Swiss banking UBS AG said Monday it plans to sell its Brazilian unit for £1.7 billion or $2.5 billion to BTG investments to boost up its capital in the current economic crisis.
With the sale back to its original owner, UBS hopes to reduce risk and strengthen its balance sheet as it vies to survive after $50 billion in write-downs.
It will also cut its production by up to CHF4 billion in 2010 and slash 11 percent of its workforce to restore UBS’ profitability after being hit by credit crisis.
The bank expects wider first quarter losses of CHF2 billion from its CHF3.9 billion write-downs and increase 0.6 percent of about 10.6 percent its capital for the said quarter.
The said sale is made up of cash and the assumption of liabilities and is scheduled to be announced with the complete first quarter earnings on May 5.
Sao Paulo based, BTG Investments, is run by Andre Esteves, the former Pactual partner who has $24 billion in management. Some CHF6 billion is managed by a Brazilian wealth management unit, or private bank.
However shares of UBS fell 65 cents to 5.42% at $11.34 in the New York trading as analyst Matt Clark of Keefe, Bruyette & Woods rated the bank underperform with a CHF12.50 price target.