UBS sold its stake in Bank of China at a profit of about $350million (£244 million) yesterday, as the world's biggest wealth manager set about repairing the ravages to its balance sheet caused by $49 billion of investment losses.

The Swiss bank sold about 3.4 million shares in Bank of China, representing a 1.33 per cent stake, when a three-year lock-up period ended yesterday. It bought the stake for $491.57 million in September 2005, before the group's $11 billion initial public offering the following year.

It is understood to have sold the shares to 15 institutional investors for about $850 million. UBS would not be specific, admitting only that it had made “a few hundred million dollars” in profit on the transaction, which would boost its fourth-quarter results, to be unveiled on February 10.

UBS is desperately seeking to rebuild its balance sheet after making tens of billions of losses on sub-prime mortgages and other investments, making it the biggest European victim of the credit crunch.

A spokesman insisted that the share sale did not represent a complete severing of ties between the two banks, saying: “UBS remains committed to its business relationship with Bank of China, and its business in China as a whole.”

Royal Bank of Scotland bought 20.94 million shares in Bank of China, or about 8.25 per cent of the group, at the same time as UBS made its investment. However, Bank of China played down rumours that RBS, its third-biggest shareholder, may be seeking to sell its $5.6 billion stake, saying that the British bank had pledged to give a month's notice if it planned to sell and it had not done so. Bank of China added that UBS had told it about a month ago of its decision to sell.

RBS declined to add to Bank of China's comments. However, although a disposal of the RBS stake is not thought to be imminent, a sale is understood to be under consideration as part of a review kicked off by Stephen Hester, RBS's new chief executive.

UBS has cut nearly 9,000 jobs since the credit crunch started and this month agreed to sell its agricultural and energy trading businesses to JPMorgan Chase for an undisclosed sum. The Swiss Government, meanwhile, has orchestrated a rescue which will involve up to $60 billion of UBS's most illiquid assets being transferred to a fund managed by Switzerland's central bank.

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