More Divestments, But Can UBS Catch Up?

April 20 saw beleaguered Swiss banking giant UBS agree to sell its Brazilian Banco Pactual unit to BTG Investments for around CHF2.8bn (US$2.5bn), as part of its ongoing bid to reduce its risk profile and shore up its balance sheet after writing down over US$50bn on losses from US toxic assets. BTG had originally built up Banco Pactual before selling it to UBS for US$2.5bn in 2006, and recently made the news when it picked up the Brazilian units of bankrupt securities firm Lehman Brothers. For UBS, the divestment (which comes hot on the heels of a recently announced and larger-than-expected Q109 loss of around US$1.75bn) should boost its Tier 1 Capital by around CHF1.3bn (60 basis points), while decreasing its risk weighted assets by CHF3bn.

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