Updated from 1:36 a.m. EDT
agreed to sell its Brazilian operation, UBS Pactual, for about $2.5 billion to BTG Investments.
In a statement Monday, the bank said the sale is "consistent with UBS's policy to continue to reduce its risk profile, strengthen its balance sheet and sharpen its business focus."
BTG Investments is run by Andre Esteves, a former partner of UBS Pactual.
UBS said it expects the sale, which will take place at a premium to book value, will result in a small loss. The transaction will increase Tier 1 capital by 1.3 billion Swiss francs.
The deal, which is still subject to regulatory approval, is expected to close in mid-2009. The sale will be a combination of cash and the assumption of debt, UBS said.