Switzerland's biggest bank, UBS, has admitted for the first time that it benefited from Nazi slave labour during World War Two.

Michael Willi, a spokesman for UBS, confirmed that one of its predecessors held a majority stake in a cement factory in Poland where slave labourers were used during the war.

Willi said the Swiss Bank Corporation, one of two banks that merged in 1998 to create UBS, had held a majority stake in a holding firm which itself had a majority share in the Golleschauer cement factory.

He said the factory was forcibly taken into SS administration when Nazi Germany invaded Poland in 1939 and that documents in Berlin proved that the cement works used slave labourers.

Willi was unable to give an exact figure for the number of people involved but one British media report says at least 400 prisoners from the nearby Auschwitz concentration camp were forced to work at the factory.

Last week, UBS along with Switzerland's second biggest bank, Credit Suisse, formally approved the $1.25 billion (SFr2 billion) global settlement aimed at ending the long-running dispute over Holocaust assets.

A US judge has given Swiss companies which benefited from slave labour until August 25 to decide whether they want to be part of the deal. If they agree, they will be free from the threat of legal action.

Willi said any use of slave labour involving the banks is already covered under the settlement.

swissinfo with agencies

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