Swiss government says no decision yet on UBS stake

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Government may sell its stake or convert into shares, but will withdraw involvement as soon as justifiable.

Zurich -- The Swiss government on Tuesday said it had not decided what to do with its stake in Swiss banking giant UBS, even though it can now sell or convert the stake into shares.

"From today, the Federation can convert all of part of its mandatory convertible notes on UBS into UBS shares. Until now, there is no decision to convert and, or to sell," said the Swiss Finance Ministry in a statement.

It said discussions were continuing with the relevant parties.

"The government will make a decision in due time," it added.

Switzerland last year injected FR six billion, then equivalent to EUR 3.9 billion or USD 5.2 billion, in UBS as part of a massive state aid package to stabilise the bank.

The capitalisation was made in the form of mandatory convertible notes that can be converted into shares after a lock-up period of six months.

Tuesday marks the end of the lock-up period and Bern can now convert the notes into shares to be placed on the stock market, or it can opt to sell the stake to investors.

It can also convert the stake into shares and hold on to them.

If it chooses to make the conversion into shares, the minimum price of a share is FR 18.21, significantly higher than Monday's closing price of the stock at FR 14.85.

The government can also hold the notes until June 2011, the deadline for conversion into shares. If it picks this option, it would be paid 12.5 percent in interest until then.

Bern has signaled on several occasions that it wants to divest from the bank as soon as possible.

"It is clear that the Federation will withdraw from its involvement as soon as it is justifiable," said Hans-Rudolf Merz in an interview with Swiss newspaper NZZ am Sonntag.

"We will not place these stocks anywhere, but where it would be sensible for UBS," he added.

On Tuesday, the government also reiterated that its involvement in UBS is "temporary."

AFP / Expatica

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