Zurich - Peter Kurer, chairman of embattled Swiss banking giant UBS, said Wednesday he would not seek reelection and the board of directors would nominate Kaspar Villiger to replace him.

Villiger was a Swiss finance minister for some eight years from the late 1990s.

Kurer is stepping down just a week after Oscar Gruebel, a former executive at rival Credit Suisse, was appointed its Chief Executive Officer, following the departure of Marcel Rohner.

"I now think it is time to complete this transition and leave the office at the end of my one-year term," said Kurer.

UBS, the largest Swiss bank, has been hardest hit in Europe by the financial crisis and has taken a massive writedown on investments in bad assets, about 40 billion dollars of which were transferred late last year to a troubled asset fund as part of a bailout deal reached with the government and central bank.

"No one could have reasonably foreseen the extent and speed of deterioration of market conditions affecting the financial services industry. The impact on UBS has been significant," Sergio Marchionne, Vice Chairman of the bank, said in a statement.

Villiger said he accepted the nomination "out of a sense of service to this country and its people." (dpa)