ZURICH, July 3 (Reuters) - U.S. bank State Street

has won a mandate to act as custodian bank for a

multibillion-dollar compensation fund of the Swiss federal

government that was previously at UBS, authorities said

on Wednesday.

The decision to hand the AHV/IV/EO fund to State Street was

made in December after a two-year tender process and the

transfer should be completed by the end of this year, according

to Compenswiss, a federal body managing the public pension fund.

The fund is worth more than 40 billion Swiss francs ($44.48

billion), and according to Swiss newspaper Tages-Anzeiger had

been with UBS for 26 years.

In a statement, Compenswiss said the custodian bank does not

manage the compensation funds, and fulfils a purely

administrative role.

It said a custodian bank appoints a sub-custodian bank in

most countries, and that in the case of State Street, that role

fell to UBS in Switzerland.

That meant the fund's Swiss assets would remain with UBS,

Compenswiss said.

UBS declined to comment on the report.

($1 = 0.8993 Swiss francs)