Strategic Issues Investment Banks - 2

10 September 2007

Straumur-Burdaras Investment Bank

Strategy Update and Key Targets

Following the recent appointment of William Fall as CEO, Straumur-Burdaras
Investment Bank (“Straumur” or the “Bank”) announces its strategic direction and
targets for 2010.

Straumur today sets out its vision of being the leading investment bank in Northern
and Central Europe. In reaching this vision, its strategy is to be the preferred
provider of a broad range of products and services to capital-raising clients
(especially SMEs) and local and international investors.

The Bank also announces some key targets in order to deliver on its strategy. The
new targets reflect the proven financial and operating strengths that Straumur has
achieved as well as a strategic focus on profitable growth and further product and
geographical diversity.

These targets take into account the three stakeholder perspectives of the Bank: its
clients, its shareholders and its people.

Key Targets:


Revenues to exceed EUR 1,250 million by 2010

Long term ROE target in excess of 20% by 2010

Balance Sheet to exceed EUR 14,000 million by 2010

Assets under Management to exceed EUR10,000 million by 2010

Long term goal for client-driven revenues to be 75% of total revenues by 2010

Introduction of consistent firm-wide compensation and performance
programme, incorporating a new share option scheme across the Bank by
2008

Diversity target of women to be more than 40% of total work force by 2008

William Fall, CEO of Straumur, commented:

“This strategic update is the result of a 90-day review process which has involved all senior management and divisional heads of the Bank. Having delivered on our
previous growth and profitability targets, our revised targets indicate our continued
focus on ensuring we deliver for all our stakeholders. We have now set out a clear
strategic direction for the Bank and look forward to continuing to deliver on our
objectives.”

For further information, please contact:
Johanna Vigdis Gudmundsdottir, Director of Corporate Communications
johanna@straumur.net
+354 840 9133
Rhiannedd Brooke, Head of international media relations
rhiannedd.brooke@straumur.net
+44 7903 419 770


About Straumur

Straumur provides extensive financial services to small and medium-sized
companies in northern and central Europe.

The Bank's integrated approach provides our clients with a unique value proposition
tailored to enhancing the growth of their businesses. Our goal is to become the
leading northern and central European investment bank, balancing strong profitable
growth with geographical and operational diversity.

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1 October, 2007

UBS writes down positions, predicts an overall loss in third quarter, and reorganizes management

Following a write down of positions in fixed income, rates and currencies (FIRC), mainly related to deteriorating conditions in the US sub prime residential mortgage market, UBS is likely to record an overall Group pre-tax loss of between CHF 600 million and CHF 800 million for third quarter, ended September 30. Pre-tax profits for the first nine months of 2007 will be in the order of CHF 10 billion.

Marcel Rohner, Group CEO, will reorganize senior management, take over as Chairman and CEO of the Investment Bank, and accelerate structural improvements to the firm.


http://www.ibb.ubs.com/News/oct07.shtml

UBS News October 1, 2007

Management changes:

Investment Bank Chairman and CEO Huw Jenkins to step down. Group CFO Clive Standish to retire

Marco Suter, Executive Vice Chairman, UBS, to become Group CFO

Walter Stuerzinger, Group Chief Risk Officer (GCRO), to become Chief Operating Officer (COO), Corporate Center

Joseph Scoby, Global Head Alternative & Quantitative Investments, UBS Global Asset Management, to become GCRO, UBS

Investment Bank changes:

Robert Wolf, COO, Investment Bank, additionally appointed President, Investment Bank

Money Markets, Currencies and Commodities (MCC) to be integrated into Fixed Income

Initiation of cost reductions in Investment Bank

Commenting on these decisions, Marcel Rohner, Group CEO said:

“On August 14, I said that if turbulent conditions prevail throughout the quarter, we will probably see a very weak trading result in the Investment Bank, offset by predictable earnings from wealth and asset management. In fact, conditions remained turbulent, so we will make an overall pre-tax loss at Group level for the quarter.

Our first quarterly loss in nine years is an unsatisfactory result, especially after such a strong first half. I have therefore taken decisive action to be as transparent as possible. I have also made appropriate senior management changes, and will accelerate already-planned changes to the firm. Following these actions, UBS is in a strong position to continue to grow its client businesses.

Despite the unsatisfactory results for the third quarter, we still expect to end the year with a good level of profits and in a strong capital position. All other businesses in the Investment Bank, and our Global Wealth Management & Business Banking and Global Asset Management businesses, continue to record good results. UBS remains a formidable competitor in financial services and is well positioned to deliver long-term profitable growth.“

Third quarter results

In the third quarter, UBS will recognize substantial losses in FIRC within the Investment Bank, mainly on its holdings of securities related to the US sub prime residential mortgage (RMBS) market. Overall, FIRC will record negative revenues in the order of CHF 4 billion.

These write downs are mainly of (a) legacy positions of the now closed Dillon Read Capital Management subsidiary and (b) positions entered into as part of the Investment Bank’s mortgage backed securities business.

There are other, smaller, losses in equities proprietary trading within an overall satisfactory result.

UBS has only limited exposure to leveraged lending with commitments of about USD 13 billion. These have also been written down appropriately, leading to a limited loss on these positions in third quarter.

UBS has no material exposure to conduits.

When most mortgage backed securities positions were set up there were offsetting positions in place, designed to mitigate risk in normal market conditions. However, the deterioration in the US sub prime residential mortgage backed securities market, especially in August, was more sudden and more severe than in recent history, and markets became illiquid. This led to substantial valuation losses, including in securities with high credit ratings. Management action has been taken to make certain these positions are appropriately valued and risk managed.

Where possible, holdings are marked at the quoted market price. For most sub prime holdings, this is not possible. Valuations therefore mostly use models with observable inputs, where possible, and level 3 valuation models otherwise.

The marks take a cautious view of future developments in the US mortgage market and UBS is content to hold these securities at this level of valuation.

The remaining relevant positions in direct sub prime RMBS have a current net value of USD 19 billion. These positions consist overwhelmingly of AAA-rated tranches, 80% with a weighted average life of less than three years. There is also a smaller position of below USD 4 billion net exposure to sub prime securities through warehouse lines and retained CDOs. These securities are either AAA-rated or High Grade, and have a short weighted average life.

In addition, UBS has taken significant write downs on positions in Super Senior AAA-rated tranches of CDOs, based on level 3 valuation models.

Management changes

With effect from today:

Marcel Rohner, in addition to his duties as Group CEO, will for the foreseeable future take over the role of Chairman and CEO of the Investment Bank. Huw Jenkins, Chairman and CEO of the Investment Bank, will step down from his position and become a senior advisor to Marcel Rohner.

Marco Suter, Executive Vice Chairman, UBS, will leave the Board of Directors to become Group Chief Financial Officer, and join the Group Executive Board. His long experience and knowledge of UBS, including as Group Chief Credit Officer, make him extremely well qualified for this position. Clive Standish, Group Chief Financial Officer, will retire.

Walter Stuerzinger, Group Chief Risk Officer (GCRO), will become Chief Operating Officer, Corporate Center, and hand over the GCRO position to Joseph Scoby, currently Global Head Alternative and Quantitative Investments (A&Q), Global Asset Management. A&Q currently has over USD 60 billion in assets under management. Joseph Scoby's record both as head of A&Q and previously as Joint Head of US Equities within the Investment Bank makes him an ideal successor to Walter Stuerzinger. Joseph Scoby's first task as a member of the Group Executive Board will be to review and refine our risk processes. William Ferri, currently Head of Business Development and Logistics for A&Q, will be appointed as the new Global Head of Alternative and Quantitative Investments.

Robert Wolf, Chairman and CEO, UBS Group Americas and Chief Operating Officer Investment Bank, will additionally become President, Investment Bank. Prior to his appointment to his current position in 2004, Robert Wolf was Global Head of Fixed Income for over three years.

Within the Investment Bank, Money Markets, Currencies and Commodities (MCC) will be integrated into Fixed Income under the leadership of Andre Esteves.

As a result of the planned changes within the Investment Bank, overall staff numbers will fall by about 1,500 by the end of this year.

Marcel Rohner, Group CEO, said: "UBS operates on the principle that management is accountable to shareholders. These events have led to the management changes announced today. The one firm approach requires a successful and profitable Investment Bank. During 2008 we will continue to focus on improving cost and balance sheet efficiency."

Continued strong performance in other business areas

All other UBS businesses remain strong. In Global Wealth Management & Business Banking, all geographical regions continue to attract net new money. Global Asset Management continues to perform well. Within the Investment Bank, IBD has gained market share, the capital markets business remains strong, and equities revenues – though a bit weaker this quarter than a year ago, and in the context of extremely difficult conditions – remain healthy.

While the third quarter loss means that pre tax results for the full year 2007 will most probably be below those for 2006, total earnings should still be at a high level and UBS will finish the year in a strong capital position.

Commenting on these changes Marcel Rohner said:

“I am confident that, with these changes and by properly absorbing the lessons of this quarter, we will become a stronger bank. We have a strong balance sheet, a strong franchise, and leading positions in all businesses in all regions. We have thousands of talented people throughout the organisation who, by working together, will deliver further value to our clients and additional growth to our shareholders.”

http://www.ubs.com/1/e/about/news.html?newsId=127136

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