(UBS) - Get Report

held discussions with

Morgan Stanley

(MS) - Get Report

in late 2008 about the sale of its U.S. brokerage unit, UBS Financial Services, according to reports.

People close to the situation said the discussions over UBS Financial, which was acquired in 2000 in the $11.8 billion of U.S. brokerage and investment bank PaineWebber, were preliminary and were unlikely to be rekindled, the

Financial Times


News of the talks with Morgan Stanley are certain to raise further questions about the Swiss bank's strategy, which has been hurt by credit-related losses and a U.S. government investigation into its offshore banking activities for American clients, the

Financial Times


UBS and Morgan Stanley declined to comment.

Morgan Stanley in January agreed to combine its brokerage operations with


(C) - Get Report

Smith Barney unit in a new joint venture to be called Morgan Stanley Smith Barney.

UBS isn't currently in talks with buyers and is instead focused on strengthening the brokerage unit, the newspaper reports.

Talks for a sale of the brokerage unit by UBS weren't unexpected,


said. Last summer, sources told


that the bank was considering a sale of its U.S. wealth management business as part of a review of its business.

This article was written by a staff member of