SWITZERLAND - Banking giant UBS is reportedly planning to divest its 20.7% stake in Swiss private bank Julius Baer nearly two years after acquiring it.
Citing well-informed sources, Switzerland's Tages-Anzeiger said UBS and Julius Baer were currently exploring ways to sell the minority stake, which is worth an estimated CHF3.5bn (€2.15bn).
According to the newspaper, UBS has two options in the divestment. The first one would involve UBS selling the stake to another bank, including a foreign one.
But it said the second and more plausible option would involve Julius Baer selling the stake to several institutional investors, including pension funds.
UBS acquired 20.7% in Julius Baer in September 2005. In exchange, Julius Baer bought from UBS three wealth management firms plus GAM, which specialises in absolute return strategies.
A spokesman for UBS did not deny the Tages-Anzeiger report. "I can't comment on the report. But we have always regarded our stake in Julius Baer strictly as a financial investment and not part of our core business," he said.
The spokesman added that in any event, UBS was obliged under the terms of the original deal to hold on to its stake until June.
UBS' stake in Julius Baer has proven very lucrative for the Zurich-based banking giant. Earlier this month, Julius Baer reported CHF672m in net profit for 2006 - or quadruple the figure for 2005.
The sharp profit rise was in part due to a strong performance at GAM, which now has CHF83bn under management.
In addition, shares in Julius Baer have doubled in value since UBS became a part owner of the private bank.
Beyond GAM, Julius Baer's asset management operations include a European business (CHF74bn in assets) and a US one (CHF66bn). Private banking, which counts as a separate business, looks after CHF138bn in assets.
Julius Baer also last month sold its London fixed income and currency arm, Julius Baer Investments Limited, through a management buy out. The firm retains a 10% stake in the renamed Augustus Asset Managers.