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Zurich Cantonal Bank cuts former BZ fund stakes

Zurich Cantonal Bank said it would diversify the BZ funds

(Keystone)

Switzerland's third largest bank has sold off badly performing shares from a portfolio of investment funds bought from the embattled BZ Group last summer.

Zurich Cantonal Bank said the funds had dumped all their holdings in Swiss-Swedish engineering group, ABB, and had reduced their stakes in Credit Suisse.

The bank, which did not disclose the number of shares sold, obtained the stocks when it bought the Vision Funds from indebted BZ Group last summer.

The news comes just days after the bank sold a stake of around eight per cent in the chemicals group, Lonza.

The sale of ABB stock - already suffering because of the group's heavy debts - is likely to ease pressure on the share price because the market had been expecting BZ Group and Zurich Cantonal Bank to offload their holdings.

Zurich Cantonal Bank board member, Hans Fischer, told a news conference that the bank had sold some 24 million ABB shares - two per cent of the engineering group's capital.

He said the shares fetched an average price of SFr6.84 and the sale, completed at the end of September, had raised SFr165 million.

ABB share price rose nearly eight per cent on Thursday to SFr1.97. The company's stock has plummeted by more than 85 per cent over the past 12 months.

Fischer declined to say how many Credit Suisse shares were sold, but said the average price was SFr30 per share. That bank's stock was trading at SFr28 on Thursday, but have halved in value over the past year.

"The [Vision] funds do not hold any ABB shares...," said Fischer. "The number of Credit Suisse shares was also strongly reduced in a timely fashion.. And we sold the biggest part of the stake in Lonza..."

Free of debt

Zurich Cantonal Bank said it was also reorganising the investment funds and that they were now free of debt.

The funds will be diversified and contain stocks of between 15 and 30 firms, compared with between four and eight previously.

BZ Group is the investment vehicle of Swiss financier Martin Ebner which took a hammering on the stock market because of its high gearing and narrow focus.

Ebner was forced to sell off the group's controlling shares in four listed investment funds - Pharma Vision, BK Vision, Spezialitäten Vision and Stillhalter Vision - to Zurich Cantonal Bank on July 30. The funds had equity holdings worth SFr3 billion.

On June 30 - a month before the sale - BZ's Stillhalter Vision held 24 million shares in ABB, 4.1 million in Credit Suisse and 4.5 million in Lonza. The BK Vision Fund had four million Credit Suisse shares.

BZ held a stake of nearly ten per cent in ABB and less than five per cent in Credit Suisse after the July sale.

On Tuesday, BZ sold its 19.8 per cent stake in Lonza via an international placement.

Ebner gained fame in the 1990s when he popularised investments in shares as a way of beating low interest rates on savings accounts.

swissinfo with agencies

Key facts

Zurich Cantonal Bank has unloaded its Vision fund stakes in ABB.
The investment funds also cut their holdings in Credit Suisse.
The funds were bought last summer from Martin Ebner's BZ Group.
The move comes days after the bank sold an 8% stake in the chemical firm, Lonza.
Zurich Cantonal Bank - Switzerland's third largest - enjoys a guarantee from local taxpayers.

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