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(Bloomberg) -- UBS Group AG, Switzerland’s biggest bank, said Friday it would pay out about 500 million Swiss francs of deferred compensation a year in securities that will count as additional tier 1 capital under Basel III rules.

UBS will pay out about 2.5 billion francs this way over the next five years, it said in a statement, starting with compensation for 2014. The deferred contingent capital replaces a similar instrument the bank paid out in previous years, that contributed to tier 2 loss-absorbing capital under Basel rules.

UBS also said it set aside the money to pay a supplementary dividend announced in May of 0.25 francs a share. The payout is separate from any dividend the company may pay out for 2014.

UBS said it would stick to its plan to pay out more than 50 percent of earnings as regular dividends to shareholders, provided its common equity ratio under the Basel III rules is at more than 13 percent and stays at more than 10 percent under internal stress tests. The common equity ratio was 13.7 percent at the end of September, while the post-stress ratio stayed above 10 percent.

To contact the reporter on this story: Jeffrey Vögeli in Zurich at jvogeli@bloomberg.net To contact the editors responsible for this story: Elisa Martinuzzi at emartinuzzi@bloomberg.net Cindy Roberts, Paul Verschuur

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