 |  Our strong earnings generation, and careful management of our balance sheet exposures, mean that UBS continues to generate capital, well in excess of our minimum regulatory requirements.
We do not, however, aim simply to store this capital, despite our exemplary BIS Tier 1 ratio. There is a close link between the way we manage our capital and our share valuation – inefficient capital allocation in and of itself would lead to structural overcapitalization. In effect, our capital management strategy, although simple, takes into account all of our stakeholders. Free capital is either used for strategic investment or it is given back to shareholders. Every potential transaction goes through rigorous assessment, to ensure that the capital used would not be better returned to our shareholders. In order to make use of the most tax efficient method of returning excess capital to shareholders, UBS has operated a second line share repurchase program on the Swiss Exchange – in both 2000 and 2001 – and has announced a new program to run from 6 March 2002.
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