UPDATE 2-UBP set to buy RBS's Coutts International

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ZURICH, March 26 (Reuters) - Swiss private bank UnionBancaire Privee (UBP) is set to buy Royal Bank of Scotland's international private banking arm Coutts International,a source familiar with the deal told Reuters on Thursday.

The British bank is expected to announce the deal on Friday,the source said.

Britain's Financial Times had earlier reported UBP isexpected to pay about $600 million to $800 million, citing twopeople familiar with the situation.

The source told Reuters the range reported was accurate butdeclined to give further details.

For Geneva-based UBP, this is its first major deal since itbought Lloyds Banking Group's international privatebanking arm in May 2013, and is another step in rebuilding itsasset base which almost halved through the financial crisis.

The private bank took a further hit when it was caught up inthe Madoff Ponzi scheme. In 2010, UBP and a related fundincorporated in the Cayman Island agreed a settlement of up to$500 million with the trustee recovering money for victims ofthe scheme.

UBP had 98.7 billion Swiss francs ($102.25 billion) inassets under management at the end of 2014 compared to its peakof 135 billion francs in 2007.

Coutts International had 35.6 billion francs in assets undermanagement at the end of 2013.

State-owned RBS put its international private banking arm upfor sale in August as it seeks to focus its business on loans toBritish households.

The sale had attracted about 10 suitors in the initialround, and could fetch about $1 billion, Reuters previouslyreported, and one source had said the deal could net RBS as muchas $1 billion.

RBS will retain the British operations of Coutts, which wasfounded in the 18th century and best known as banker to QueenElizabeth.

German prosecutors are looking at whether CouttsInternational helped some clients evade tax. It has also comeforward under a scheme brokered by the Swiss and U.S.governments for Swiss banks which have helped wealthy Americansevade taxes.

Geneva-based UBP was not immediately available for comment.

A spokeswoman for Coutts International declined to comment.RBS also declined to comment.

($1 = 0.9653 Swiss francs) (Reporting By Katharina Bart and Joshua Franklin; Additionalreporting by Steve Slater in London, editing by David Evans)