UBS Writes Down Positions, Predicts an Overall Loss in Third Quarter, and Reorganizes Management

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.

There are other, smaller, losses in equities proprietary trading within

an overall satisfactory result.

Mr. These securities are either AAA-rated or High Grade, and have a

short weighted average life.

Marcel Rohner, Group CEO, said: “UBS operates on the principle that

management is accountable to shareholders. UBS’s financial businesses employ more than 80,000 people

around the world. Overall, FIRC

will record negative revenues in the order of CHF 4 billion.

Our first quarterly loss in nine years is an unsatisfactory result,

especially after such a strong first half. Management action has been taken to

make certain these positions are appropriately valued and risk managed.

“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. Scoby has a BS from Wharton School and an MA from the

University of Pennsylvania, both earned with honors in a total of four

years of study and awarded in 1987.

Within the Investment Bank, Money Markets, Currencies and Commodities

(MCC) will be integrated into Fixed Income under the leadership of Andre

Esteves.

Mr. There is also a smaller position of below USD 4 billion net

exposure to sub prime securities through warehouse lines and retained

CDOs. For most

sub prime holdings, this is not possible. He is a Swiss citizen. Scoby began his career with O’Connor and

Associates in 1987 and became a Managing Director in 1993. 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.

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.

When most mortgage backed securities positions were set up there were

offsetting positions in place, designed to mitigate risk in normal

market conditions. He also chairs

the Swiss Institute for International Studies (SIAF).

William Ferri is the Head of Business Development and Logistics for

Alternative and Quantitative Investments (A&Q), an alternatives platform

within Global Asset Management.

Management changes

. I have therefore taken

decisive action to be as transparent as possible. 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.”

Mr. The one firm approach requires a

successful and profitable Investment Bank. It has offices

in 50 countries, with about 39% of its employees working in the

Americas, 34% in Switzerland, 16% in the rest of Europe and 11% in Asia

Pacific. He received a BS form Cornell University in

1988 and a JD from the University of North Carolina in 1991.

Commenting on these changes Marcel Rohner said:

Short bio Joseph Scoby

With effect from today:

Mr. Suter has been with UBS and its predecessor, Swiss Bank Corporation,

since 1974. From 1996 until the merger of SBC

and Union Bank of Switzerland in 1998 he served as regional manager of

the Zurich-Eastern Switzerland-Ticino area for the corporate and

commercial banking activities of SBC. Global Asset Management continues to perform well. Mr. He is a member of the

Global Asset Management Executive Committee and a member of the UBS

Group Managing Board.

UBS is one of the world’s leading financial

firms, serving a discerning international client base. Its business,

global in scale, is focused on growth. 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. 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 of 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

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 of Alternative and Quantitative

Investments (A&Q), Global Asset Management. 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. These positions consist overwhelmingly of

AAA-rated tranches, 80% with a weighted average life of less than three

years. All other businesses in the Investment Bank, and our

Global Wealth Management & Business Banking and Global Asset Management

businesses, continue to record good results. Between 1999 and 2005 he was Group Chief Credit Officer and

a member of the Group Managing Board. A&Q currently has over USD

60 billion in assets under management.

Joseph Scoby’s first task as a member of the Group Executive Board will

be to review and refine our risk processes. Ferri began his legal career practicing corporate law at Seward &

Kissel, from 1991 to 1995. Suter was born on 7 May 1958. Wolf also participated as a panel member at

the inaugural Wall Street forum for HIV and AIDS alongside former UN

Secretary Kofi Annan.

Mr. His long experience and knowledge of UBS, including as

Group Chief Credit Officer, make him extremely well qualified for this

position. Scoby’s

experience includes portfolio management in commodity options,

convertible arbitrage, equities, equity derivatives, corporate bonds,

merger arbitrage, quantitative equity, real estate finance, and

fundamental based equity long short funds. Clive Standish, Group Chief Financial Officer, will retire.

In addition, UBS has taken significant write downs on positions in Super

Senior AAA-rated tranches of CDOs, based on level 3 valuation models.

UBS has only limited exposure to leveraged lending with commitments of

about USD 13 billion. 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 was elected to the Board of Directors at the Annual General

Meeting of UBS in April 2005 and thereafter appointed as Executive Vice

Chairman.

ZURICH & BASEL, Switzerland–(BUSINESS WIRE)–Regulatory News:

UBS has no material exposure to conduits.

Biographies

Third quarter results

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. Ferri joined the UBS Investment Bank in 1998

as Director of Equity Compliance. He originally worked for PaineWebber

Inc. Mr. Mr. Its shares are listed on the SWX Swiss Stock Exchange,

the New York Stock Exchange (NYSE) and the Tokyo Stock Exchange (TSE).

Results for third quarter 2007 will be announced on October 30, 2007 as

planned.

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.

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.

Short bio Marco Suter

Robert Wolf is the Chairman & CEO of UBS for the Americas. We have a strong balance sheet, a strong franchise, and

leading positions in all businesses in all regions. (since 1995) where positions held included Corporate Vice President

and Associate General Counsel to the Global Equities Division, and

Deputy Director of Compliance.

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. He is married with two children.

A video containing an interview with Group CEO Marcel Rohner is

available at www.ubs.com/media as

well as at www.cantos.com.

Previously, he was General Counsel for the O’Connor

hedge fund and fund of fund businesses, and was on the O’Connor team at

its relaunch in 2000. Wolf graduated from the Wharton School at the University of

Pennsylvania with a B.S. Suter first joined the bank in 1974 as an

apprentice at SBC’s St. In fact, conditions remained

turbulent, so we will make an overall pre-tax loss at Group level for

the quarter.

The remaining relevant positions in direct sub prime RMBS have a current

net value of USD 19 billion. UBS remains a formidable

competitor in financial services and is well positioned to deliver

long-term profitable growth.”

Continued strong performance in other business areas

Working closely with other members of the management team and the key

investment professionals within A&Q, Mr. This led to substantial valuation losses, including in

securities with high credit ratings. These have also been written down appropriately,

leading to a limited loss on these positions in third quarter.

Short bio William Ferri

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.

“I am confident that, with these changes and

by properly absorbing the lessons of this quarter, we will become a

stronger bank. Ferri has overall

responsibility for managing the logistics platform and business

development effort of the group, ensuring the investment team’s

requirements are met while maintaining the appropriate control

infrastructure. A

glossary, containing definitions of some of the less-well known terms

used in today’s release, is also available at www.ubs.com/media.

UBS

UBS is present in all major financial centers worldwide. Mr. From

1995-1999 he was the Joint Head of US Equities at the Investment Bank,

with responsibility for approximately 650 employees. As an integrated firm, UBS

creates added value for clients by drawing on the combined resources and

expertise of all its businesses.

Marco Suter, Executive Vice Chairman, UBS, will leave the Board of

Directors to become Group Chief Financial Officer, and join the Group

Executive Board. Pre-tax profits for the

first nine months of 2007 will be in the order of CHF 10 billion. He served as Global Head of Fixed Income from

2002 – 2004, having joined the firm in 1994

after spending approximately 10 years at Salomon Brothers.

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

Mr. 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.

Where possible, holdings are marked at the quoted market price. Wolf is on the Undergraduate

Executive Board of the Wharton School and sits on the Athletics Board of

Overseers at the University of Pennsylvania. Prior to his appointment to his current position in 2004, Robert

Wolf was Global Head of Fixed Income for over three years.

In addition to his roles at UBS, Mr. During 2008 we will continue

to focus on improving cost and balance sheet efficiency.”

Joseph Scoby is Global Head of Alternative and Quantitative Investments

(A&Q), an alternatives platform within Global Asset Management with

approximately USD 60 billion in assets under management and 360

employees around the globe. He has also been the head of O’Connor,

a specialist hedge fund provider within A&Q, with assets under

management of approximately USD 7.5 billion. He also has extensive

experience in solving institutional and corporate client problems using

derivatives. in Economics. In Global Wealth Management &

Business Banking, all geographical regions continue to attract net new

money. In

Switzerland, UBS is the market leader in retail and commercial banking.

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. Mr. He also

serves as Global Chief Operating Officer for the Investment Bank.

Short bio Robert Wolf

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. Ferri is also responsible for managing the product

pipeline, business development, sales and client services.

Robert Wolf, Chairman and CEO, UBS Group Americas and Chief Operating

Officer Investment Bank, will additionally become President, Investment

Bank. 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.

UBS is the leading global wealth manager, a top tier investment banking

and securities firm, and one of the largest global asset managers. Valuations therefore mostly

use models with observable inputs, where possible, and level 3 valuation

models otherwise.

All other UBS businesses remain strong. He is on the Executive

Leadership Council for the Multiple Myeloma Research Foundation, on the

Board of Trustees for the Children’s Aid Society, the Board of Directors

for the partnership for NYC and on the Board of Directors for the

National Sports Museum. Gall office and later broadened his experience

with assignments in Nyon, New York, Basel, Zurich and London.

 

In third quarter 2007, expected pre-tax loss for the Group between

CHF 600 million and CHF 800 million, due mainly to write downs and

losses in the FIRC business within the Investment Bank

For the first nine months of 2007 pre-tax profits for the Group in

the order of CHF 10 billion, and expect to end the year with good

level of profits and a strong capital position

All other businesses in the Investment Bank, as well as the Global

Wealth Management & Business Banking and Global Asset Management

business groups, performing very well

Management changes:

– Investment Bank Chairman and CEO Huw Jenkins to step down. Mr. Wolf is a member of the UBS Group Managing Board and the Investment

Bank Management Committee. These events have led to the

management changes announced today. Prior to that, he held various

management positions in SBC’s investment banking operations, first as

the Continental European Head of Merchant Banking and later as the Chief

Credit Officer for EMEA

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