UBS AG said Monday it will sell Banco Pactual back to one of the Brazilian investment bank's original owners at a loss, a move that will lift the Swiss bank's capital.

UBS said Pactual will be sold for $2.5 billion to BTG Investments, a firm run by Andre Esteves, the former Pactual partner who briefly ran UBS' troubled fixed-income business before exiting the Swiss bank last summer.