UBS sells stake in Bank of China - update

Financial services firm UBS AG (UBS: News ) Wednesday announced the sale of its investment of about 3.4 billion Bank of China Limited H-shares to institutional investors through a placement. The Zurich, Switzerland-based company purchased the stake in Bank of China in 2005 in preparation for Bank of China's Initial Public Offering, or IPO, to the international market.

UBS said it remains committed to its business relationship with Bank of China and to its businesses in China as a whole. The company will continue to develop its client franchise in China.

Similar to other banking and financial institutions, UBS has been hit hard by the credit market slump, incurring huge losses from sub-prime related mortgages. In October, the firm received a $59.2 billion aid package from the government. The company said in November that Chief Executive Officer Marcel Rohner, his 11 colleagues on the executive board and Chairman Peter Kurer would not receive bonus payments for 2008.

Last week, J.P. Morgan Chase & Co. (JPM: News ) announced a deal to acquire UBS Commodities Canada Ltd., the Canadian energy operations of UBS, as well as the firm's global agricultural business. Terms of the deal were not disclosed. The transaction is expected to be closed in the first quarter of 2009.

Media reported in early December that UBS is planning to cut its total workforce by a further 4,500, adding to its already announced about 9,000 job cuts, primarily in the investment banking business. The planned reduction will bring the company's total head count to below 80,000.

For the third quarter ended in September, UBS reported a profit compared with a loss last year, helped by a gain on own credit and a tax benefit. However, for the fourth quarter, the company expects the adverse conditions seen at the beginning of the quarter to continue to affect its fee-earning businesses. Wall Street analysts are of the view that UBS will incur a loss of $1.15 per share in the fourth quarter on revenues of $11.40 billion.

Meanwhile, UBS's peer, Citigroup, Inc. (C: News ) has completed the sale of its India-based captive business processing outsourcing business, Citigroup Global Services Ltd, to Tata Consultancy Services Ltd., a Tata Group company, for all cash consideration of $512 million. With the sale, Citi would be able to focus on its core financial services competencies.

In mid-December, Citi reached an agreement to sell its India-based Citi Technology Services Ltd. to another Indian company, Wipro Ltd. (WIT: News ), for an all cash consideration of approximately $127 million. Further, On December 16, Nikko Citi Holdings Inc., the principal holding company of Citi in Japan, announced a definitive deal to sell all shares of NikkoCiti Trust and Banking Corp. to Mitsubishi UFJ Trust and Banking Corp., or MUTB, for an all cash consideration of 25 billion yen. In December itself, Citi completed the sale of its German retail banking operation Citibank Privatkunden AG & Co. KGaA and certain of its affiliates, to Crédit Mutuel-CIC, a French banking group, for a cash consideration of US$6.6 billion.