Initiatives and achievements

UBS reported net profit attributable to UBS shareholders ("attributable profit") of CHF 3,275 million in first quarter 2007, down from CHF 3,504 million in the same period a year earlier. Attributable profit from continuing operations was CHF 3,270 million. Financial businesses contributed CHF 3,188 million to first quarter attributable profit, with CHF 3,182 million stemming from continuing operations. Industrial holdings, including our private equity portfolio, contributed CHF 87 million to UBS's attributable profit, down from CHF 456 million last year, when we sold Motor-Columbus.

UBS acquires Standard Chartered's mutual funds management business in India

In late January 2007, we signed an agreement to acquire Standard Chartered's mutual funds management business in India for a total consideration of USD 126 million. The transaction is structured as the acquisition of a 100% interest in Standard Chartered Asset Management Company Private Ltd, as well as Standard Chartered Trustee Company Private Ltd, the manager and trustee, respectively, of the mutual funds offered by the company. The transaction remains subject to regulatory approval as well as to a price adjustment linked to assets under management at closing.

We also announced our intention to form a strategic alliance with Standard Chartered Bank for fund distribution in Asia, the Middle East and Africa. Although the scope of the agreement has yet to be finalized, it is envisaged that it will give Standard Chartered's growing retail and wealth management businesses access to our capabilities as well as to a number of the Investment Bank's products, including structured products and, at the same time, provide momentum to UBS's third-party wholesale business in Asia.

Standard Chartered's mutual funds management business in India manages 16 mutual funds, 10 of which are fixed income, two asset allocation and four in equities. The equity funds represent around 19% of total assets under management.

Formerly known as ANZ Grindlays Asset Management Company, Standard Chartered Asset Management Company was incorporated in 1999. It has around 60 permanent staff members and is the ninth largest mutual fund manager in India with a 4% share of the domestic market. It is headquartered in Mumbai and has offices in 27 other cities, including Bangalore, Chennai, Kolkata and New Delhi.

Moody's upgrades UBS long-term debt rating to Aaa from Aa2 as part of methodology update

In April, Moody's Investors Service upgraded UBS's long-term debt rating to Aaa from Aa2 after applying its new joint default analysis (JDA) and updated bank financial strength (BFSR) methodologies.

JDA includes the probability of external support in a bank's local currency deposit rating while the BFSR rating looks at the individual, intrinsic financial strength of banks without external support.

Moody's long-term debt upgrade for UBS was due to a one notch improvement in the BFSR rating, combined with the firm's systemic importance within the Swiss banking system. UBS's subsidiaries and issuing vehicles debt ratings have been raised in line with the parent upgrade, except for UBS Loan Finance LLC in the US, which was placed on review for a possible upgrade.

UBS and Credit Suisse experienced the most significant debt upgrading in the Swiss banking system, although the deposit ratings of Raiffeisen Schweiz were also upgraded.

"The Aaa and Aa1 ratings for the three largest deposit takers in Switzerland reflect our assessment of the likely availability of systemic support in the event of distress at these institutions, given their importance to the Swiss economy and its payment system," Moody's said in a press release.