UBS said Friday it plans to sell its 20.7% stake in private bank Julius Baer Holding to raise capital for its share repurchase program.
Switzerland's largest bank said proceeds from the sale would be more than 4.1 billion Swiss francs ($3.34 billion; 2.48 billion euros). It expects a capital gain of 2.1 billion francs ($1.71 billion; 1.27 billion euros) before taxes from the stake it acquired in 2005 through a cash and stock deal.
The announcement was widely anticipated as restrictions governing what UBS can do with its Julius Baer stake end later Friday.
UBS shares were flat at 78.00 francs ($63.52; 47.23 euros) in Zurich. Shares in Julius Baer, Switzerland's largest publicly traded private bank, were also flat, at 89.60 francs ($72.97; 54.26 euros).
"The stake is not strategic in nature," UBS said in a statement.
UBS said it would use the proceeds to buy back shares as part of a program it has previously said could be worth up to 8 billion francs ($6.52 billion; 4.84 billion euros).
Speculation over how UBS will dispose of the stake has led Julius Baer shares to surge as much as 11% in recent weeks.
Julius Baer shares have gained 34% for the year, partly because of acquisition speculation and partly because new management at the bank has aggressively raised client assets and margins by opening new branches, analysts say.