People enter and leave the building of Swiss bank UBS in Midtown Manhattan in New York City on Wednesday

The Swiss government is selling its 6 billion-Swiss franc investment in UBS AG, the country’s biggest bank, a day after signing an agreement with the US on data on bank clients suspected of evading taxes.

The Swiss government bought 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 US lawsuit that sought data on 52,000 UBS clients and the bank’s 3.8 billion-franc capital increase in June 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 note. “The placement increases UBS’s flexibility in rebuilding its franchise and will help to keep or hire key employees.”

UBS was 75 centimes, or 4.5 percent, higher at 17.49 francs by 12:20 p.m. in Swiss trading. UBS shares have risen 16 percent since the US and Switzerland said they had reached an agreement in principle on the tax lawsuit on July 31.

Profit on sale

The Swiss Confederation will waive its right to receive future coupons on the mandatory convertible notes for a cash amount of approximately 1.8 billion francs, representing the present value of the future coupon payments, UBS said.

The government expects to make a “significant profit” on the stake sale, Siegenthaler said. The offering was 4.5 times oversubscribed, he said.

Swiss and US authorities said Wednesday that UBS will divulge information on 4,450 accounts to settle a US 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.

“At the moment, it wouldn’t be a bad deal” to sell the UBS investment, Swiss Finance Minister Hans-Rudolf Merz said at a press conference in Bern.

Source: Bloomberg