse Group next month after falling out with the board over whether the bank ought to pursue a merger.

The unexpected management shake-up came following a board meeting in New York on Thursday. It is combined with a simplification of the way the bank's businesses are organised and shifts the balance of power back to Zurich. It also signals that the bank is prepared to abandon the bancassurance model it adopted when Lukas Muehlemann was chief executive.