RPT-UPDATE 1- UBS considers Paine Webber sale in review -sources

(Repeats with no changes to text of story; adds additional reporting credit) (Adds valuation estimate)

By John O'Donnell

LONDON, June 27 (Reuters) - Beleaguered Swiss bank UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) is considering the sale of Paine Webber, the heart of its U.S. wealth management business, according to sources with direct knowledge of the matter.

UBS is under pressure from the Swiss financial watchdog and from one of its top shareholders, Olivant, to overhaul its business after more than $37 billion in writedowns during the credit turmoil.

The bank's management, led by Chief Executive Marcel Rohner, is also grappling with the U.S. trial of a former employee for helping a billionaire client hide $200 million.

Considering a sale of Paine Webber, the broker it bought nearly eight years ago for about $10 billion as a bridgehead into North America, is part of a review which is due to be concluded by October.

"If you are going to be a global wealth manager, then the U.S. is a market where you have to be present. But it is also the case that you have to make it more profitable. (A sale) is always an option," one of the sources told Reuters.

Another source said Paine Webber was "one of the assets that would be of serious interest to other people. If you were to merge Paine Webber with another brokerage, for example, there would be huge cost synergies," he said.

When Wachovia (WB.N: Quote, Profile, Research, Stock Buzz) bought broker A.G. Edwards for $6.4 billion last year, it paid roughly $1 million per broker. A similar valuation for Paine Webber would value it at more than $8 billion.