The Swiss government has decided to divest its stake from Swiss banking giant UBS AG (NYSE:UBS), by converting the CHF 6 billion ($5.6 billion) investment it made on the bank at the height of the financial crisis, UBS said in a statement late Wednesday.
The Swiss government will convert notes in UBS it holds into shares and sell the shares to institutional investors on August 25.
In lieu of interest it would have paid on the notes before they mature in 2011, UBS will pay the government a lump sum of CHF 1.8 billion, the statement said.
Switzerland last year injected 6 billion Swiss francs, then equivalent of $5.2 billion, in UBS as part of a massive government aid package to stabilise the bank. The capitalisation was made in the form of mandatory convertible notes giving the government the choice of converting the notes into shares after a lock-up period of six months.