UBS planning to sell $3.3bn Julius Baer stake

May 25 | Updated: May 26 2007, 05:31am hrs
UBS AG, the worlds biggest money manager, plans to sell its 4.1 billion-Swiss franc ($3.3 billion) stake in Julius Baer Holding AG and use the proceeds to buy back shares.

UBS got 20.7% holding when it sold three private banks and an asset management unit to Julius Baer in December 2005. An agreement blocking it from selling the stake expires at the end of the day, Zurich-based UBS said on Frdiday. Shares of UBS trailed rivals Credit Suisse Group and Deutsche Bank AG over the past year as the company posted three straight declines in quarterly earnings.

The sale will generate a pretax gain of about 2.1 billion franc, which will be used to repurchase stock as part of a program announced in March, UBS said. A number of institutional and financial investors have shown interest in the stake, spokesperson Christoph Meier said. UBS is clearly trying to win friends after three quarters of disappointing quarterly results, Peter Thorne, an analyst at Helvea who rates Baer shares neutral, said in a note to investors. We expect UBS to sell its shares to the likes of Julius Baer itself or institutional shareholders. Shares of Julius Baer, Switzerlands biggest publicly-traded private bank, rose 25 cent to 89.85 franc on Friday.

The stock reached a record 94 franc last week amid speculation the company may be acquired. UBS shares added 5 cent to 78.05 franc. They have gained 12% in the past year, compared with Credit Suisses 30% increase and Deutsche Banks 24% advance. Julius Baer, founded in 1890 and led by former UBS executive Johannes de Gier, paid the Swiss bank 6.1 billion franc for fund manager GAM and three banks for the wealthy, Ehinger & Armand von Ernst, Banco di Lugano and Ferrier Lullin. The purchase added 128 billion franc in assets under management. The value of UBSs holding has more than doubled since the sale of the units to Julius Baer was announced in September 2005.