UPDATE 1-SNB says UBS fund to be domiciled in Switzerland

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ZURICH, Nov 26 (Reuters) - A special purpose vehicle set up to absorb up to $60 billion of UBS's illiquid assets will be domiciled in Switzerland, not in the Cayman Islands as originally planned, the Swiss National Bank said on Wednesday.

Swiss media had criticised the government and the central bank for initially deciding to base the fund in the Caribbean offshore centre and not at home.

The central bank also said UBS (UBSN.VX) would complete the transfer of its problematic assets, mostly linked to the U.S. subprime market, by March 2009.

The special vehicle is part of a Swiss government-sponsored rescue package for UBS announced on Oct. 16 which also includes a 6.0 billion Swiss franc ($5 billion) cash injection by the state. (Reporting by Lisa Jucca; Editing by David Holmes)