Our Businesses in 2011

Review 2011

Our businesses in 2011

Contents

2 UBS 150 years: Looking back, looking forward

4 A trip through three centuries

12 Financial performance 2011

13 Our strategy

22 Wealth Management

27 Retail & Corporate

30 Wealth Management Americas

34 Global Asset Management

40 Investment Bank

45 Corporate Center

48 Our Board of Directors

50 Our Group Executive Board

52 Corporate responsibility

54 Information sources

This review is provided as a convenience to our investors, clients and other stakeholders who would like a brief overview of our business, strategy and 2011 performance. Please refer to UBS’s Annual Report 2011 for additional information. Details about how to obtain the Annual Report and other publicly available information about UBS, including the Annual Report on Form 20-F for the year ended 31 December 2011, are set out on page 54 of this review. The information contained in this review is not to be construed as a solicitation of an offer to buy or sell any securities or other financial instruments in Switzerland, the United States or any other jurisdiction. No investment decision relating to securities of or relating to UBS AG or its affiliates should be made on the basis of this document. UBS 150 years: Looking back, looking forward

Dear readers,

UBS has made progress in what has been a difficult and A successful organization has the strength to adapt and turbulent year. Throughout 2011, uncertain markets, low improve continuously. Throughout its history, UBS has client activity and regulatory changes weighed heavily proven that it possesses this quality. With our agility in on our industry’s results. In addition, we experienced losses bringing about change, and with our firm and solid roots, related to unauthorized trading in our Investment Bank. time and again we have managed to emerge even stronger. Now that our industry is transforming, once again our Despite these challenging conditions, we achieved a net ability to prudently yet thoroughly renew ourselves will profit attributable to shareholders of CHF 4.2 billion and be tested. further strengthened our position as the best-capitalized bank in our peer group. Our funding and liquidity positions How will we go about this? Change and stability – these are remained strong. Our asset-gathering businesses attracted themes that will also shape our future course. Our industry healthy inflows of net new money. All of this is testament to is challenged, and rightly so. The only way to respond to what we value most: the trust that our clients place in our this challenge is to change – change our strategy and our bank, and in our people. culture – and by doing so preserve stability. Our future strategic course has now been set: our wealth management The financial services industry is going through a paradigm businesses globally and our universal bank in Switzerland shift and, as we proudly look back at 150 years of our history, are central to our strategy. In order to serve the needs of it is time to build on our strong foundations to ensure our core wealth management clients, our Global Asset continued success in the future. Over the last decades, Management business and our Investment Bank must each two factors have been instrumental in shaping our bank: be strong and successful in meeting the needs of their change on the one hand, and stability on the other. clients. Going forward, our Investment Bank will be less complex and less capital intensive. It will focus firmly on We have grown from a small regional lender in 1862 to become its corporate, institutional, sovereign, ultra high net worth, a global financial institution today serving a broad array of wealth management and other clients and will be an private and institutional clients across the world. Historically, our important partner to them. Only a competitive and success- predecessor institutions, Union Bank of Switzerland and Swiss ful Investment Bank will enable us to take our wealth Bank Corporation, were commercial banks operating mainly in management businesses to the next level. Switzerland. They shared a similar vision: to become a world leader in wealth management, a successful global investment However, given the requirement to build up more capital bank, and a top-tier global asset manager, while remaining a in the coming years, further steps will be needed to leading commercial and retail bank in our home market. Union maximize efficiency and create value. This means we may Bank of Switzerland pursued these goals through a strategy of have to change even more profoundly. Succeeding in this organic growth, while Swiss Bank Corporation grew through process will only be possible if we have a more consistent a combination of partnerships and acquisitions. Their merger in and stronger culture across the firm. This culture will be 1998 created the world-class institution we know today. driven by our commitment to clients, by our determination to achieve excellence in everything we do, and by our During the last 150 years there have been numerous ups and constant efforts to deliver sustainable performance. downs, many achievements as well as occasional setbacks, some of the more serious ones in recent times.

2 Sergio P. Ermotti Group Chief Executive Officer and Kaspar Villiger Chairman of the Board of Directors

We should also embody a “We will not rest” attitude, always For our staff, we want to be their first-choice employer, searching for better ways to do our work and serve our attracting the best talents who put client needs first, exhibit clients’ needs. At the same time, we have to be disciplined a proactive attitude and always act in the best long-term and accountable for what we do. More than ever before, interest of the firm. we need to remember that the purpose of banks must be to enable clients to manage their financial needs. Our private At UBS, we are well positioned to achieve all of this. Much is clients seek investment advice in volatile markets to protect still a vision, and as we move forward, we will measure and increase their wealth. Institutional and corporate clients our progress objectively. Our most important benchmark will expect us to manage their risk exposures and help finance be your trust and satisfaction. their businesses. Sovereign clients are under increased pressure to manage scarce resources in the most effective way. Only if we live up to these tasks and expectations, will we be of real value to our clients and the economy. So, as we change, what should we become? Yours sincerely,

For our clients, we want to be their first-choice service provider, offering them broad expertise and knowledge, flawless service and execution, and lasting relationships.

For our shareholders, we want to be their first-choice investment. We will strive to be transparent and consistent, demonstrate financial strength, and deliver stable, sustainable Kaspar Villiger Sergio P. Ermotti returns. Chairman of the Group Chief Executive Officer Board of Directors

3 A trip through three centuries

As UBS turns 150, we look back at the events that led major predecessor bank, Swiss Bank Corporation (SBC), to the making of a global financial services firm. coming into being a decade later through the initiative of six Basel private banks. On June 25, 1862, 13 honorable Swiss merchants, politicians and industrialists founded the Bank in Winterthur with The history of US brokerage PaineWebber, acquired by UBS in starting capital of five million francs. Private banks could no 2000, extends back nearly as far, to 1880 – in fact 1879 via longer meet the demands of rapidly expanding Swiss merger – and Boston, MA, while S. G. Warburg, the central industry, so new commercial banks arose to fill the need. UBS pillar upon which today’s Investment Bank was built, com- traces its roots to this era of Swiss growth, with its other menced operations in London in 1946.

William A. Paine and Wallace G. Webber open their offices in Boston, becoming Paine, Webber & Co. a year later.

1880

The Bank in Winterthur marks the starting point of UBS history. Painted by Jean-Christophe de Ziegler 1862 or Jakob B. Ziegler-Sulzberger, 1867. The Bank in Winterthur commences business operations in Winterthur.

4 Swiss Bank Corporation is The headquarters of formed by a merger of Eidgenössische Bank Zurich Bankverein, Basel The Bank in Winterthur merges in Berne; photo Bankverein and Swiss with Toggenburger Bank to form taken around 1885. Unionbank in St. Gallen, Union Bank of Switzerland. along with a takeover Rudolf Ernst is the organization’s of Basler Depositenbank. first chairman.

1897 1912

1945

Acquisition of Eidgenössische Bank by Union Bank of Switzerland and Basler Handelsbank by SBC.

5 The Bank in Winterthur thrived from the outset and by 1912 Switzerland, emerging relatively unscathed from the Depres- had merged with a St. Gallen savings and mortgage bank to sion and World War II, developed into the world’s third most create the Union Bank of Switzerland, which soon afterwards significant financial center, after New York and London. constructed its new Zurich main offices on Bahnhofstrasse, Union Bank and SBC acquired competitors and opened the Wall Street of Switzerland. For its part, SBC was busy additional offices around the world. In 1967, Union Bank co-financing the building of the Gotthard railway and Basel’s became Switzerland’s largest bank, and one of the strongest ascent as Switzerland’s center for the chemical industry. in Europe.

The first half of the 20th century witnessed rapid economic In London, the upstart S. G. Warburg and Co. bought expansion in industrialized nations and severe setbacks Seligman Bros. in 1957 and grew into a leading City caused by two world wars. Though World War I ruined many merchant bank over the next decade. Across the Atlantic, European banks, it did not stop the rise of Union Bank and PaineWebber moved its headquarters from Boston to New SBC, which benefited from international clients depositing York, went public in 1974, and made a series of acquisitions. their money in neutral, politically stable Switzerland. By 1980 it had 161 branch offices in 42 states, as well as six offices in Asia and Europe. In the US, Paine, Webber & Co., which had purchased a seat on the New York Stock Exchange in 1890, entered the The 1980s and ’90s saw financial market deregulation and investment banking business during the economic boom of globalization. Union Bank and SBC continued expanding their the 1920s. The Wall Street Crash of 1929 and the Great international wealth management businesses – offshore and Depression that followed hit the firm hard, but it survived to onshore – and moved into investment banking. S. G. Warburg merge with another Boston-based brokerage in 1942. The emerged from London’s Big Bang reforms as the preeminent new Paine, Webber, Jackson & Curtis operated 23 branch UK-based M&A advisor, equity underwriter, and research offices in the US. house. In 1995 SBC bought the London firm and created the investment bank SBC Warburg, which two years later was renamed Warburg Dillon Read after the purchase of US investment bank Dillon, Read & Co.

Union Bank launches the first automated cash dispenser in Continental Europe.

1967

1963

S. G. Warburg, under the leadership of Siegmund Warburg, plays a pioneering role in the launch of the Eurobond market.

6 The SBC key symbol and Union Bank of Switzerland logo are merged in today’s UBS logo.

1995 1998

In the mid-1990s, SBC acquired the invest- Union Bank of ment banks S. G. Warburg Plc. and Dillon, Switzerland Read & Co., which were integrated into merges with SBC. the b usiness division SBC Warburg Dillon Read.

7 Then in 1998 came the major event leading to today’s UBS. 2009, UBS made considerable write-downs and received On June 29, 1998, Union Bank and SBC merged to form UBS support from the Swiss National Bank and the Swiss Confed- AG. Two years later the new Swiss giant acquired PaineWeb- eration. In the US, the bank was sued for cross-border ber, which itself had snapped up Kidder, Peabody & Co. and business violations but reached a conclusive settlement with become the fourth largest private client firm in the US. US authorities.

The PaineWebber purchase increased the number of UBS New management responded to the setbacks by reducing employees to 71,076 and the firm’s equity capital to nearly 45 debt and increasing the bank’s capital strength to meet billion francs. It also made UBS the world’s largest asset enhanced regulatory requirements, and adopted other manager. measures to equip itself for the post-crisis market environment. Despite the challenges it faces, UBS is confident of its UBS grew steadily at the start of the new millennium, prospects, even with further changes looming for the enjoying the most successful year in its history in 2006. financial sector. However, a year later the global financial crisis erupted. Between the third quarter of 2007 and the fourth quarter of

UBS receives UBS completes its trading floor government funds in Stamford, Connecticut, the after taking losses largest column-free securities and write-downs trading floor in the world. in the subprime crisis.

2002 2008 2011

2000 At its Investor Day in November, UBS acquires US UBS redefines its broker PaineWebber. strategy and sets the course for future success.

8 2012

UBS celebrates its 150th anniversary.

Our financial performance and strategy

11 Financial performance 2011

For the financial year 2011 we report UBS key figures a net profit attributable to UBS shareholders of CHF 4.2 billion and As of or for the year ended diluted earnings per share of CHF CHF million, except where indicated 31.12.11 31.12.10 31.12.09 1.08. During the year we strengthened our industry-leading capital Group results position, with our Basel II tier 1 Operating income 27,788 31,994 22,601 capital ratio increasing significantly Operating expenses 22,439 24,539 25,162 to 19.6% from 17.8%, and our Basel Operating profit from continuing operations before tax 5,350 7,455 (2,561) Net profit attributable to UBS shareholders 4,159 7,534 (2,736) 2.5 tier 1 capital ratio rising to Diluted earnings per share (CHF) 1 1.08 1.96 (0.75) 15.9%. We attracted significant net new money inflows despite the Key performance indicators, balance sheet and capital management 2 challenging operating environment, Performance recording combined net inflows in Return on equity (RoE) (%) 8.5 16.7 (7.8) our wealth- and asset- gathering Return on risk-weighted assets, Basel II, gross (%) 13.7 15.5 9.9 businesses of almost CHF 40 billion. Return on assets, gross (%) 2.1 2.3 1.5 We have also made progress in Growth reducing both risk-weighted assets Net profit growth (%) 3 (44.8) N/A N/A and costs and, taking into account Net new money (CHF billion) 4 42.4 (14.3) (147.3) the challenges we faced, the Efficiency performance of our businesses gives Cost / income ratio (%) 80.5 76.5 103.0 us great confidence in the firm’s Capital strength future. We are therefore proposing BIS tier 1 ratio, Basel 2.5 (%) 5 15.9 to pay a dividend8 to our sharehold- BIS tier 1 ratio, Basel II (%) 5 19.6 17.8 15.4 ers for the financial year 2011 of FINMA leverage ratio (%) 6 5.4 4.4 3.9 CHF 0.10 per share, subject to Balance sheet and capital management shareholder approval at our Annual Total assets 1,419,162 1,317,247 1,340,538 General Meeting of Shareholders Equity attributable to UBS shareholders 53,447 46,820 41,013 (AGM) in May. Total book value per share (CHF) 6 14.26 12.35 11.65 Tangible book value per share (CHF) 6 11.68 9.76 8.52 BIS total ratio, Basel 2.5 (%) 5 17.2 BIS total ratio, Basel II (%) 5 21.6 20.4 19.8 BIS risk-weighted assets, Basel 2.5 5 240,962 BIS risk-weighted assets, Basel II 5 198,494 198,875 206,525 The 2011 results and the balance sheet in BIS tier 1 capital, Basel 2.5 5 38,370 the Annual Report 2011 differ from those BIS tier 1 capital, Basel II 5 38,980 35,323 31,798 presented in our fourth quarter 2011 report issued on 7 February 2012. The net impact of adjustments made subsequent to the Additional information publication of the unaudited fourth quarter Invested assets (CHF billion) 2,167 2,152 2,233 2011 financial report on net profit attribut- Personnel (full-time equivalents) 64,820 64,617 65,233 able to UBS shareholders was a loss of 7 CHF 74 million, which decreased basic and Market capitalization 42,843 58,803 57,108 diluted earnings per share by CHF 0.02. 1 Refer to “Note 8 Earnings per share (EPS) and shares outstanding” in the “Financial information” section of the Annual Report 2011 for ➔ more information. 2 For the definitions of our key performance indicators, refer to the “Measurement of performance” section of the An- ➔ Refer to the “Certain items affecting nual Report 2011. 3 Not meaningful and not included if either the reporting period or the comparison period is a loss period. 4 Excludes our results in 2011” sidebar in the interest and dividend income. 5 Capital management data as of 31 December 2011 is disclosed in accordance with the Basel 2.5 frame- “Group results” section and to “Note work. Comparative data under the new framework is not available for 31 December 2010 and 31 December 2009. The comparative infor- 32 Events after the reporting period” mation under the Basel II framework is therefore provided. Refer to the “Capital management” section of the Annual Report 2011 for more information. 6 Refer to the “Capital management” section of the Annual Report 2011 for more information. 7 Refer to the appendix in the “Financial information” section “UBS registered shares” of the Annual Report 2011 for more information. 8 The term “dividend” is used throughout the Annual Report of the Annual Report 2011 for more 2011, notwithstanding that for Swiss tax purposes the distribution is characterized as a payment from capital contribution reserves. Refer information to the “Statement of appropriation of retained earnings” of the Parent Bank in the “Financial information” section of the Annual Report 2011 for more information.

12 Our strategy

UBS is a client-focused financial services firm that aims to provide superior financial advice and solutions to clients. Our strategy is shaped by our commitment to deliver attractive and sustainable risk-adjusted returns and takes into account the changing business environment and more stringent capital regulatory requirements. We believe the successful execution of this strategy will enable us to implement a progressive capital returns policy starting with the dividend of CHF 0.10 per share we propose to pay to our shareholders for the financial year 2011.

At our Investor Day in November 2011, Since the last financial crisis, we have we provided a comprehensive update on turned around the performance of our strategic plans, which center on our Wealth Management and Wealth preeminent wealth management Management Americas. When adjusted businesses and our universal bank in for restructuring costs, the gain made on Switzerland supported by our Global the sale of our strategic investment Asset Management business and the portfolio in 2011 and a provision related Investment Bank. Our strategy builds on to an arbitration matter in 2010, our the strengths of all of these businesses, wealth management businesses and at the same time targets a signifi- increased their 2011 aggregate profits cant reduction in risk-weighted assets by 19% to CHF 2.9 billion despite and improvements to our strong capital challenging market conditions. This position. At the end of 2011, our Basel progress also led to increased confidence 2.5 capital ratio was one of the highest amongst our clients and we recorded in the industry at 15.9%, and our combined net new money of CHF 35.6 Basel III pro forma common equity ratio, billion compared with net outflows of calculated on the phased-in basis that CHF 18.2 billion in 2010. Combined will become applicable as of January invested assets increased by CHF 2 2013, stood at an estimated 10.8%1. We billion to CHF 1,459 billion. Improved will build on this strength as well as on profitability and our ability to attract our stable funding and sound liquidity new assets have enabled us both to positions by capitalizing on the comple- retain and recruit high-quality advisors, mentary capabilities of all our businesses as evidenced in particular by the to generate more sustainable returns. significant reduction in advisor attrition This requires us to make changes to our rates in our Wealth Management risk profile and to focus and simplify Americas business. We remain commit- some aspects of our Investment Bank. In ted to our home market and to growing line with our desire to reduce complexity the profitability of our leading Retail & and drive high-quality risk-adjusted Corporate business, which is critical to returns, we aim to reduce risk-weighted the Group in terms of both revenue and assets. To facilitate this objective profitability, as well as delivering growth and as announced during our Investor Day in November 2011, we transferred a portfolio of legacy assets from the Investment Bank to the Corporate Center. By 2016, we aim to reduce risk-weighted assets in the Investment Bank and in the legacy portfolio together by 50% from 30 September 2011 levels calculated on a pro forma Basel III basis.

1 Our pro forma Basel III risk-weighted assets calculation is a combination of the existing Basel 2.5 risk-weighted assets, a revised treatment for securitization exposures which applies a fixed risk weighting, as well as several new capital charges which require the development of new models and calculation engines. Our pro forma Basel III risk-weighted assets are based on estimates of the impact of these new capital charges, and will be refined as we progress with our implementation of the new models and associated systems.

13 to other businesses. The more stringent clients and our shareholders. As a key strongest combination of wealth Basel III capital and liquidity require- part of this, the Investment Bank will management and investment banking ments are likely to lead to increased work more closely with UBS’s wealth businesses and through closer collabora- competition for both secured funding management businesses and increase its tion we can build further on our leading and deposits as a stable source of emphasis on the execution, advisory position. However, new regulations funding, and to higher funding costs. and research capabilities it provides to require us to build and improve the Our solid funding position, derived from wealth management clients. quality of our capital base, and so we our wealth management businesses and are adjusting our Investment Bank to our Retail & Corporate business, as well The Investment Bank is critical to the make it simpler, more focused, less as the stable earnings generated by our success of our wealth management busi- capital-intensive and able to deliver Retail & Corporate business, reinforces nesses and the Group as a whole. The improved risk-adjusted returns. We will our financial position further. Our complementary needs of clients of the build on its strengths in equities, foreign strategy centers on these businesses and Investment Bank and of our wealth exchange and advisory, while shaping we are committed to building on the management businesses means we can the business in favor of the products and progress we have made in the last few maximize value for them and for the services that our clients demand, that years. firm. Making connections between offer the best growth opportunities and clients, markets and ideas is the essence that are less capital-intensive. Our strategy puts our clients at the of value creation, and these connections center of everything we do and close between private wealth and wholesale We will continue to invest in key collaboration between our businesses markets are especially close in areas geographies and products where we allows us to deliver the very best of UBS where we already have a strong identify opportunities across the Group. to them. Today, our clients benefit from presence, such as the Asia Pacific region. In practice, this means that our Wealth the comprehensive range of comple- There, for example, we have the Management business will work to mentary capabilities offered by the strengthen its industry-leading position- Group as a whole. While collaboration ing, while accelerating development has always been part of our corporate within growth markets. Our Wealth ethos, we believe there are further Management Americas business will benefits to be delivered both for our continue with its strategic banking initiatives, including its mortgage

We are building on the strengths of all our businesses

Wealth Management Investment Bank Wealth Management Americas Retail & Corporate Global Asset Management

– Consistently top-ranked research house1 – World’s leading HNW and UHNW wealth – Leading retail and corporate business – Invested assets: CHF 574 billion, of which – Top 3 global equities house2 manager: CHF 1.5 trillion of invested assets in Switzerland 66% from third-party channels – Top 3 overall FX market share3 consistently – Unrivalled in scope, reach and client mix – Driver of growth in Wealth Management, – Full-year 2011 third-party net new money since 2005, #1 FX house 20114 – Strong footprint in all major financial centers Global Asset Management and the Investment inflows of over CHF 12 billion Bank – Best equity derivatives house in Asia5 – WM: among industry-leading cost / income – Well diversified across investment capabilities, – Continued to attract strong deposit inflows regions and distribution channels – Top 3 in structured credit in the first half of 20116 ratios, significant increase in return on assets since 2009 – Inherently stable business with strong – Successful alternatives platform, including – Strong global footprint: consistently among top 7 8 – WMA: highest financial advisor productivity and cash flow generation our real estate and fund of hedge funds 3 in APAC IBD, rated #1 pan-European broker- businesses, both ranked #2 globally age firm and a leading Australian franchise invested assets per financial advisor among – Full-year 2011 pre-tax profit CHF 1.9 billion main US peers

1 Institutional Investor, 2011. 2 UBS estimates based on companies reporting of 31.12.2011 YTD revenues. 3 Euromoney FX Poll (2005–2011). 4 Risk Magazine, September 2011. 5 Risk – Structured Prod- ucts Awards, 2011. 6 Coalition, November 2011. 7 Pensions & Investments, October 2011. 8 InvestHedge, September 2011.

14 lending initiatives, to ensure continued requirements for both the Swiss conditions. In August 2011, we an- growth in balances coming from credit Financial Market Supervisory Authority nounced a CHF 2 billion cost reduction lines to our target high net worth and (FINMA) and the Basel Committee on program. We have already seen some ultra high net worth client base. It will Banking Supervision and we believe this benefits as a result of these measures, also sharpen the focus on “delivering will provide even greater comfort to our and we expect more of the benefits to the bank”, as we aim to become the clients and increase confidence further become apparent in our results over provider of choice for companies, their in the firm as a whole. We have built a coming quarters. Given the cost employees and families for all their strong track record both in balance reductions we have implemented and wealth management needs. Our Retail & sheet and legacy asset reductions. Over announced, scope for further material Corporate business will further enhance the past few years, we have successfully tactical cuts is limited. Thus we are the range of life cycle products and reduced our balance sheet and legacy focused on making strategic changes services we offer our clients, while positions: compared with the end of which go to the heart of our organiza- capitalizing on additional growth 2008, our balance sheet is over half a tion’s structure and design. While we opportunities in advisory and execution. trillion Swiss francs smaller and our Basel believe these changes will be adequate Our Global Asset Management business II risk-weighted assets are approximately to resize our cost base to the current will expand its alternatives platform 35% lower. We have achieved signifi- environment and to meet our financial further and invest in fast-growing cant reductions in legacy positions in the targets, we will monitor markets actively passive capabilities, while continuing to Investment Bank since the end of 2008. and, if conditions deteriorate materially, grow its third-party wholesale business. We will continue to reduce risk by we will take further action. Finally, the Investment Bank will work to exiting or shrinking businesses within service our core clients competitively, our Investment Bank that deliver Our reputation remains our most optimize capital allocation and reduce unattractive returns relative to their valuable asset, and retaining the trust risk-weighted assets in core businesses capital consumption, particularly in our and confidence of all our stakeholders is with the goal of delivering attractive and fixed income, currencies and commodi- critical to the long-term success of UBS. sustainable risk-adjusted returns. ties operations. We have set ourselves the key strategic objective of strengthening our opera- Capital strength remains the foundation Vigilance on costs remains paramount in tional risk framework to ensure that all for our success and we will continue to an industry undergoing fundamental of our employees, at every level of the build capital to achieve our targeted change, and since the financial crisis of Basel III tier 1 common equity ratio of 2007–2009 we have successfully 13%. This target is above the regulatory reduced expenses, with costs for 2011 around 20% below 2008 levels. As concerns mounted around issues in the eurozone and the US during 2011, we took further action to prepare our cost base for more challenging market

15 organization, pay even greater attention The strategic priorities for our markets expected to be the fastest to safeguarding and reinforcing our businesses growing segments in terms of invested reputation. As a first step, we are assets. enhancing our performance manage- Our strategy centers on our Wealth ment processes to ensure operational Management and Wealth Management Our strategy for Wealth Management risk has a stronger weighting in the Americas businesses and our universal builds on the considerable progress we assessment of individuals, teams and bank in Switzerland supported by our have made and aims to extend our business performance. This assessment Global Asset Management business and industry-leading position. We plan to will be fundamental to the success, the Investment Bank. achieve this through a combination of compensation and career prospects of targeted investments and the expansion all UBS employees. Wealth management is a growth of client advisor capabilities in markets business area with attractive profit we believe present attractive growth We are confident that our focus, placing margins and high barriers to entry in opportunities. We aim to increase our clients at the center of everything many markets. Our preeminent Wealth efficiency by consolidating our on- and we do, increasing collaboration across Management business has a strong offshore European businesses to reflect the firm, continuing to reduce risk- global footprint in all major financial the convergence of client needs in this weighted assets and build capital, while centers, making it ideally placed to take market, and we will focus our invest- remaining vigilant on costs, constitutes advantage of these conditions and the ment in regions with the highest the right strategy to enable us to deliver opportunities they present. Wealth potential for growth, particularly Asia sustainable earnings and increasingly Management Americas is a client-fo- Pacific and the emerging markets where attractive capital returns to our share- cused and advisor-centric business. We holders. believe the long-term growth prospects of the wealth management business are attractive in the Americas, with the high net worth and ultra high net worth

UBS Switzerland

UBS is the largest and strongest We strive to be the leading bank in all segments while ensuring stability and universal bank in Switzerland. Switzer- Switzerland with regard to client continuity throughout the client’s life land is the only country where we satisfaction, employee engagement and cycle. Our universal bank model has operate in retail, corporate and sustainable profitability. UBS Switzer- proven itself to be highly effective in institutional banking, wealth and asset land’s unique universal bank model is Switzerland and provides a substantial management as well as investment central to our success. Our dedicated part of the Group’s revenues. banking. Our strong position in the Swiss management team has representa- Swiss home market is crucial to sustain tives from all five business areas, and Given the strength of the economy our global brand and further grow our ensures a uniform approach to the and stable political environment in global core business. We are fully market when offering our full range of Switzerland, the country remains an committed to our home market, and banking products, expertise and services. attractive and growing financial market. by building on our 150 years of Our cross-divisional management This inherent stability and growth has banking heritage, UBS Switzerland approach allows us to utilize efficiently been the basis for our success and maintains a leading position in all five our existing resources, promotes the constant contribution from UBS business areas. With approximately 300 cross-divisional thinking and enables Switzerland to the Group financial branches and 4,700 client-facing staff, seamless collaboration across all business performance. Thanks to our universal we are able to reach approximately areas. As a result, we are in a unique bank model, vast client base and branch 80% of Swiss wealth, one in three position to efficiently serve our clients network, we are well-positioned to households, one in every three wealthy with a comprehensive range of banking capture future market growth and individuals and almost half of all Swiss products and services to fit their needs. strengthen our leading position in our companies. We are able to differentiate ourselves home market. through leveraging our strengths across

16 we expect to see the fastest market unique position in the market and our Our leading Retail & Corporate business growth in the global ultra high net force of high-quality financial advisors. constitutes a central building block for worth and high net worth client We will bolster our financial advisors’ the universal bank model in Switzerland segments. We also aim to enhance the productivity through increased training and is critical to the Group in terms of business’s gross margin through pricing and platform enhancements, and work both revenue and profitability, as well as initiatives and increasing lending to strengthen our partnership with the delivering growth to other businesses. opportunities. Our transformation from Investment Bank further. We believe we Our goal is to deliver value-added a traditional private bank into a more are uniquely positioned to serve high net services that make us the bank of choice dynamic investment manager with worth and ultra high net worth investors for retail clients. We will continue to strong advisory capabilities will help to in the world’s largest wealth market. We refine our suite of life cycle-based meet our clients’ needs whatever the are large enough to be relevant, but offerings which provide our clients with market environment. Our clients will small enough to be nimble, enabling us products and dedicated services to fulfill continue to benefit from the access our to combine the advantages of both large their evolving needs. Through systematic Investment Bank gives them to execu- and boutique wealth managers. We aim and consistent sales management, we tion, capital markets, investment insight to differentiate ourselves from competi- will continue to ensure an efficient and and research, as well as advisory and tors by being a trusted and leading seamless sales process. We will continue other capabilities. provider of financial advice and solutions to put our clients first by investing in our to our clients by enabling our financial branches and electronic channels, using In Wealth Management Americas we advisors to leverage the full resources of technology to complement, rather than remain committed to our client-focused UBS, including unique access to wealth replace, our traditional branch network. and advisor-centric strategy. We will management research and global build on our achievements by continuing solutions from our asset-gathering Our diversity and size puts us in a unique to focus on delivering advice-based businesses and the Investment Bank. position to serve all our clients’ complex solutions and by seeking to capture financial needs. We aim to be the main more banking and lending opportunities bank of Swiss corporate and institutional in the high net worth and ultra high net clients ranging from small- and medium- worth client segments through our size enterprises to multinationals, and from pension funds and commodity

17 traders to banks and insurers. We strive position to benefit from shifting market UBS’s wealth management businesses. to further expand and leverage our dynamics and provides a solid founda- We aim to expand our successful transaction banking capabilities and tion for capturing industry growth alternatives platform, building on our increase our presence and grow in the opportunities. established positions in real estate and commodities trade finance business. fund of hedge fund businesses, and Combining the universal bank approach With long-term performance as our invest in our fast-growing passive with our local market expertise will focus, we will work closely with clients capabilities, including exchange-traded enable us to provide access to all UBS in pursuit of their investment goals. In funds and strategies tracking non-stan- capabilities, while generating opportuni- particular, we are continuing to expand dard indices. ties to cross-sell and increase referrals. our strong third-party institutional Achieving these goals for the business business both in developed and The Investment Bank is critical to the will allow the firm to continue to benefit emerging markets; while expanding success of UBS, and its strategy is built from the advantages this success brings third-party wholesale distribution in the on the principles of client relevance, to our global brand in general and to Americas and Europe, building on our capital efficiency and close collaboration our leading wealth management strengths in areas including Asia Pacific with our Wealth Management and business in particular. and Switzerland. We also remain Wealth Management Americas busi- committed to delivering distinctive nesses. The business is focused firmly on We have shaped our Global Asset products and solutions to the clients of meeting the needs of our corporate, Management strategy according to the institutional, sovereign, ultra high net changing needs of clients by developing worth, wealth management and other a diversified business model across clients while adapting to more stringent investment capabilities, regions and capital requirements. Having a competi- distribution channels. The diversification tive and successful Investment Bank is of our business places us in a good critical to the success of our wealth management businesses. To achieve this

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18 we will build on our current strengths in we will continue with our efforts to base to ensur e we remain among the providing flow, solutions and advisory increase our capital efficiency and to world’s best-capitalized banks under services. We aim to grow our leading actively reduce risk-weighted assets. We Basel III. equities franchise through targeted will do this by optimizing our business technology investments and to reshape mix in favor of products and services Our strategic imperative to achieve our our fixed income, currencies and that have the highest relevance to targets for Basel III capital ratios requires commodities business to materially clients, offer the best growth opportuni- a rapid and prudent reduction of risk reduce its level of risk and capital ties and are less capital-intensive. deployed in our Investment Bank and in consumption and to make the business the legacy portfolio in the Corporate more client-focused. We also aim to Center. We intend to reduce the Group’s increase market share in our investment Reducing risk and building capital Basel III risk-weighted assets by a third banking department and global capital with a targeted reduction of risk-weight- markets businesses by leveraging our We benefit from a strong liquidity ed assets in the Investment Bank and client relationships and global footprint position as measured under the the legacy portfolio of around half by further. To ensure we are able to deliver proposed Basel III guidelines, and our 2016. These plans to improve capital effectively, we will be highly disciplined mix of funding sources is stable and well efficiency in the Investment Bank involve in executing, trading, actively managing diversified by market, product and a reduction in risk-weighted assets in our portfolio and using our resources to currency, with client deposits providing our core businesses of approximately the best possible advantage. To support the single largest source of funding for 35% and a reduction of around 90% in our goal of becoming more focused and the firm. Our capital strength is the less complex while taking on less risk, foundation for the future success of our businesses and today our Basel 2.5 capital ratio is one of the highest in the industry. We will continue derisking our balance sheet and building our capital

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19 legacy risk-weighted assets by 2016. We because 2012 will be a year of transition will continue to invest in growth for the Investment Bank in which we will businesses where we have strong focus on reducing risk-weighted assets market positions and in areas critical to in the business. The target performance the success of the Group as a whole. ranges for all other business divisions apply from 2012. Achieving these divisional targets should enable the Measuring our performance Group to deliver a return on equity of 12–17% starting in 2013 and a To track our progress in executing our cost / income ratio of 65–75%. strategy, we have established annual target performance ranges for each of our business divisions and for the Group as a whole. These ranges focus on the key performance metrics of growth, profitability and efficiency. We believe these are the appropriate metrics against which to judge our future success. While any target framework will naturally be subject to the vagaries of the market, we believe these ranges are realistic and achievable on an annual basis over the next five years. As we have previously stated, we have taken 2013 as the starting point for the Group’s return on equity target and the Investment Bank’s return on attributed equity target,

20 Our businesses

21 Wealth Management

Headquartered in Switzerland, with a presence in over 40 countries, Wealth Management provides wealthy private clients with financial advice, products and tools to fit their individual needs.

Business unit reporting As of or for the year ended % change from CHF million, except where indicated 31.12.11 31.12.10 31.12.09 31.12.10 Net interest income 1,968 1,737 1,853 13 Net fee and commission income 4,363 4,964 5,137 (12) Net trading income 878 647 625 36 Other income 425 1 (3) (189) Income 7,634 1 7,345 7,427 4 Credit loss (expense) / recovery 11 11 45 0 Total operating income 7,645 1 7,356 7,471 4 Personnel expenses 3,258 3,153 3,360 3 Non-personnel expenses 1,711 1,896 1,831 (10) Total operating expenses 4,969 2 5,049 5,191 (2) Business unit performance before tax 2,676 1 2,308 2,280 16

Additional information / Key performance indicators 3 Net new money (CHF billion) 4 23.5 (12.1) (87.1) Invested assets (CHF billion) 750 768 825 (2) Gross margin on invested assets (bps) 5 101 92 91 10 Personnel (full-time equivalents) 15,904 15,663 15,408 2

1 Includes revenues from the sale of our strategic investment portfolio: Wealth Management CHF 433 million, of which CHF 79 million relate to Swiss wealth management and CHF 354 million relate to Interna- tional wealth management. 2 Operating expenses include restructuring charges of CHF 82 million. Refer to “Note 37 Reorganizations and disposals” in the “Financial information” section of the Annual Report 2011 for more information. 3 For the definitions of our key performance indicators, refer to the “Measurement of performance” section of the Annual Report 2011. 4 Excludes interest and dividend income. 5 Excludes any effect on profit or loss from a property fund (2011: loss of 22 million, 2010: loss of CHF 45 million, 2009: loss of CHF 155 million).

22 Business client base and strong global footprint Invested assets by client domicile put us in an excellent position to take In %, except where indicated Total: CHF 750 billion Wealth Management delivers compre- advantage of the substantial growth On 31.12.11 hensive financial services to wealthy opportunities this expected wealth private clients around the world – except creation presents. This applies in 22 Europe, Middle East and Africa those served by Wealth Management particular to Asia, Latin America, the Switzerland Americas. With CHF 750 billion of Middle East and Central and Eastern Americas invested assets at the end of 2011, we Europe, the areas where we expect to 46 10 Asia Paciﬁc are one of the largest wealth managers see the fastest market growth based on in the world. Our clients benefit from economic development and entrepre- the entire spectrum of UBS resources, neurial wealth creation. In the key 22 ranging from asset management to onshore locations in which we are estate planning and corporate finance expanding, our Wealth Management 1BD014_e advice, in addition to the specific wealth business benefits from our established management products and services local Investment Bank and Global Asset outlined below. An open product Management business relationships. +PXGUVGFCUUGVUD[ENKGPVYGCNVJ| platform provides clients with access to +PGZEGRVYJGTGKPFKECVGF 6QVCN%*(DKNNKQP a wide array of products from third-party We continue to build on our integrated 1P providers that complement our own client service model, bundling compe- product lines. tencies across the Group to identify %*(OKNNKQP investment opportunities in all market %*(sOKNNKQP Strategy and clients conditions and tailor products to %*(sOKNNKQP %*(OKNNKQP individual client needs. We intend to Our goal is to be the bank of choice for increase our client advisor base to about wealthy individuals worldwide. We offer 4,700 advisors in the medium term, with products and services to private clients, a particular emphasis on the emerging $&AG focusing in particular on the ultra high markets and Asia Pacific growth regions. net worth (clients with investable assets Our global booking centers give us a of more than CHF 50 million) and high strong local presence that enables us to net worth client segments (clients with book client assets in multiple locations. investable assets between CHF 2 million In an increasingly complex regulatory and CHF 50 million). In addition, we also environment, we aim to differentiate provide wealth management solutions, ourselves from competitors through our products and services to financial sophisticated and robust compliance intermediaries. framework. In our pursuit of the highest possible levels of compliance, we make We remain confident on the long-term ongoing investments to optimize our growth prospects of our wealth risk management processes and conduct management business, and we expect extensive employee training. We strive the wealth management market to grow to adapt quickly to changes to regula- twice as fast as the gross domestic tory and suitability requirements in every product in all regions of the globe. From region, drawing on our local know-how a client segment perspective, the global and experience. ultra high net worth market shows the highest growth potential, followed by the high net worth market. Our broad

23 +PXGUVGFCUUGVUD[CUUGVENCUU| In Asia Pacific, we continue to focus on market share in our Wealth Manage- Hong Kong and Singapore, the leading ment franchise, and provides our clients +PGZEGRVYJGTGKPFKECVGF financial centers in the region, as well as access to investment insight and 1P on selective presences in the major research, products, capital markets and 6QVCN%*(DKNNKQP %*(DKNNKQP %*(DKNNKQP onshore markets. Today, we are present execution as well as to advisory and in seven markets and have already other capabilities. Our extensive branch established sizeable businesses in several network, including over 100 wealth onshore locations such as Japan and management offices, fosters referrals Taiwan. We continue to invest in our from the Swiss corporate and retail local presences in China and India to client base as well as retail clients’

capture long-term growth opportunities. development to our wealth management operations as their wealth In the emerging markets, we are increases. $&AG focusing on the Middle East, Latin #EEQWPVUOQPG[OCTMGVUƂFWEKCT[KPXGUVOGPVU America, as well as Central and Eastern We aim to build on our position as $QPFU 7$5OWVWCNHWPFU 'SWKVKGU Europe, and we already have local market leader in the ultra high net 1VJGT 'ZVGTPCNOWVWCNHWPFU presences in more than 20 countries. As worth segment, which we regard as +PENWFKPIUVTWEVWTGFRTQFWEVUCPFCNVGTPCVKXGKPXGUVOGPVU the majority of our clients from emerg- having considerable growth potential, by ing markets prefer to book their assets continuously enhancing our service and +PXGUVGFCUUGVUD[EWTTGPE[| in established financial centers, we are product offering. We have, for example, +PGZEGRVYJGTGKPFKECVGF strengthening our emerging markets recently introduced a new product 1P coverage through our booking centers in group in our philanthropy offering called the US, the UK and Switzerland. We will “Impact Investing”, which aims to make 6QVCN%*(DKNNKQP %*(DKNNKQP %*(DKNNKQP continue to expand our local presence measurable, positive social and environ- where appropriate, for example, through mental impacts at the same time as the establishment of new advisory generating financial returns for the offices, such as the one recently opened investor. Moreover, to cover the needs of in Israel. the largest 250 family offices worldwide, we have created the Global Family In Europe, our growth ambition is Office Group as a joint venture between underpinned by an established European Wealth Management and the Invest- footprint in all major booking$&AG centers ment Bank. With its dedicated specialist 75& '74 %*( )$2 1VJGT and a broad franchise. We are combin- teams from both Wealth Management ing the management of our European and the Investment Bank, the Global offshore and onshore businesses to Family Office Group delivers the full reflect the converging needs of clients in range of capabilities our integrated bank the region. This reorganization enables has to offer this highly sophisticated us to leverage our extensive Swiss client group. product offering, while creating economies of scale and helping us to Our Global Financial Intermediaries deal more efficiently with increased (Global FIM) business serves approxi- regulatory requirements. mately 1,700 asset managers. Based on defined business models, Global FIM In Switzerland, our wealth management supports financial intermediaries as a operations’ close collaboration with our strategic business partner, offering leading retail, corporate, asset manage- professional investment advisory services ment and investment banking busi- and tailored solutions that enable them nesses gives us the foundation to grow to advise their clients more effectively. Global FIM is represented in 11 Swiss locations and 14 international locations. We regard financial intermediaries as an attractive client segment offering high growth potential.

24 Organizational structure tools that best fit their individual needs. We accommodate the individual needs Wealth Management is headquartered of our clients by offering services across in Switzerland, with a presence in over the full investment spectrum, from 40 countries and approximately 200 execution only to discretionary man- wealth management and representative dates. Clients who opt for a discretion- offices, half of which are outside ary mandate delegate the management Switzerland, mostly in Europe, Asia of their assets to a team of professional Pacific, Latin America and the Middle portfolio managers. Clients who prefer East. As of the end of 2011, Wealth to be actively involved in the manage- Management employed roughly 16,000 ment of their assets can choose an people worldwide, of whom approxi- advisory mandate, in which investment mately 4,200 were client advisors. The professionals provide analysis and Wealth Management business unit is monitoring of portfolios, together with governed by an executive committee tailor-made proposals to support and is primarily organized along regional investment decisions. Our clients can lines with the business areas Asia Pacific, trade the full range of financial instru- Europe, Global Emerging Markets, ments from single securities, such as Switzerland and Global Ultra High Net equities and bonds, to various invest- Worth Clients. Our business is supported ment funds, structured products and by a Chief Investment Officer and a alternative investments. Additionally, we global Investment Products & Services offer structured lending, corporate unit as well as central functions. finance and wealth planning advice on client needs such as funding for Competitors education, inheritance and succession. For our ultra high net worth clients, we Our major global competitors include offer institutional-like servicing that Credit Suisse, Julius Bär, HSBC, Deutsche provides special access to our Investment Bank, JP Morgan and Citigroup. In the Bank and Global Asset Management European domestic markets, we offerings. primarily compete with the private banking operations of such large local Financial markets have changed banks as Barclays in the UK, Deutsche fundamentally over the last few years Bank in Germany and Unicredit in Italy. and are characterized by a high degree The private banking franchises of HSBC, of uncertainty and volatility. In these Citigroup and Credit Suisse are our main difficult market conditions our clients competitors in Asia Pacific. have become increasingly focused on protecting their assets and expect strong Products and services advisory support for their investment decisions. We are, therefore, continuing As a global, integrated firm, UBS has the to evolve our wealth management necessary expertise to identify appropri- business model from a traditional private ate investment opportunities for clients bank towards an investment manager and the local presence to advise them in with strong advisory capabilities. This a timely manner. We provide our clients implies active relationships between our with the financial advice, products and highly qualified client advisors and their clients. Fast and focused communication, new investment ideas, access to growth markets and wealth protection are critical for our clients’ success. To this

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end, and with the ultimate goal of Officer. Wealth Management also gives improving our clients’ investment clients access to the knowledge, and performance, we have set up a new product and service offerings from team under the leadership of our Chief Global Asset Management and the Investment Officer that formulates our Investment Bank, complemented by an investment view by integrating the open product platform providing access research and expertise of our investment to a wide array of products from specialists across all business divisions third-party providers. By aggregating and from all around the globe. Based on private investment flows into institution- this “UBS house view”, our client al-size flows, we are in a position to advisors actively and regularly inform our offer our Wealth Management clients clients about our opinion on develop- access to investments that would ments in the financial markets. Clients otherwise only be available to institu- receive investment proposals directly tional clients. related to our house view, as well as solutions for alternative scenarios should Our integrated client service model clients have diverging views on market allows client advisors to analyze their trends. clients’ financial situation, and develop and implement systematic, tailored Our Investment Products & Services unit investment strategies. These strategies ensures our offering is consistently are regularly reviewed and based on adapted to market conditions by individual client profiles, which comprise aligning our products with the invest- all important investment criteria such as ment views of our Chief Investment a given client’s life cycle needs, risk appetite and performance expectations. We continuously train our client advisors and provide them with ongoing support to ensure they present the best solutions to our clients.

26 Retail & Corporate

As the leading retail and corporate banking business in Switzerland, our goal is to deliver comprehensive financial products and services to our retail, corporate and institutional clients, provide stable and substantial profits for the Group and create revenue opportunities for other businesses within the Group.

Business unit reporting As of or for the year ended % change from CHF million, except where indicated 31.12.11 31.12.10 31.12.09 31.12.10 Net interest income 2,328 2,422 2,681 (4) Net fee and commission income 1,175 1,178 1,121 0 Net trading income 333 249 194 34 Other income 350 1 97 100 261 Income 4,186 1 3,946 4,096 6 Credit loss (expense) / recovery (101) (76) (178) 33 Total operating income 4,085 1 3,870 3,918 6 Personnel expenses 1,666 1,625 1,836 3 Non-personnel expenses 500 473 453 6 Total operating expenses 2,166 2 2,098 2,289 3 Business unit performance before tax 1,919 1 1,772 1,629 8

Additional information / Key performance indicators 3 Impaired loans portfolio as a % of total loans portfolio, gross (%) 4 0.7 0.9 1.1 Invested assets (CHF billion) 134 136 135 (1) Client assets (CHF billion) 848 879 840 (4) Personnel (full-time equivalents) 11,430 12,089 12,140 (5)

1 Includes revenues from the sale of our strategic investment portfolio of CHF 289 million. 2 Operating expenses include restructuring charges of CHF 32 million. Refer to “Note 37 Reorganizations and disposals” in the “Financial information” section of the Annual Report 2011 for more information. 3 For the definitions of our key performance indicators, refer to the “Measurement of performance” section of the Annual Report 2011. 4 Refer to the “Risk management and control” section of the Annual Report 2011 for more information on impairment ratios.

Business Switzerland, with a highly collateralized lending portfolio of CHF 135 billion on Our Retail & Corporate business unit 31 December 2011, as shown in the delivers comprehensive financial “Loans, gross” chart. This portfolio is products and services to our retail, managed for profitability rather than for corporate and institutional clients in market share. Switzerland, and maintains a leading position in these client segments. As Our Retail & Corporate unit constitutes a shown in the “Business mix” chart, central building block for the universal Retail & Corporate has generated stable bank model of UBS Switzerland. Retail & profits which have contributed substan- Corporate supports our other business tially to the overall financial performance divisions by referring clients to them and of the Group. We are market leaders in assisting retail clients to build their the retail and corporate loan market in wealth to a level at which we can transfer them to our Wealth Manage- ment unit. Furthermore, Retail &

27 $WUKPGUUOKZ Corporate leverages the cross-selling Our size in Switzerland and the diversity +P 6QVCN%*(OKNNKQP potential of products and services of businesses we operate put us in a (QTVJG[GCTGPFGF provided by our asset-gathering and unique position to serve all our clients’ investment banking businesses. Togeth- complex financial needs. eW aim to be 4GEWTTKPIKPVGTGUV er, these actions contribute strongly to the main bank of corporate and 4GEWTTKPIHGGU our Group profitability. In addition, Retail institutional clients ranging from 0QPTGEWTTKPIKPEQOG & Corporate provides and pays for a small- and medium-size enterprises to substantial part of the Swiss infrastruc- multinationals, and from pension funds ture, including nearly 300 branches, and and commodity traders to banks and the Swiss banking product platform. insurers. We serve almost one in two Swiss companies, including more than Strategy and clients 85% of the 1,000 largest Swiss corpora- 'ZENWFKPIUCNGQHUVTCVGIKEKPXGUVOGPVRQTVHQNKQ %*(OKNNKQP $&AG tions, as well as one in three pension Our goal is to deliver value-added funds in Switzerland, including 75 of the services that make us the bank of choice largest 100. We strive to further expand for retail clients in Switzerland. With a and leverage our transaction banking .QCPUITQUU network of around 300 branches, 1,250 capabilities (e.g. payment and cash +P 6QVCN%*(DKNNKQP automated teller machines, self-service management services, custody solutions, #UQH terminals and customer service centers, trade and export finance). In addition,

alongside e-banking and mobile we plan to increase our presence and 5GEWTGFD[TGUKFGPVKCN banking, we serve one in three house- grow in the commodities trade finance RTQRGTV[ holds in Switzerland. We are continu- business. Combining the universal bank 5GEWTGFD[EQOOGT EKCNKPFWUVTKCN ously refining our suite of life cycle- approach with our local market expertise RTQRGTV[ based offerings which provide our across all Swiss regions enables us to 5GEWTGFD[UGEWTKVKGU clients with products and dedicated optimize our client service by providing 7PUGEWTGFNQCPU services to fulfill their evolving needs. access to all UBS capabilities while Through systematic and consistent sales generating opportunities to cross-sell management, we ensure an efficient and increase referrals. CXGTCIGNQCPVQXCNWGDCUGFQPVJGNCVGUVETGFKVTGXKGY and seamless sales process.$&AG In order to CXGTCIGNQCPVQXCNWGDCUGFQPVJGNCVGUVETGFKVTGXKGY +PENWFGUIWCTCPVGGUCPFQVJGTEQNNCVGTCN improve our clients’ experience of As the leading retail and corporate banking with us, we will continue to banking business in Switzerland, we invest in our branches and electronic understand the importance of our role in channels, using technology to comple- supporting the needs of our clients. In ment, rather than replace, our tradition- 2011, we initiated the necessary steps to al branch network. hone and simplify our service commitments across the business, including streamlining our processes, reducing the administrative burden on our client advisors and enhancing their productivity without compromising our risk standards.

28 Organizational structure Products and services

The Retail & Corporate unit is a core Our retail clients have access to a life element of UBS Switzerland’s universal cycle-based, comprehensive offering bank delivery model, which allows us to including cash accounts, payments, extend the expertise of the entire bank savings and retirement solutions, to our Swiss retail, corporate and investment fund products, residential institutional clients. mortgages, as well as life insurance and advisory services. These are tailored to To ensure consistent delivery throughout clients’ individual needs and require- Switzerland, the Swiss network is ments. We provide financing solutions organized into ten geographical regions. to our corporate clients, offering access Dedicated management teams in the to capital markets (equity and debt regions and in the branches derived capital), syndicated and structured from all business areas are responsible credit, private placements, leasing and for executing the universal bank model, traditional financing. Our transaction fostering cross-divisional collaboration banking offers solutions for payments and ensuring that the public and clients and cash management services, trade have a uniform experience based on a and export finance, receivable finance, single corporate image and shared as well as global custody solutions to standards of service. institutional clients. Our close collaboration with the Investment Bank enables Competitors us to offer capital market products such as foreign exchange offerings, hedging In the Swiss retail banking business, our strategies (currency, interest rates, and competitors are Credit Suisse, Raiffeisen, commodities) and trading (equities and the cantonal banks and PostFinance, as fixed income, currencies and commodi- well as other regional and local Swiss ties), and to provide corporate finance banks. advice in fields such as mid-market mergers and acquisitions, corporate In the Swiss corporate and institutional succession planning and real estate. We business, our main competitors are also cater to the asset management Credit Suisse, the cantonal banks and needs of institutional clients by offering foreign banks in Switzerland. portfolio management mandates, strategy execution and fund distribution.

29 Wealth Management Americas

Wealth Management Americas provides advice-based relationships through its financial advisors, who deliver a fully integrated set of wealth management solutions designed to address the needs of high net worth and ultra high net worth individuals and families.

Business division reporting As of or for the year ended % change from CHF million, except where indicated 31.12.11 31.12.10 31.12.09 31.12.10 Net interest income 729 695 800 5 Net fee and commission income 4,018 4,244 3,948 (5) Net trading income 450 570 763 (21) Other income 103 56 36 84 Income 5,300 5,565 5,546 (5) Credit loss (expense) / recovery (6) (1) 3 (500) Total operating income 5,295 5,564 5,550 (5) Personnel expenses 3,840 4,225 4,231 (9) Non-personnel expenses 920 1,469 1,287 (37) Total operating expenses 4,760 1 5,694 5,518 (16) Business division performance before tax 534 (130) 32

Additional information / Key performance indicators 2 Net new money (CHF billion) 3 12.1 (6.1) (11.6) Net new money including interest and dividend income (CHF billion) 4 30.4 13.0 8.7 Invested assets (CHF billion) 709 689 690 3 Gross margin on invested assets (bps) 79 80 81 (1) Personnel (full-time equivalents) 16,207 16,330 16,925 (1)

1 Operating expenses include restructuring charges of CHF 10 million. Refer to “Note 37 Reorganizations and disposals” in the “Financial information” section of the Annual Report 2011 for more information. 2 For the definitions of our key performance indicators, refer to the “Measurement of performance” section of the Annual Report 2011. 3 Excludes interest and dividend income. 4 For purposes of comparison with a US peer.

30 Business combine the advantages of both large +PXGUVGFCUUGVUD[ENKGPVYGCNVJ| and boutique wealth managers. We aim +PGZEGRVYJGTGKPFKECVGF 6QVCN%*(DKNNKQP Wealth Management Americas is among to differentiate ourselves from competi- 1P the leading wealth managers in the tors and be a trusted and leading provid-

Americas in terms of financial advisor er of financialadvice and solutions to %*(OKNNKQP productivity and invested assets, and our clients by enabling our financial %*(sOKNNKQP includes the domestic US and Canadian advisors to leverage the full resources of %*(sOKNNKQP businesses as well as international UBS, including unique access to wealth %*(OKNNKQP business booked in the US. On 31 De- management research and global cember 2011, the business division had solutions from our asset-gathering CHF 709 billion in invested assets. businesses and the Investment Bank. These resources are augmented by our Strategy and clients commitment to an open architecture $&AG and our partnerships with many of the Our goal is to be the best wealth world’s leading third-party institutions. management business in the Americas. Moreover, our wealth management In order to achieve this, we must offerings are complemented by banking, +PXGUVGFCUUGVUD[CUUGVENCUU| continue to be both client-focused and mortgage, and financing solutions that +PGZEGRVYJGTGKPFKECVGF advisor-centric. We deliver a fully enable us to provide advice on both the 1P integrated set of advice-based wealth asset and liability sides of our clients’ 6QVCN%*(DKNNKQP %*(DKNNKQP %*(DKNNKQP management solutions and banking financial balance sheets. services through our financial advisors in key metropolitan markets to meet the We believe the long-term growth needs of our target client segments: prospects of the wealth management business are attractive in the Americas, high net worth clients (USD 1 million to

USD 10 million in investable assets) and with high net worth and ultra high net ultra high net worth clients (more than worth expected to be the fastest USD 10 million in investable assets), growing segments in terms of invested while also serving the needs of the core assets in the region. In 2011, our affluent (USD 250,000 to USD 1 million strategy and focus led to an improve- #EEQWPVUOQPG[OCTMGVU $QPFU in investable assets). We are committed ment in financial results, retention of 7$5OWVWCNHWPFU 'ZVGTPCNOWVWCNHWPFU $&AG to providing high-quality advice to our high-quality financial advisors and net 'SWKVKGU 1VJGT clients across all their financial needs by new money growth. Building on this +PENWFGUUVTWEVWTGFRTQFWEVUCNVGTPCVKXGKPXGUVOGPVUCPF employing the best professionals in the progress, we aim for continued growth ƂFWEKCT[KPXGUVOGPVU industry, delivering the highest standard in our business by developing our of execution, and running a streamlined financial advisors’ focus toward advice- and ef ficient business. based solutions, leveraging the global capabilities of UBS to clients by partner- We believe we are uniquely positioned ing with the Investment Bank and Global to serve high net worth and ultra high Asset Management, and delivering net worth investors in the world’s largest banking and lending services that wealth market. With a network of complement our wealth management almost 7,000 financial advisors and CHF solutions. We also plan to continue 709 billion in invested assets, we are investing in improved platforms and large enough to be relevant, but small technology. We expect these efforts enough to be nimble, enabling us to to enable us to achieve higher levels of client satisfaction, strengthen our client relationships, and lead to greater revenue productivity among our financial advisors and a more profitable business.

31 Organizational structure Competitors Our offerings are designed to meet a wide variety of investment objectives, Wealth Management Americas consists Wealth Management Americas com- including wealth accumulation and of branch networks in the US, Puerto petes with national full-service broker- preservation, income generation and Rico and Canada, with 6,967 financial age firms, domestic and global private portfolio diversification. To address the advisors as of 31 December 2011. Most banks, regional broker-dealers, indepen- full range of our clients’ financial needs, corporate and operational functions of dent broker-dealers, registered invest- we also offer competitive lending and the business division are located in the ment advisors, trust companies, and cash management services such as home office in Weehawken, New Jersey. other financial services firms offering securities-backed lending, the resource wealth management services to US and management account, FDIC-insured In the US and Puerto Rico, Wealth Canadian private clients, as well as deposits, mortgages and credit cards. Management Americas operates foreign non-resident clients seeking through direct and indirect subsidiaries wealth management services within the Additionally, our Corporate Employee of UBS AG. Securities and operations US. Our main competitors include the Financial Services unit provides a activities are conducted primarily wealth management businesses of comprehensive, personalized stock through two registered broker-dealers, Bank of America, Morgan Stanley, and benefit plan and related services to UBS Financial Services Inc. and UBS Wells Fargo. many of the largest US corporations and Financial Services Incorporated of Puerto their executives. For corporate and Rico. Our banking services in the US Products and services institutional clients, we offer a robust include those conducted through the suite of solutions, including equity UBS AG branches and UBS Bank USA, a Wealth Management Americas offers compensation, administration, invest- federally regulated Utah bank, which clients a full array of solutions that focus ment consulting, defined benefit and provides Federal Deposit Insurance on the individual financial needs of each contribution programs and cash Corporation (FDIC)-insur ed deposit client. Comprehensive planning supports management services. accounts, enhanced collateralized clients through the various stages of lending services and mortgages. their lives, including education funding, Our clients can choose asset-based charitable giving, tax management pricing, transaction-based pricing or a Canadian wealth management and strategies, estate strategies, insurance, combination of both. Asset-based banking operations are conducted retirement, and trusts and foundations accounts have access to both discretion- through UBS Bank (Canada). with corresponding product offerings for ary and non-discretionary investment each stage. Our advisors work closely advisory programs. Non-discretionary Significant business transfers in the past with internal consultants in areas such advisory programs enable the client to few years included the 2009 sales of 56 as wealth planning, portfolio strategy, maintain control over all account branches to Stifel, Nicolaus & Company, retirement and annuities, alternative transactions, while clients with discre- Incorporated and UBS’s Brazilian investments, managed accounts, tionary advisory programs direct financial services business, UBS Pactual, structured products, banking and investment professionals to manage a to BTG Investments, LP. lending, equities, and fixed income. portfolio on their behalf. Depending on Clients also benefit from our dedicated the type of discretionary program, the Wealth Management Research team, client can give investment discretion to a which provides research guidance to help support the clients’ investment decisions.

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qualified financial advisor, a team of our advantage of structured products and investment professionals or a third-party alternative investment offerings to investment manager. Separately, mutual complement their portfolio strategies. fund advisory programs are also offered, whereby a financial advisor works with All of these solutions are supported by a the client to create a diversified portfolio dedicated markets execution group. This of mutual funds guided by a research- group partners with the Investment driven asset allocation framework. Bank and Global Asset Management in order to access the resources of the For clients who favor individual securi- entire firm as well as third-party ties, we offer a broad range of equity investment banks and asset manage- and fixed income instruments. In ment firms. addition, qualified clients may take

33 Global Asset Management

Global Asset Management is a large-scale asset manager with businesses well diversified across regions, capabilities and distribution channels. We serve third-party institutional and wholesale clients and the clients of UBS’s wealth management businesses with a broad range of investment capabilities and styles across all major traditional and alternative asset classes.

Business division reporting As of or for the year ended % change from CHF million, except where indicated 31.12.11 31.12.10 31.12.09 31.12.10 Net management fees 1 1,704 1,918 1,904 (11) Performance fees 99 141 233 (30) Total operating income 1,803 2,058 2,137 (12) Personnel expenses 955 1,096 996 (13) Non-personnel expenses 420 446 702 (6) Total operating expenses 1,375 2 1,542 1,698 (11) Business division performance before tax 428 516 438 (17)

Additional information / Key performance indicators 3 Total net new money (CHF billion) 4.3 1.8 (45.8) Total invested assets (CHF billion) 574 559 583 3 Total gross margin on invested assets (bps) 33 36 37 (8) Personnel (full-time equivalents) 3,750 3,481 3,471 8

1 Net management fees include transaction fees, fund administration revenues (including interest and trading income from lending business and foreign exchange hedging as part of the fund services offering), gains or losses from seed money and co-investments, funding costs and other items that are not performance fees. 2 Operating expenses include restructuring charges of CHF 26 million. Refer to “Note 37 Reorganizations and disposals” in the “Financial information” section of the Annual Report 2011 for more information. 3 For the definitions of our key performance indicators, refer to the “Measurement of performance” section of the Annual Report 2011.

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Business Asset Management is a leading fund committed to delivering distinctive house in Europe, the largest mutual products and solutions to the clients of Global Asset Management’s investment fund manager in Switzerland and one of UBS’s wealth management businesses. capabilities encompass equities, fixed the largest fund of hedge funds and real income, currency, hedge funds, real estate investment managers in the In the highly volatile market environ- estate, infrastructure and private equity. world. ment, investors are increasingly looking We also enable clients to invest in a for market-like returns (“beta”) from combination of different asset classes Strategy passive investments, complemented by through multi-asset strategies. Our fund higher potential returns (“alpha”) from services unit, a global fund administra- With long-term performance as our higher-risk investments, including tion business, provides professional focus, we work closely with clients in alternatives. In response to this, we services including legal fund set-up, pursuit of their investment goals. In continue to expand our successful accounting and reporting. Invested particular, we are continuing to expand alternatives platform, building on our assets totaled CHF 574 billion and assets our strong third-party institutional established positions in real estate and under administration were CHF 375 business both in developed and fund of hedge funds businesses. In billion on 31 December 2011. Global emerging markets while also expanding addition, we continue to invest in our third-party wholesale distribution in the Americas and Europe, building on our strengths in this channel in Asia Pacific and Switzerland. We also remain

35 +PXGUVGFCUUGVUD[EJCPPGN fast-growing passive capabilities, Significant recent acquisitions, business +PGZEGRVYJGTGKPFKECVGF including exchange-traded funds and transfers and other developments 1P strategies tracking non-standard indices. In November 2011, investment manage- 6QVCN%*(DKNNKQP %*(DKNNKQP %*(DKNNKQP The current environment and near-term ment responsibility for a private equity outlook are characterized by market fund of funds was transferred to Global

uncertainty, investor risk aversion and Asset Management from Wealth lower interest rates. In this environment, Management & Swiss Bank.

the diversification of our business places us in a good position to benefit from In October 2011, Global Asset Manage- shifting market dynamics and provides a ment completed the acquisition of the solid foundation for capturing industry ING Investment Management Limited

growth opportunities. business in Australia. This currently 7$5YGCNVJOCPCIGOGPV 6JKTFRCTVKGU $&AG operates as a subsidiary of UBS Global The long-term outlook for the asset Asset Management (Australia) Ltd and management industry remains strong, will be fully integrated during 2012. with three main drivers: (i) the financial crisis has reduced the assets of both the In July 2011, the infrastructure and retired and the working population, private equity fund of funds businesses creating a pressing need for increased were transferred from our alternative savings rates; (ii) emerging markets will and quantitative investment area to our continue to drive growth in the mutual infrastructure investment area which, as funds industry and retirement schemes a result, was renamed infrastructure and in these markets; and (iii) as govern- private equity. ments focus on reducing deficits, they will need to reduce support for benefits In January 2011, investment manage- and pensions and will face increased ment responsibility for a multi-manager pressure to privatize infrastructure alternative fund was transferred to assets. Global Asset Management from Wealth Management & Swiss Bank. Organizational structure In October 2010, UBS increased from The “Business structure” chart shows 51.0% to 94.9% its holding in UBS Real the investment, distribution and support Estate Kapitalanlagegesellschaft mbH structure of the business division. We (KAG), a Global Asset Management joint employ around 3,800 personnel in 26 venture with Siemens in Munich, countries, and have our principal offices Germany. in London, Chicago, Frankfurt, Hartford, Hong Kong, New York, Paris, Singapore, In September 2010, investment manage- Sydney, Tokyo and Zurich. Global Asset ment responsibility for Wealth Manage- Management operates through UBS AG ment Americas’ US hedge fund business or its subsidiaries. was transferred to Global Asset Man- agement’s alternative and quantitative investments area. A joint venture between the two business divisions aims to deliver attractive hedge fund and fund of hedge funds solutions to Wealth Management Americas’ clients.

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In December 2009, the real estate Competitors investment management business of Wealth Management & Swiss Bank was Our competitors include global firms transferred to Global Asset Manage- with wide-ranging capabilities, such as ment. Fidelity Investments, AllianceBernstein Investments, BlackRock, JP Morgan In September 2009, UBS completed the Asset Management and Goldman Sachs sale of its Brazilian financial services Asset Management. Most of our other business, including its asset manage- competitors are more regional or local ment business, UBS Pactual Asset specialist niche players that focus mainly Management. on one asset class, particularly in the real estate, hedge fund or infrastructure investment areas.

Clients and markets

Global Asset Management serves third-party institutional and wholesale clients, and the clients of UBS’s wealth management businesses. As shown in the chart of invested assets by channel, at 31 December 2011, approximately 66% of invested assets originated from

37 +PXGUVGFCUUGVUD[TGIKQP third-party clients, including institutional according to a price-to-intrinsic-value +PGZEGRVYJGTGKPFKECVGF clients (e.g. corporate and public philosophy), growth (portfolios of quality 1P pension plans, governments and their growing companies that we believe to central banks) and wholesale clients (e.g. be undervalued in the market) and struc- 6QVCN%*(DKNNKQP %*(DKNNKQP %*(DKNNKQP financial intermediaries and distribution tured (strategies that employ proprietary partners). A further 34% originated analytics and quantitative methods, from UBS’s wealth management including passive). businesses. Fixed income offers a diverse range of Products and services global, regional and local market-based

investment strategies. Its capabilities Global Asset Management’s business include single-sector strategies such as

lines are as follows: traditional invest- government and corporate bond #OGTKECU #UKC2CEKƂE ments (equities, fixed income$&AG and global portfolios, multi-sector strategies such as 'WTQRG/KFFNG'CUV#HTKEC 5YKV\GTNCPF investment solutions); alternative and core and core plus bond, and extended- #UUGVUTGRTGUGPVGFCTGVQVCNUHQTVJG)NQDCN#UUGV/CPCIGOGPV quantitative investments; global real sector strategies such as high-yield and DWUKPGUUFKXKUKQPYQTNFYKFG6JGTGIKQPCNURNKVKURTKOCTKN[DCUGF QPVJGENKGPVUGTXKEKPINQECVKQP estate; infrastructure and private equity; emerging market debt. In addition to and fund services. Revenues and key this suite of traditional fixed income performance indicators are reported offerings, the team also manages according to these business lines and a unconstrained fixed income, currency +PXGUVGFCUUGVUD[DWUKPGUUNKPG breakdown of invested assets by strategies and customized solutions. +PGZEGRVYJGTGKPFKECVGF business line is shown in the chart. 1P Global investment solutions offers active The “Investment capabilities and asset allocation, currency, multi-manag- 6QVCN%*(DKNNKQP %*(DKNNKQP %*(DKNNKQP services” chart illustrates our offering, er, structured solutions, risk advisory and which can be delivered in the form of strategic investment advisory services. It segregated, pooled and advisory manages a wide array of regional and mandates, along with a range of more global multi-asset investment strategies than 1,000 registered investment funds, across the full investment universe and exchange-traded funds and other risk / return spectrum, structured investment vehicles in a wide variety of portfolios, convertible bonds and jurisdictions and across all major asset absolute-return strategies. Through its classes. risk management and strategic invest- 6TCFKVKQPCNKPXGUVOGPVU $&AG ment advisory services, it supports clients #NVGTPCVKXGCPFSWCPVKVCVKXGKPXGUVOGPVU Equities offers a full spectrum of in a wide range of investment-related )NQDCNTGCNGUVCVG +PHTCUVTWEVWTGCPFRTKXCVGGSWKV[ investment styles with varying risk and functions. return objectives. It has three investment pillars with distinct strategies, including core / value (portfolios managed

38 Alternative and quantitative investments Distribution has two primary business lines – Alterna- tive Investment Solutions (AIS) and Our capabilities and services are O’Connor. AIS offers a full spectrum of distributed through our regional hedge fund solutions and advisory business structure (Americas, Asia services including multi-manager Pacific, Europe and Switzerland) as strategies. O’Connor is a key provider of detailed in the “Business structure” single-manager global hedge funds. chart. A breakdown of invested assets across these regions is shown in the bar Global real estate actively manages real chart. estate investments globally and region- ally within Asia, Europe, Switzerland and Through regional distribution, we are the US, across the major real estate able to leverage the full resources of our sectors. Its capabilities are focused on global investment platforms and core and value-added strategies but also functions to provide clients with relevant include other strategies across the investment management products and risk / return spectrum. It offers direct and services, client servicing and reporting at indirect investment, multi-manager and a local level. real estate securities strategies. We also have a dedicated global Infrastructure and private equity sovereign markets group to deliver an manages direct infrastructure investment integrated approach to this client and multi-manager infrastructure and segment and ensure that sovereign private equity strategies for both institutions receive the focused advisory, institutional and high net worth investment and training solutions they investors. Infrastructure asset manage- require. ment manages direct investments in core infrastructure assets globally. Alternative Fund Advisory (AFA) infrastructure and AFA private equity construct broadly diversified fund of funds portfolios across the infrastructure and private equity asset classes, respectively.

Fund services, the global fund administration business, provides professional services, including legal set-up, reporting and accounting for retail and institutional investment funds, hedge funds and other alternative products.

39 Investment Bank

The Investment Bank provides a broad range of products and services in equities, fixed income, foreign exchange and commodities to corporate and institutional clients, sovereign and government bodies, financial intermediaries, alternative asset managers and UBS’s wealth management clients. The Investment Bank is an active participant in capital markets flow activities, including sales, trading and market-making across a broad range of securities. It provides financial solutions to a wide range of clients, and offers advisory and analytics services in all major capital markets.

Business division reporting As of or for the year ended % change from Excluding unauthorized trading incident CHF million, except where indicated 31.12.11 1 31.12.11 2 31.12.10 31.12.09 31.12.10 Investment banking 1,371 2,414 2,466 (43) Securities 7,969 10,144 4,390 (21) Equities 3,698 4,469 4,937 (17) Fixed income, currencies and commodities 4,271 5,675 (547) (25) Total income 9,340 12,558 6,856 (26) Credit loss (expense) / recovery 3 12 0 (1,698) Total operating income excluding own credit and unauthorized trading incident 9,352 12,558 5,158 (26) Own credit 4 1,537 (548) (2,023) Total operating income excluding unauthorized trading incident 10,889 10,889 Unauthorized trading incident (1,849) Total operating income as reported 9,040 12,010 3,135 (25) Personnel expenses 5,801 6,743 5,568 (14) Non-personnel expenses 3,085 3,070 3,648 0 Total operating expenses 8,886 5 8,886 9,813 9,216 (9) Business division performance before tax 154 2,003 2,197 (6,081) (93)

Additional information / Key performance indicators 6 Total assets (CHF billion) 7 1,073.6 966.9 992.0 11 BIS risk-weighted assets, Basel 2.5 (CHF billion) 8 155.7 145.6 N/A N/A N/A Average VaR (1-day, 95% confidence, 5 years of historical data) 75 N/A 56 55 34 Personnel (full-time equivalents) 17,256 16,860 15,666 2

1 Income and expenses related to the SNB StabFund investment management team, who are employed by UBS, were transferred from the Investment Bank to the Corporate Center in 2011. The impact on performance from continuing operations before tax is not material in the current or any prior period. Comparative prior periods have not been adjusted. 2 Excludes the impact from the unauthorized trading incident of CHF 1,849 million in the income statement, and its risk-weighted assets impact of CHF 10.1 billion on a Basel 2.5 basis. 3 Includes credit loss (expense) / recovery on reclassified and acquired securities (2011: recovery of CHF 9 million; 2010: credit loss expense of CHF 172 million). 4 Represents own credit changes on financial liabilities designated at fair value through profit or loss. The cumulative own credit gain for such debt held on 31 December 2011 amounts to CHF 1.9 billion; the cumulative own credit gain for such debt held at 31 December 2010 amounts to CHF 0.2 billion. The gains have reduced the fair value of financial liabilities designated at fair value through profit or loss recognized on our balance sheet. Refer to “Note 26 Fair value of financial instruments” in the “Financial information” section of the Annual Report 2011 for more information. 5 Operating expenses include restructuring charges of CHF 216 million. Refer to “Note 37 Reorganizations and disposals” in the “Financial information” section of the Annual report 2011 for more information. 6 For the definitions of our key performance indicators, refer to the “Measurement of performance” section of the Annual report 2011. 7 Based on third-party view, i.e. without intercom- pany balances. 8 Capital management data as of 31 December 2011 is disclosed in accordance with the Basel 2.5 framework. Comparative data under the new framework is not available for 31 December 2010 and 31 December 2009. The comparative information under the Basel II framework is therefore provided. Refer to the “Capital management” section of the Annual report 2011 for more information.

40 1WTUVTCVGI[ We are repositioning the Investment Bank to align our businesses more (NQY 5QNWVKQPU #FXKUQT[ closely with the needs of our core clients CPFCPCN[VKEU and the wealth management franchise, 9JCV! 'ZGEWVKQP 5WRRQTVMG[ENKGPVU 4GUGCTEJCPFKPUKIJV /CTMGVOCMKPI 5GNGEVKXGTKUMVCMKPI #FXKUQT[ and to address economic and regulatory %NGCTKPI /CTMGVGZRGTVKUG #PCN[UKU changes that affect the entire industry. %NKGPVU! 9GCNVJOCPCIGOGPVKPUVKVWVKQPCN 9GCNVJ/CPCIGOGPV 9GCNVJ/CPCIGOGPV Our business model aims to be simpler EQTRQTCVGUUQXGTGKIPU EQTRQTCVGUUQXGTGKIPU URQPUQTUCPFKPUVKVWVKQPCN URQPUQTUCPFKPUVKVWVKQPCN and more focused, with the goal of *QY! +PXGUVCPFITQY 1RVKOK\G /QPGVK\G optimizing returns predicated on the efficient execution of our strategy across three strategic pillars: (i) flow; (ii) %+TCVKQ *KIJ .QY *KIJ solutions; and (iii) advisory and analytics.

%CRKVCNKPVGPUKV[ .QY /GFKWOs*KIJ .QY Each pillar represents businesses that have similar transactional characteristics 4Q' /GFKWO *KIJ /GFKWOs*KIJ and success factors. $&AG We believe that while none of the three pillars can support our franchise or Business capital for corporate, institutional and deliver adequate returns on its own, a sovereign clients in the debt and equity carefully balanced combination can The Investment Bank is organized into markets. In addition, the investment better protect our profitability against three distinct business areas to align the banking department plays a lead role in fluctuations in client demand, costs or delivery of our services and the execu- marketing UBS to corporates by market movements. tion of our strategy with the needs of leveraging senior client relationships. our clients: To support our goal of becoming more –– equities Strategy focused and less complex while taking –– fixed income, currencies and com- on less risk, we have intensified efforts modities (FICC) The Investment Bank is critical to the to increase our capital efficiency and to –– the investment banking department success of UBS’s strategy. It is well actively reduce risk-weighted assets. In positioned across many businesses and line with this strategy, we plan on The equities and FICC businesses are regions – for example, we are among reducing risk-weighted assets in the core aligned within securities to foster a the market leaders in equities, equity businesses by approximately one-third higher degree of cooperation across derivatives and foreign exchange and we and reducing our legacy portfolio sales and trading. Together, they offer have a strong presence across all (managed and reported in the Corporate access to the primary and secondary businesses in Asia. Center starting with the first quarter of securities markets, foreign exchange and 2012) by close to 90% by the end of prime brokerage services as well as 2016. In our operating plan, we research on equities, fixed income, estimate the potential revenue loss from commodities, and economic and the risk-weighted assets reduction in our quantitative research. The investment core businesses to be approximately CHF banking department provides advice on 500 million per annum. To this end, we mergers and acquisitions and raises will optimize our business mix in favor of products and services that have the highest relevance to clients, offer the best growth opportunities and are less capital intensive.

41 In reshaping our securities business, we governance. In 2011, we continued to Significant recent acquisitions, disposals are exiting certain areas, including FICC focus on the efficiency of our cost base and business transfers asset securitization, complex structured through a number of initiatives, and we products, FICC macro directional and expect the full impact of our activities to In September 2009, UBS completed the equities proprietary trading. With the be realized during the course of 2012 sale of its Brazilian financial services exception of macro directional and and 2013. These initiatives include business, UBS Pactual. equities proprietary trading, the assets headcount reductions, refocusing of associated with the areas we intend to discretionary spending on client revenue In April 2010, UBS entered into an exit will be managed in a legacy asset generating activities and increasing agreement to acquire Link Investimen- portfolio, which will be reported in the efficiency of our operating model and tos, a Brazilian financial services firm. Corporate Center starting with the first processes. quarter of 2012. Competitors Organizational structure We have also revised our approach to Our main competitors are the major other businesses with high capital The Investment Bank comprises the global investment banks, including intensity relative to returns, such as three business areas described in the Bank of America / Merrill Lynch, Barclays long-dated rates derivatives in flow “Business” section above. Additionally, Capital, Citigroup, Credit Suisse, rates, which will be scaled back signifi- the global capital markets business is a Deutsche Bank, Goldman Sachs, JP cantly. We will nevertheless continue to joint venture between securities and the Morgan Chase and Morgan Stanley. invest in businesses in which we have a investment banking department, which Other competing firms are active in strong presence and those that offer consists of two separate areas: equity many of the businesses and markets in attractive risk-return characteristics, such capital markets and debt capital which we participate. as cash and equity derivatives, foreign markets. Global leveraged finance is a exchange, certain credit businesses and joint venture between the investment Products and services commodities. banking department and FICC and includes the global syndicated finance Securities In advisory and capital markets, we are business. The securities segment provides a increasing the intensity of our coverage coordinated distribution platform with to leverage our global footprint more We employ approximately 17,000 enhanced cross-asset delivery and effectively. This includes strengthening personnel in over 30 countries. We oper- specialist skills. Securities research is a our presence in the Americas, restoring ate through branches and subsidiaries consistently top-ranked research house, our position in Europe, the Middle East of UBS AG. Securities activities in the US which provides in-depth investment and Africa and extending our leading are conducted through UBS Securities analysis across various asset classes of market position in Asia Pacific. LLC, a registered broker-dealer. more than 3,400 companies worldwide, or about 85% of the global market Across the Investment Bank, we will capitalization, in over 50 markets. In continue to invest in infrastructure, addition, we have a specialist research technology, the retention and develop- function offering quantitative analysis, ment of our people and hiring of talent socially responsible investing, alternative in key areas to ensure the successful research, valuation and accounting, and execution of our strategy. The Invest- special situations analysis. ment Bank is also investing to improve its internal risk control systems and Equities increasing its focus on corporate We are one of the world’s largest participants in the primary and secondary markets for cash equity and equity- related products, including listed options, structured products, equity- linked securities, swaps, futures and over-the-counter (OTC) derivative contracts. Our equities franchise utilizes a client-centric model to serve hedge

42 funds, asset managers, wealth manage- range of exchange-traded, OTC, Credit sales and trading encompasses ment advisors, banks, pension funds and securitized and fund-wrapped products. the origination, underwriting, trading corporations globally. We structure, We create customized structured and distribution of cash and synthetic execute, distribute, finance and clear products for institutional and retail products across the credit spectrum – cash equity and equity-related products, investors with returns linked to individu- bonds, derivatives, notes and loans. We in addition to distributing new equity al companies, sectors and indices across are active across all major markets in and equity-related issues. Our prime multiple asset classes. secondary trading and market making of services franchise includes prime flow and structured credit instruments, brokerage and execution and clearing Prime services offers an integrated securitized products and loans, and are services, which enables clients to address global prime brokerage business, focused on providing market liquidity regulatory changes in the OTC derivative including multi-asset class clearing and and tailored solutions to our clients. In markets. custody, capital consultancy, financing, partnership with the investment banking securities lending and equity swaps department, we also provide capital The main business lines of the equities execution. In addition, we provide clients markets debt financing and liability risk business area are outlined below: with execution and clearing capabilities management solutions to corporates on futures and options contracts across and institutions. Cash equities provides clients with all asset classes, including equities, fixed liquidity, investment advisory, trade income and commodities, on more than The emerging markets business offers execution and related consultancy 70 exchanges globally. investors in Central and Eastern Europe, services, together with comprehensive the Middle East, Latin America and access to primary markets, corporate Fixed income, currencies and selected Asian countries access to management and subject matter commodities international markets, and provides experts. We offer full-service trade The FICC business area delivers products international investors with an opportu- execution for single stocks and portfo- and solutions to corporate, institutional nity to add exposure through our lios, including capital commitment, block and public-sector clients in all major onshore presence in key locations. We trading, small-cap execution and markets, as well as to private clients via also provide liquidity in local markets commission management services. In targeted intermediaries. The main across foreign exchange, credit, rates addition, we provide clients with a full business lines of the FICC business area and structured products. suite of advanced electronic trading are outlined below: algorithms, strategies and analytical Our commodities business includes tools. Macro consists of the foreign exchange, market-leading indices and precious money market and interest rate sales metals offerings, combined with flow Derivatives and equity-linked provides a and trading businesses, as well as cash trading in agriculture, base metals and full range of flow, structured, synthetic and collateral trading. We provide a energy. We service a broad spectrum of and equity-linked products with global range of foreign exchange, precious institutional and corporate clients from access to primary and secondary metals, treasury, and liquidity manage- markets. The franchise enables clients to ment solutions to institutional and hedge and manage risk through a wide private clients via targeted intermediaries. Interest rate activities include standardized rate-driven products and services such as interest rate derivatives trading, underwriting and trading of government and agency securities.

43 risk management to direct or structured comprises the equity capital markets investments, enabling them to structure business, aligned with equities, whose deals at all levels of complexity and to products include initial public offerings, access liquidity during and outside secondary offerings and equity-linked exchange times and across time zones. transactions; and the debt capital From the first quarter of 2012, this markets business, aligned with FICC, business will be part of the macro whose products include commercial business. paper, medium-term notes, senior debt, high-yield debt, subordinated debt and Investment banking department hybrid capital. All our financing products The investment banking department are provided alongside risk management provides strategic advice and a range of solutions, which include derivatives, capital markets execution services to structured finance, ratings advisory corporate clients, financial institutions, services and liability management. financial sponsors, sovereign clients and hedge funds. With a presence in all Global leveraged finance provides major financial markets, investment event-driven (acquisition, leveraged banking coverage is based on a matrix buyout) loans, and bond and mezzanine of country, sector and product banking leveraged finance to corporate clients professionals. and financial sponsors.

The main business lines of the investment banking department business area are outlined below:

The advisory group assists in acquisitions and sale processes, and also advises on strategic reviews and corporate restructuring solutions.

Global capital markets is a joint venture with the securities business. It offers financing and advisory services that cover all forms of capital raising as well as risk management solutions. It

44 Corporate Center

The Corporate Center enables UBS to operate coherently and effectively by providing and managing support and control functions for the business divisions and the Group. It provides services in the areas of risk, finance (including funding, capital and balance sheet management, and management of non-trading risk), legal and compliance, information technology, human resources, real estate, procurement, communication and branding, corporate development, security and offshoring.

Treasury activities and other corporate items reporting As of or for the year ended % change from CHF million, except where indicated 31.12.11 1 31.12.10 31.12.09 31.12.10 Income (80) 1,135 394 Credit loss (expense) / recovery (1) 0 (5) Total operating income (80) 1,135 389 Personnel expenses 71 78 551 (9) Non-personnel expenses 212 265 699 (20) Total operating expenses 283 2 343 1,250 (17) Performance before tax (363) 795 (867)

Additional information Total operating expenses before service allocations to business divisions 7,762 8,202 8,501 (5) Personnel (full-time equivalents) 19,270 19,472 20,054 (1) Personnel after allocations (full-time equivalents) 274 194 1,624 41

1 Income and expenses related to the SNB StabFund investment management team, who are employed by UBS, were transferred from Investment Bank to Corporate Center in 2011. The impact on performance from continuing operations before tax is not material in the current or any prior period. Comparative prior periods have not been adjusted. 2 Operating expenses include restructuring charges of CHF 15 million. Refer to “Note 37 Reorganizations and disposals” in the “Financial information” section of the Annual Report 2011 for more information.

Aims and objectives branding, corporate development, security and offshoring) into the The Corporate Center provides the Corporate Center under the leadership business divisions with Group-level of the Group Chief Operating Officer control in the areas of finance, risk, legal (Group COO) was completed in 2009. and compliance, and a global corporate At the same time, the control functions shared services organization comprising were centralized under the Group Chief support and logistics functions. We Financial Officer (Group CFO), the Group strive to maintain effective corporate Chief Risk Officer (Group CRO), and the governance processes, including Group General Counsel (Group GC), compliance with relevant regulations, respectively. ensuring an appropriate balance between risk and return. Each functional The Corporate Center has improved head in the Corporate Center has efficiency, execution and service quality. authority over all businesses in their area We have upgraded our cost manage- of responsibility, including the authority ment for global and Group-wide cost to issue Group-wide policies for that responsibilities, and have implemented area. simple service delivery models with clear responsibilities. Our investment gover- The integration of Group-wide shared nance process provides oversight, review service functions (information technol- and approval of programs in the project ogy, human resources, real estate, portfolio and of those in the pipeline. procurement, communication and This is part of a global service level

45 agreement framework, ensuring manages and controls our tax affairs and Group Chief Risk Officer investments are aligned with the Group’s treasury and capital management, The Group CRO is responsible for strategic priorities. Overall, the integrat- including management and control of developing and implementing principles ed structure helps us to maintain funding and liquidity risk as well as regu- and appropriate independent control independent control functions and a latory capital ratios. After consultation frameworks for credit, market, country core platform from which we can create with the Board of Directors’ Audit and operational risks within the Group. synergies for revenue growth and Committee, the Group CFO makes In particular, the Group CRO formulates enhance shareholder value. proposals to the Board of Directors (BoD) and implements the frameworks for risk regarding the policies for accounting we capacity and appetite, risk measure- The Corporate Center also encompasses have adopted, and defines the policies ment, portfolio controls and risk certain centrally managed positions, for financial reporting and disclosure. reporting; and has management including the SNB StabFund option and Together with the Group Chief Executive responsibility over the divisional and (with effect from the first quarter of Officer (CEO), the Group CFO provides Group risk control functions. He 2012) the legacy portfolio formerly in external certifications under sections implements the risk control mechanisms the Investment Bank. 302 and 404 of the Sarbanes-Oxley Act as determined by the BoD, the BoD Risk 2002, and, in coordination with the Committee or the Group CEO. In In 2011, the Corporate Center focused Group CEO, manages relations with addition, the Group CRO approves on further streamlining the organization, analysts, investors and rating agencies. transactions, positions, exposures, implementing strategic change pro- portfolio limits and provisions in grams and improving operational Group Chief Operating Officer accordance with the delegated risk excellence. At the end of the year, there The Group COO is responsible for the control authorities, and monitors and were approximately 19,300 employees management and performance of the challenges the firm’s risk-taking activi- across all of the Corporate Center shared service functions of the Group, ties. functions. The majority of the Corporate including the management and control Center’s treasury income, costs and of Group-wide information technology, Group General Counsel headcount are re-allocated to the procurement, real estate and corporate The Group GC is responsible for legal business divisions for which the respec- administrative services, human resourc- and compliance matters, policies and tive services are performed. es, strategy, communications and processes, and for managing the legal branding as well as for physical and and compliance function for the UBS Organizational structure information security and offshoring. In Group. The Group GC assumes responsi- addition, the Group COO supports the bility for establishing a Group-wide The Corporate Center consists of the Group CEO in developing our strategy management and control process for control functions Group Finance, Group and addressing key strategic issues. The our relationship with regulators, in close Risk, and Group General Counsel, in Group COO also acts as the CEO of the cooperation with the Group CRO and addition to the shared services functions. Corporate Center, and oversees the the Group CFO where relevant, and for business and strategic planning of maintaining the relationships with our Group Chief Financial Officer shared services. key regulators with respect to legal and The Group CFO is responsible for compliance matters. The Group GC is transparency in, and appraisal of, the further responsible for reporting legal financial performance of the Group and and compliance risks and material its business divisions; the Group’s litigation, for managing litigation and financial reporting; forecasting, planning special and regulatory investigations, and controlling processes; and for and for ensuring that we meet relevant providing advice on financial aspects of regulatory and professional standards in strategic projects and transactions. The the conduct of our business. Group CFO manages the divisional and Group financial control functions. He

46 Our corporate governance and responsibility

47 Our Board of Directors

The Board of Directors (BoD) is our most senior body. Under the leadership of the Chairman, it determines the strategy of the Group based upon the recommendations of the Group Chief Executive Officer (Group CEO). It exercises ultimate supervision of management and is responsible for the appointment and dismissal of all Group Executive Board (GEB) members, the Company Secretary and the head of Group Internal Audit as well as supervising and setting appropriate risk management and control principles for the firm. With the exception of its current Chairman, Kaspar Villiger, all members of the BoD are independent.

48 1 2 3 4 5 6 1 Kaspar Villiger Chairman of the Board of Directors, Chairperson of the Governance and Nominating 7 8 9 10 11 Committee and member of the Corporate Responsibility Committee 2 Michel Demaré Independent Vice Chairman, member of the Audit Committee and the Governance and Nominating Committee 3 David Sidwell Senior Independent Director, Chairperson of the Risk Committee and member of the Governance and Nominating Committee 4 Rainer-Marc Frey Member of the Audit Committee and the Risk Committee 5 Bruno Gehrig Member of the Governance and Nominating Committee and the Human Resources and Compensation Committee 6 Ann F. Godbehere Chairperson of the Human Resources and Compensation Committee, member of the Audit Committee and the Corporate Responsibility Committee 7 Axel P. Lehmann Member of the Governance and Nominating Committee and the Risk Committee 8 Wolfgang Mayrhuber Chairperson of the Corporate Responsibility Committee and member of the Human Resources and Compensation Committee 9 Helmut Panke Member of the Human Resources and Compensation Committee, member of the Risk Committee 10 William G. Parrett Chair person of the Audit Committee 11 Joseph Yam Member of the Corporate Responsibility Committee and the Risk Committee

49 Our Group Executive Board

The management of the firm is delegated by the BoD to the GEB. Under the leadership of the Group CEO, the GEB has executive management responsibility for the Group and its businesses. It assumes overall responsibility for the development of the Group and business division strategies and the implementation of approved strategies.

50 1 2 3 4 5 6 1 Sergio P. Ermotti Group Chief Executive Officer 2 Markus U. Diethelm Group General Counsel 7 8 9 10 11 12 3 John A. Fraser Chairman and CEO Global Asset Management 4 Lukas Gähwiler CEO UBS Switzerland and co-CEO Wealth Management & Swiss Bank 5 Carsten Kengeter Chairman and CEO Investment Bank 6 Ulrich Körner Group Chief Operating Officer, CEO Corporate Center and CEO UBS Group Europe, Middle East and Africa 7 Philip J. Lofts Group Chief Risk Officer 8 Robert J. McCann CEO Wealth Management Americas and CEO UBS Group Americas 9 Tom Naratil Group Chief Financial Officer 10 Alexander Wilmot-Sitwell Co-Chairman and co-CEO UBS Group Asia Pacific 11 Chi-Won Yoon Co-Chairman and co-CEO UBS Group Asia Pacific 12 Jürg Zeltner CEO UBS Wealth Management and co-CEO Wealth Management & Swiss Bank

51 Corporate responsibility

In 2011, we continued to work towards meeting the societal goals and commitments we have set ourselves, guided by our Code of Business Conduct and Ethics. We contributed further to the fight against money laundering, corrup- tion and terrorist financing. We strengthened our management of environmental and social risks, intensified our sustainability-related business activities, and continued to roll out our in-house environmental management and supply chain programs and our investment in community activities.

Governance, strategy, commitments ingly provide financial services to In the social sphere, we seek to en- corporate clients, nor will we purchase hance, along with our employees, the The Board of Directors sets the Group’s goods or services from suppliers, where well-being of the local communities we values and standards and ensures that the use of proceeds, primary business operate in through our well-established we meet our obligations to shareholders activity, or acquisition target involves community affairs program. In 2011, and stakeholders. Our focus is on certain environmental and social risks. UBS and its affiliated foundations gaining and retaining the trust of all our donated a total of CHF 31.1 million in stakeholders, as well as on generating In 2011, our integrated teams for cash to carefully selected non-profit sustainable earnings and creating philanthropy and values-based / sustain- partner organizations and charities. long-term shareholder value. Our able investing further developed our These donations were directed primarily shareholders, clients, employees and holistic service offering in our wealth toward advancing our Community society in general demand that we management businesses. These teams Affairs key themes of “Education” and pursue our banking activities responsibly, provide thought leadership, advice and “Entrepreneurship.” Our overall and that our products and services are solutions to assist our private clients and donations also include CHF 3.2 million in best suited to the needs of our clients. prospects in investing all or part of their disaster relief made after the devastating portfolio according to their values and in earthquake in Japan. Our employees Continued commitment to delivering positive change through their participate in our community investment responsible banking philanthropy and investments. efforts across all business regions. In 2011, 11,678 employees spent 105,000 In 2011, we strengthened our efforts to Across all of UBS’s businesses, we seek hours volunteering, a substantial both prevent and combat financial to help investors benefit from environ- increase on previous years. crime. We adhere to strict Know Your mentally and socially related business Client regulations without undermining opportunities by integrating environ- Recognition for our efforts our clients’ legitimate right to privacy. mental and social considerations, where relevant, in our investment, ownership, Our activities are regularly recognized by Some of our clients operate in sectors research and financing processes. external bodies. UBS was once again characterized by consistent environmen- named an index component for the Dow tal and social challenges. In 2011, we With regard to our own operations, we Jones Sustainability Index (DJSI) World, focused on the execution of the “UBS have long worked to lower our environ- and we are a member of the FTSE4Good position on relationships with clients and mental footprint. After establishing an index series. We have belonged to both suppliers associated with controversial energy functional unit in the late 1970s, since their inception. We are also among activities”. This means we will not know- we became the first Swiss bank to create the few financial companies represented an environmental officer position in the in both the Carbon Disclosure Project’s 1980s. We have persisted in improving the environmental efficiency of our operations. In 2011, we further reduced

our global CO2 emissions to 39% compared with 2004 levels, and we are confident that we will meet our ambi- tious 40% reduction target for 2012.

52 Carbon Performance Leadership Index and its Carbon Disclosure Leadership Investing in our communities across the globe Index. Our community investment activities have also been singled out for UBS understands its responsibility to with Charities Aid Foundation India, was merit. In December, UBS’s partnership enhance the well-being of the commu- held in June 2011 in Mumbai. It focused with the Bridge Academy, a state nities in which it operates. It invests in on women leaders and the 20 partici- secondary school in Hackney, London, local communities to produce a signifi- pants came away with fresh perspectives received UK Prime Minister David cant and sustained impact in them. UBS on how to tackle the challenges of Cameron’s Big Society Award. It Community Affairs acts in a comprehen- leading and managing a not-for-profit recognizes the 1,700 UBS employees sive manner that encompasses direct organization in India. Across the who have volunteered their time and and matched financial donations as well Asia-Pacific region, UBS employees skills since the academy was established as volunteering by UBS employees. It continued to volunteer in record in 2003. works to create opportunities by numbers, significantly increasing the focusing on activities in the areas of number of hours contributed to our Client foundation education and entrepreneurship community partners in 2011.

The UBS Optimus Foundation is one of Americas – In 2011, we developed a Europe, Middle East and Africa – Switzerland’s largest charitable founda- unique community partnership with Throughout the region, we continue to tions. It is a non-profit organization artist Stephen Wiltshire and student support educational and entrepreneurial through which UBS clients have artists from the greater New York area. activities, particularly in areas close to improved the lives of children worldwide The program allowed students to draw where we conduct our business. We by donating over CHF 118 million to their own interpretation of the New York now have active Community Affairs 250 projects in 73 countries. As UBS City skyline as a way to learn and programs in the UK, France, Italy, South bears all the administrative costs related engage in discussions about 9/11 and Africa, Poland, UAE, Russia, Ireland and to the foundation, 100% of every client their neighborhoods in general. To Jersey. The regional flagship program is donation goes directly to the individual commemorate the 10th anniversary of our partnership with the Bridge Acad- projects. September 11, 2001, UBS published emy, a mixed, non-denominational Reflections of Recovery and Resurgence: school for 11–18-year-olds located in UBS 9/11 Humanitarian Relief Fund. Hackney – one of the most deprived Immediately following the events of boroughs in London – and adjacent to September 11, UBS created the UBS UBS’s London base. 9/11 Humanitarian Relief Fund to provide assistance to victims as well as Switzerland – During the European Year long-term grants for the children of of Volunteering in 2011, UBS launched victims. Our mentor programs, which a unique national project to restore operate in four US cities, continue to be Swiss hiking trails. UBS employees our main volunteer initiatives. In 2011, replaced broken or inaccurate signposts, employees volunteered to become restored sections of the network of mentors to hundreds of children – help- hiking trails and constructed new ones. ing students build the confidence and The activities took place in six locations skills they need for future success. across Switzerland. In total, 319 employees volunteered 3,805 hours of Asia Pacific –The Community Leadership their time. Experience, developed in partnership

53 Information sources

Reporting publications Other information

Annual publications Website Annual report (SAP no. 80531): Published in both English and The “Investor Relations” website at www.ubs.com/investors German, this single volume report provides a description of: provides the following information on UBS: press releases; our UBS Group strategy and performance; the strategy and financial information (including results-related filings with the performance of the business divisions and the Corporate US Securities and Exchange Commission); corporate informa- Center; risk, treasury and capital management; corporate tion, including UBS share price charts and data and dividend governance, responsibility and senior management and Board information; the UBS corporate calendar; and presentations of Directors compensation; and financial information, by management for investors and financial analysts. Informa- including the financial statements.Review (SAP no. 80530): tion on the internet is available in English and German. The booklet contains key information on our strategy and financials. It is published in English, German, French and Result presentations Italian. Compensation Report (SAP no. 82307): The report Our quarterly results presentations are webcast live. discusses compensation for senior management and the A playback of most presentations is downloadable at Board of Directors (non-independent and independent). It is www.ubs.com/presentations. published in English and German. Messaging service / UBS news alert Quarterly publications On the www.ubs.com/newsalerts website, it is possible to Letter to shareholders: The letter provides a quarterly update subscribe to receive news alerts about UBS via SMS or e-mail. from executive management on our strategy and perfor- Messages are sent in English, German, French or Italian and it mance. The letter is published in English, German, French and is possible to state theme preferences for the alerts received. Italian. Financial report (SAP no. 80834): The quarterly financial report provides an update on our strategy and Form 20-F and other submissions to the US Securities and performance for the respective quarter. It is published in Exchange Commission English. We file periodic reports and submit other information about UBS to the US Securities and Exchange Commission (SEC). How to order reports Principal among these filings is the annual report on Form 20-F, filed pursuant to the US Securities Exchange Act of The annual and quarterly publications are available in PDF 1934. The filing of Form 20-F is structured as a “wrap- format on the internet at www.ubs.com/investors in the around” document. Most sections of the filing can be “Financial information” section. Printed copies can be satisfied by referring to parts of the annual report. However, ordered from the same website by accessing the “Order print there is a small amount of additional information in Form publications” panel on the left-hand side of the screen. 20-F which is not presented elsewhere, and is particularly Alternatively, they can be ordered by quoting the SAP number targeted at readers in the US. Readers are encouraged to and the language preference where applicable, from UBS AG, refer to this additional disclosure. Any document that we F4UK–AUL, P.O. Box, CH-8098 Zurich, Switzerland. file with the SEC is available to read and copy on the SEC’s website, www.sec.gov, or at the SEC’s public reference room at 100 F Street, N.E., Room 1580, Washington, DC, 20549. Please call the SEC by dialing +1-800-SEC-0330 for further information on the operation of its public reference room. Please visit http://www.ubs.com/investors for more information.

54 Corporate information

The legal and commercial name of the company UBS AG is incorporated and domiciled in The addresses and telephone numbers of our is UBS AG. The company was formed on 29 June Switzerland and operates under Swiss Company two registered offices are: Bahnhofstrasse 45, 1998, when Union Bank of Switzerland (founded Law and Swiss Federal Banking Law as an CH-8001 Zurich, Switzerland, 1862) and Swiss Bank Corporation (founded Aktiengesellschaft, a corporation that has issued phone +41-44-234 11 11; and Aeschenvorstadt 1, 1872) merged to form UBS. shares of common stock to investors. CH-4051 Basel, Switzerland, phone +41-61-288 50 50. UBS AG shares are currently listed on the SIX Swiss Exchange and the New York Stock Exchange. Contacts

Switchboards Media Relations Shareholder Services For all general queries. UBS’s Media Relations team supports global UBS’s Shareholder Services team, a unit of the Zurich +41-44-234 1111 media and journalists from offices in Zurich, Company Secretary office, is responsible for London +44-20-7568 0000 London, New York and Hong Kong. the registration of the global registered shares. New York +1-212-821 3000 Hong Kong +852-2971 8888 www.ubs.com/media UBS AG, Shareholder Services P.O. Box, CH-8098 Zurich, Switzerland www.ubs.com/contact Zurich +41-44-234 8500 [email protected] [email protected] Investor Relations UBS’s Investor Relations team supports London +44-20-7567 4714 Hotline +41-44-235 6202 institutional, professional and retail investors [email protected] Fax +41-44-235 3154 from our offices in Zurich and New York. New York +1-212-882 5857 US Transfer Agent UBS AG, Investor Relations [email protected] For all global registered share-related queries P.O. Box, CH-8098 Zurich, Switzerland Hong Kong +852-2971 8200 in the US. [email protected] [email protected] Computershare www.ubs.com/investors 480 Washington Boulevard Office of the Company Secretary Jersey City, NJ 07310-1900, USA Hotline +41-44-234 4100 The Company Secretary receives queries on New York +1-212-882 5734 compensation and related issues addressed to [email protected] Fax (Zurich) +41-44-234 3415 members of the Board of Directors. www.bnymellon.com/shareowner/equityaccess UBS AG, Office of the Company Secretary Calls from the US +866-541 9689 P.O. Box, CH-8098 Zurich, Switzerland Calls outside the US +1-201-680 6578 [email protected] Fax +1-201-680 4675 Hotline +41-44-234 3628 Fax +41-44-234 6603

Corporate calendar Imprint

Publication of first quarter 2012 results Publisher: UBS AG, Zurich and Basel, Switzerland | www.ubs.com Wednesday, 2 May 2012 Languages: English / German / French / Italian | SAP-No. 80530E

Annual General Meeting © UBS 2012. The key symbol and UBS are among the registered and Thursday, 3 May 2012 unregistered trademarks of UBS. All rights reserved. Publication of second quarter 2012 results Tuesday, 31 July 2012 Publication of third quarter 2012 results Tuesday, 30 October 2012

55 Cautionary Statement Regarding Forward-Looking Statements | This report contains statements that constitute “forward-looking statements”, including but not limited to management’s outlook for UBS’s financial performance and statements relating to the anticipated effect of transactions and strategic initiatives on UBS’s business and future development. While these forward-looking statements represent UBS’s judgments and expectations con- cerning the matters described, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from UBS’s expectations. These factors include, but are not limited to: (1) developments in the markets in which UBS operates or to which it is exposed, including movements in securities prices or liquidity, credit spreads, currency exchange rates and interest rates and the effect of economic conditions and market developments on the financial position or creditworthiness of UBS’s clients and counterparties; (2) changes in the availability of capital and funding, including any changes in UBS’s credit spreads and ratings; (3) the ability of UBS to reduce its Basel III risk-weighted assets in order to comply with future Swiss capital requirements without materially adversely affecting its profitability; (4) changes in financial regulation in Switzerland, the US, the UK and other major financial centers which may impose constraints on or necessitate changes in the scope and location of UBS’s business activities and in its legal and booking structures, including the imposition of more stringent capital and liquidity requirements, incremental tax requirements and constraints on remuneration; (5) possible constraints or sanctions that regulatory authorities might impose on UBS, including as a consequence of the unauthorized trading incident announced in September 2011; (6) changes in UBS’s competitive position, including whether differences in regulatory capital and other requirements among the major financial centers will adversely affect UBS’s ability to compete in certain lines of business, (7) the liability to which UBS may be exposed due to litigation, contractual claims and regulatory investigations, some of which stem from the market events and losses incurred by clients and counterparties during the financial crisis of 2007–2009; (8) the effects on UBS’s cross-border banking business of international tax treaties recently negotiated by Switzer- land and future tax or regulatory developments; (9) the degree to which UBS is successful in effecting organizational changes and implementing strategic plans, and whether those changes and plans will have the effects intended; (10) UBS’s ability to retain and attract the employees necessary to generate revenues and to manage, support and control its businesses; (11) changes in accounting standards or policies, and accounting determinations affecting the recognition of gain or loss, the valuation of goodwill and other matters; (12) limitations on the effectiveness of UBS’s internal processes for risk management, risk control, measurement and modeling, and of financial models generally; (13) whether UBS will be successful in keeping pace with competitors in updat- ing its technology, particularly in trading businesses; and (14) the occurrence of operational failures, such as fraud, unauthorized trading and systems failures, either within UBS or within a counterparty. Our business and financial performance could be affected by other factors identified in our past and future filings and reports, including those filed with the SEC. More detailed information about those factors is set forth in documents furnished by UBS and filings made by UBS with the SEC, including UBS’s Annual Report on Form 20-F for the year ended 31 December 2011. UBS is not under any obligation to (and ex- pressly disclaims any obligation to) update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise. Rounding | Numbers presented throughout this report may not add up precisely to the totals provided in the tables and text. Percentages and percent changes are calculated based on rounded figures displayed in the tables and text and may not precisely reflect the percentages and percent changes that would be derived based on figures that are not rounded.

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