Notes to the Financial Statements

Acquisitions

UBS Securities

On 13 April 2007, UBS completed the acquisition of an equity stake of 20% in the newly established UBS Securities Co. Ltd. (UBSS) in China for a total consideration of approximately RMB 2.4 billion (CHF 369 million). The cost of the acquisition consisted of cash payments of approximately RMB 2.1 billion (CHF 324 million) including transaction costs and liabilities settled as well as the assumption of liabilities of approximately RMB 0.3 billion (CHF 45 million). On the basis of its current rights and obligations, UBS has significant influence and applies the equity method of accounting. Following approvals by Chinese regulators, UBSS commenced operations in December 2006 on the basis of a comprehensive set of securities licenses. UBSS is active in both primary and secondary domestic equities and fixed income businesses, in discretionary asset management, corporate advisory and mergers and acquisitions services, and in wealth management.

Daehan Investment Trust Management Company

In May 2007, UBS entered into a stock purchase agreement with Hana Daetoo Securities (formerly Daehan Investment & Securities Company Ltd.), a wholly owned subsidiary of Hana Financial Group, to acquire 51% of Daehan Investment Trust Management Company Ltd. (DIMCO). The transaction closed on 27 July 2007. DIMCO will be integrated into UBS Global Asset Management and will be known as UBS Hana Asset Management Company Ltd. internationally, and as Hana UBS Asset Management in Korea. At closing, DIMCO managed around KRW 19.9 trillion of assets (CHF 26.4 billion). The cost of the business combination includes a fixed cash component of KRW 150 billion (CHF 198 million) and an immediate payment of KRW 30 billion (CHF 40 million), subject to customary purchase price adjustment and to an earn-out claw back of up to KRW 30 billion (CHF 40 million) over the next three to five years.

Discontinued operations

Private Banks & GAM

In second quarter, upon the sale of UBS's 20.7% stake in Julius Baer, UBS released a deferred tax liability of approximately CHF 275 million to the profit and loss account. This deferred tax liability had been recognized in connection with the receipt of Julius Baer shares on the sale of Private Banks & GAM in December 2005, but was not ultimately incurred due to the manner of realization of the Julius Baer investment. The tax expense from the recognition of the deferred tax liability was booked in discontinued operations in 2005, and therefore the release has also been reflected in discontinued operations.

DRCM closure

UBS Global Asset Management performance from continuing operations before tax includes costs for the DRCM closure of CHF 384 million. These costs are reflected in Personnel expenses (CHF 318 million), General and administrative expenses (CHF 38 million) and impairments reflected in Depreciation of property and equipment (CHF 28 million). More than 50% of the Personnel expenses recorded relate to accelerated amortization of deferred compensation of former DRCM employees leaving UBS. UBS Group tax expense on continuing operations includes a credit of CHF 155 million related to DRCM restructuring costs.

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