UBS sells Brazilian unit for £1.7 billion

Switzerland's biggest bank, UBS, is to sell its Brazilian outlet, UBS Pactual - a financial services firm bought in 2006 - to its original owners for ┬ú1.7 billion. ┬á The Swiss bank said the sale of UBS Pactual to Andre Esteves, the former head of the business, would result in "a small loss,ÔÇØ but will reduce its risk profile, free up capital, strengthen its balance sheet and sharpen its business focus.┬á "There may be more transactions like this to follow," said Mathias Bueeler and analyst at Kepler Capital Markets.  Chief Executive Officer Oswald Gruebel, who UBS recruited out of retirement in February, announced 7,500 job cuts last week as he seeks to restore profitability. UBS has been one of the biggest banks hit by exposure to the sub-prime loan crisis, had the biggest credit-related writedowns of any European bank, and last year posted the largest-ever loss by a Swiss company.  Last week UBS said it would seek to cut costs by shedding 8,700 jobs by next year, as the bank announced it had lost about 2 billion Swiss francs (┬ú1.2 billion) in the first three months of 2009. ┬á UBS is hoping to make savings of 4 billion Swiss francs. ┬á ÔÇ£Gruebel is reviewing every single portfolio in the business,ÔÇØ said Teresa Nielsen, an analyst at Bank Vontobel who has a ÔÇ£buyÔÇØ rating on UBS. ÔÇ£This sale is a positive because it increases the capital ratio so shareholders wonÔÇÖt get caught in any dilutive capital raising.ÔÇØ  Gruebel, 65, told shareholders last week that UBS, with operations in more than 50 countries, would exit some ÔÇ£high- riskÔÇØ businesses and certain locations after a first-quarter loss of almost 2 billion francs. UBS Pactual does investment banking, asset management and wealth management.  ÔÇ£This transaction marks a withdrawal of UBSÔÇÖs ambitions to be a major force in emerging market investment banking all over the world,ÔÇØ Peter Thorne, a London-based analyst at Helvea, said in a note. ÔÇ£We are encouraged to see the new UBS executing on its strategy to reduce risk.ÔÇØ