Swiss grab US stockbroker

The Swiss move into Manhattan

One of the world's biggest banks is expanding into the US market by buying a leading stockbroker.

UBS is purchasing PaineWebber for $10.8bn, offering the company's shareholders 40% more than its current value on the stock market.

The premium price is a measure of the importance UBS attaches to the US market, where more people own stocks than anywhere else.

By buying PaineWebber, UBS will reach 2.7 million customers with about $452bn in assets.

PaineWebber is partly owned by the US industrial giant General Electric, which has successfully diversified into financial services in recent years.

UBS, which is Europe's largest bank by assets, is particularly strong in private client and corporate business. It was created by a merger of two of Switzerland's main banks several years ago.

Generous offer

Although UBS is a European powerhouse, which also owns the UK's Warburg merchant banking business, it has long sought a bigger presence in the US.

It is offering $73.50 for each PaineWebber share, a premium of 47% over the company's closing price, with 50% in cash.

"The merger of PaineWebber and UBS will combine one of the top US private client firms with the world's largest private bank, to create the premier global institution serving private clients," the companies said in a statement.

Donald Marron, chairman of PaineWebber, added: "Over the past 10 years, we have established PaineWebber as a leading provider of financial advisory services to the fastest growing segment of the world's largest market - affluent investors in the United States.

"We are confident that these clients will increasingly seek the diversified product range of a global financial services business, and believe that our merger with UBS will result in a powerful combination well positioned to meet those needs."

PaineWebber was one of the last independent stockbrokers on Wall Street, and was seen as something of an anomaly, lacking either a partner or the financial clout of its rivals.

It is believed that the imminent retirement of Mr Marron helped pave the way for the merger.

Other European banking groups have also made recent moves into the highly competitive American market, including HSBC buying Republic Bank with its private client base earlier in the year.