UBS sells Bank of China stake and makes small gain

By Emma Thomasson

ZURICH (Reuters) - Straitened Swiss bank UBS said on Wednesday it had sold its stake in Bank of China at a discount to institutional investors and would book a gain of a "few hundred million dollars" in the fourth quarter.

UBS is struggling to repair its balance sheet after massive investments into risky U.S. assets forced it to make nearly $49 billion (33 billion pounds) of writedowns, more than any other European bank.

Bank of China spokesman Wang Zhaowen said the sale would have no impact on the bank's financial status and operations.

UBS said it offloaded about 3.4 billion Bank of China H-shares through a discounted placing.

The world's biggest wealth manager paid $500 million for a 1.6 percent stake in China's second-largest lender in 2005 before it went public in 2006. Foreign investors who took bigger stakes at the time included Royal Bank of Scotland (RBS.L) and Temasek Holdings.

Philip Higson, UBS head of investor relations, said the shares were sold at a discount to Bank of China's closing price on Tuesday, but declined to say by how much.

Dow Jones news agency said UBS sold the shares to 15 investors at a 12 percent discount, raising $835 million, citing people familiar with the situation.

UBS said it had made a gain on the sale of "a few hundred million dollars" which it would book in the fourth quarter although it would only have a marginal positive impact on the bank's Tier I ratio, a key measure of financial strength.