- The Washington Times - Friday, August 21, 2009

The Swiss government made a profit of $1.1 billion from selling its investment in UBS AG, the country’s biggest bank, a day after agreeing to release data to the United States on clients suspected of evading taxes.

The Swiss state sold 332.2 million shares to institutional investors, the government said in a statement Thursday. Including a $1.7 billion cash payment the state is getting from UBS, the proceeds amount to about $6.7 billion.

The government bought $5.6 billion of UBS mandatory convertible notes last year to help the Zurich-based bank split off toxic assets amid the worst economic crisis since the Great Depression. The settlement of a U.S. lawsuit that sought data on 52,000 UBS clients strengthened confidence in the bank, the government said.

“The exit is a positive signal, as it shows the confidence of the Swiss government regarding the situation of UBS,” Stefan Schuermann, an analyst at Vontobel with a “hold” rating on the stock, said in a statement. “The placement increases UBS’ flexibility in rebuilding its franchise and will help to keep or hire key employees.”

Swiss and U.S. authorities said Wednesday that UBS would divulge information on 4,450 accounts to settle a U.S. lawsuit that sought names of American clients suspected of evading taxes. The bank, which won’t pay any fine under the agreement, will transfer the data to the Swiss government, which will then decide what information gets passed on.

UBS, the world’s second-biggest manager of money for the rich, admitted in February to participating “in a scheme to defraud the U.S.” and agreed to pay $780 million and disclose the names of more than 250 clients who purportedly hid assets from the IRS. A day later, the IRS sued the bank for information on as many as 52,000 clients.

Chief Executive Officer Oswald Gruebel and Chairman Kaspar Villiger have said they aim to wean the bank off government support as quickly as possible. Mr. Gruebel has cut 7,500 jobs, sold a Brazilian unit, replaced three executive board members and tapped investors for more capital since joining UBS in February to help restore the bank’s profitability and reputation.

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