Sunday, November 11, 2007

UBS Investment Bank

January 2007

Global Wealth Management &
Business Banking

Marcel Rohner | Chairman and CEO
Global Wealth Management &
Business Banking

Our vision
As the global leader in wealth management, we are determined to become the provider of choice for private clients worldwide. The scale and significance of our wealth management business in UBS ensures the highest levels of long-term
commitment to the interests of our private clients. We will provide our clients with a consistent positive experience at every point of contact with our group, anywhere in the world. This is founded on the high quality of our advisory process
through which we first take the time to listen to our clients, then develop and implement solutions for and with them, and finally monitor and learn from the results. At the center of this process is the client advisor. Careful selection, development and support of our client advisors is instrumental in providing a positive experience to our clients, thus fostering long-term personal relationships with our group.

As the leading bank in Switzerland, we grow by providing a complete range of top quality banking, securities and operational services, and multi-channel access for individual and corporate clients.

Clients and markets
Wealth management is a fast-growing market. According to
an internal UBS estimate, the global growth rate of liquid assets
held by wealthy individuals is expected to grow by 5.8%
annually between 2005 and 2009.
The wealth management market is very fragmented and
UBS’s global market share, including the US wealth management
business, is estimated at 3.5%.
A clearly structured advisory process helps client advisors
add value at each step and provides our clients with a consistent
and comprehensive experience. Our approach consists of
four clear, mutually enhancing steps, which are shown in the
UBS Client Experience diagram on the next page.
We offer sophisticated products and services specifically
designed to address the needs of:
– core affluent clients with investable assets of CHF 250,000
to CHF 1–2 million

– high net worth clients with investable assets of CHF 1 –2
million to CHF 50 million
– ultra-high net worth clients with investable assets of more
than CHF 50 million.
We also provide financial intermediaries, both inside and
outside Switzerland, with UBS’s wealth management solutions,
products and services.
Growth initiatives
Wealth management in Asia Pacific
One of the main challenges for the wealth management
business in the next few years will be to enhance its already
strong business footprint in the Asia Pacific region. The region
is very heterogeneous and, taken together, accounts for
more than half the world’s population – while only contributing
a quarter of total global Gross Domestic Product
Our wealth management business has a presence in six
domestic Asia Pacific markets and plans to expand its network
of branches and offices into further high-potential locations.
By cooperating with the other Business Groups in the region, wealth management can draw on a wide array of
products and services already on offer and share infrastructure,
delivering significant cost savings.
In March 2006, we opened a wealth management business
office (sub-branch) in Osaka, an important step in further
expanding our presence in Japan.
Given the strong demand for wealth management services
in the region, UBS decided in September 2006 to create
a regional training center for employees in Singapore,
which is scheduled to open in 2007. Clients will also be able
to take courses at the facility.

Our extensive wealth management branch network comprises
4,742 client advisors, 107 offices in Switzerland and
77 offices worldwide.

Clients and strategy
Changing legislation and basic market forces have steadily
eroded the long entrenched boundaries separating trust,
banking, and brokerage in the US, creating an opportunity
to deliver a seamless set of services to affluent and wealthy
private clients. With 38% of the world’s wealth located in
the US, the growth prospects are substantial.
We believe we are in a position to capture this strategic
opportunity with a unique approach – within the current
regulatory framework and the prevailing competitive landscape.
Following our successful shift into the firm’s global
wealth management business, we have now embarked on a
long-term strategy that focuses on the delivery of a client
experience that sets us apart from competitors.
The strategy comprises a number of organic growth initiatives
and infrastructure enhancements aimed at fundamentally
improving the way financial advisors approach
and service individual clients. It will also allow for targeted
strategic investments while making more use of the global
wealth management support platform, bringing scale efficiencies.
We will also closely look at any suitable acquisition
opportunity that potentially complements our organic
growth drive.
Internally, asset-gathering efforts benefit from our established
strategy of treating client feedback systematically and
seriously. Extensive proprietary survey data sampled annually
is used to create an index for every individual financial
advisor. The index is the base by which each financial advi-sor gets specific feedback in terms of the four consultative
steps of UBS’s client experience – understanding the client’s
needs, proposing solutions, agreeing and implementing
them with the client, and, finally, reviewing performance on
a continuous basis. This will help to generate an accurate,
overall picture of what clients think about the advice they
Our business has also aligned its strategy with regard to
advisor compensation. Specifically, financial advisor compensation
now incorporates net new money growth as a key
At the same time, there is a large-scale effort to collaborate
more closely with UBS’s other businesses. With the help
of the global wealth and asset management businesses, and
by pursuing an open architecture framework, we will enhance
the number of structured products and hedge funds
we offer in the US – and expand in-house research capabilities
for private clients.
The other strategic investments focus on enhancing internal
infrastructure and technology – while evaluating the opportunity
for potential acquisitions, such as the Piper Jaffray
and McDonald Investments branch networks. Such acquisitions
enable us to expand our financial advisor network
while leveraging our existing product platform, gaining access and increased representation in important client markets.
As always, potential acquisitions must meet UBS’s financial
and cultural criteria.
We are also expanding our ability to address the specific
needs of ultra-high net worth clients. We opened the first of
a series of dedicated offices for such clients in New York
City in July 2006. There, specialized financial advisors who
have completed a specific accreditation program giving
them the skill and knowledge to deal with wealthy clients,
work together with private bankers, trust officers and multidisciplinary
product experts. We believe the pilot office has
a particularly promising future as we have a very high share
of the market in New York, and we are taking advantage of
the fact that no other major firm delivers trust, banking and
brokerage comprehensively and effectively from a single

Global Asset Management

John A. Fraser | Chairman and CEO
Global Asset Management

Our vision
Our global asset management business provides investment management solutions directly to our private, institutional and corporate clients and through financial intermediaries. We aim to deliver superior investment performance to clients
through the management of their investments, across and within all major asset classes and through a number of investment approaches. The strength of our global asset management business lies in its globally integrated investment organization
and processes, as well as in the quality of its client service.

Strategic opportunities

The industry in which we operate is becoming more complex
and client demands are changing. Key industry trends vary
for each location, capability and client segment. Among major
trends, we see a continuing shift in the pension industry
from defined benefit to defined contribution plans – although
the speed of the shift varies in each country. Access
to wholesale distribution channels is increasingly becoming
important. As baby boomers move into retirement, the focus
is shifting from wealth accumulation to income generation
and capital protection, providing attractive new opportunities.
Investors are increasingly looking to standardize their
core or central portfolios and adding actively managed areas
or satellites, with a particular focus on alternatives and real
estate. We also remain optimistic about the growth potential
in emerging markets.
We intend to further diversify our investment capabilities,
expand our alternative and real estate investment offering,
and focus on high value-adding products. Highly innovative
products like dynamic alpha and absolute return will continue
to drive asset and net new money growth. Investments
in our global real estate business in Europe, infrastructure
and growth equities capability are examples of further business
In parallel to this, we aim to strengthen our distribution
both through our own channels as well as through third parties.
The acquisition of Banco Pactual in Brazil by UBS and
our recently announced acquisition of Standard Chartered’s mutual funds management business in India are key elements
in our growth strategy to expand in emerging markets.
We also see growth potential in our joint venture in
China (UBS SDIC) and are seeking to build a discretionary asset
management business in the restructured Beijing Securities.
Opportunities in global real estate and infrastructure are
being considered. We are examining options for entry into
other emerging markets such as South Korea in order to
gain access to these long-term growth opportunities.
We recognize the crucial importance of a robust risk and
compliance culture to the sustainability of our business.
Managing operational risk continues to be a key focus. We
also remain committed to the effective execution of our
strategy, ensuring that our initiatives deliver profit growth.

Investment banking

Huw Jenkins | Chairman and CEO
Investment Bank

Strategic opportunities

The financial industry will remain very competitive but the
strength of the markets and the level of client activity continue
to offer attractive investment opportunities. The Investment
Bank’s growth agenda is derived from the needs of
our clients and is based on four pillars: focusing on high
growth client segments, capturing new business growth
through product innovation, building a scalable and convergent
infrastructure and developing employees.

We have already made significant progress in our plan to
expand our offering to high growth clients such as hedge
funds and financial sponsors as well as private clients, who
are increasingly seeking yield from alternative asset classes.
Specifically, we have continued to build our prime brokerage
platform for hedge fund clients. To better meet financial
sponsor needs, we have re-engineered our leveraged finance
processes and adapted our risk levels accordingly. We have
also reviewed our structured derivatives businesses and
grown our range of commodities products which provide
private clients with exposure to these rapidly growing asset
classes, through both our own wealth management business
and other private banks.

In capturing new business growth through product innovation,
fixed income continues to be an area of major focus.
We are expanding our commodities business globally and
have already seen meaningful growth in revenues. We have
established a securitized product group to take advantage of
this growing asset class. Our investment grade structured
credit and trading business has been rebuilt under new management.

In emerging markets, we are positioned to take part in
future growth with the acquisition of Banco Pactual in Brazil,
which will be a platform for expansion in Latin America, and
we have acquired certain assets, licenses, and staff from Beijing
Securities in China to be incorporated in UBS Securities.

We have also received a banking license from the Central
Bank in Russia and have been granted a license in Dubai to
service both international and domestic clients.

In Turkey, we
became a member of the Istanbul Stock Exchange through
an acquisition of a small broker dealer.

As our businesses in securities areas continue to commoditize,
we are building a scalable and convergent infrastructure.

To maintain cost leadership, we are replacing and consolidating
legacy systems, enabling us to drive down the incremental
cost of trades. This will allow us to expand capacity at low
marginal cost, innovate more complex products and services
and put in place the backbone for further growth.

We will keep investing in attracting qualified employees,
giving them the support to realize their potential in an inclusive
environment. We continue to demonstrate our ability to
manage and retain staff, including the successful integration
of employees in acquisitions, and through development programs
such as those for junior high-potential professionals.

By working to deliver all of UBS’s services and products to
our clients, the Investment Bank is well positioned to take
full advantage of market trends and generate sustainable
levels of growt

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