UBS has embarked on its largest acquisition since it bought PaineWebber more than five years ago, striking a deal to acquire Brazilian investment bank and asset manager Banco Pactual for $2.5bn (€2bn).

UBS, which was advised by its investment banking arm, will pay $1bn up front and up to a further $1.6bn in five years to acquire Banco Pactual. The Brazilian bank had been in talks last year about a joint venture with Goldman Sachs until negotiations came to a halt in November.