Investment Bank

Mergers and acquisitions

Despite a decline in deal volumes in third quarter due to the deteriorating credit environment, mergers and acquisitions volume for the first nine months of the year was up 50% from the same period in 2006. We advised globally on 363 transactions with a deal volume of USD 776 billion in the first nine months of this year. Some of our significant deals this quarter were:

- joint financial advisor to Hilton Hotels Corporation on its USD 26 billion sale to The Blackstone Group's real estate and corporate private equity funds

- joint financial advisor and broker to Imperial Chemical Industries on the GBP 8 billion recommended cash offer from Akzo Nobel

- exclusive financial advisor to Reed Elsevier, a major international publisher, on the USD 4 billion sale of its Harcourt US schools education business to Houghton Mifflin Riverdeep Group, as part of the disposal of the Harcourt Education division.

Equity underwriting

UBS's global equity capital markets deal volume was USD 16.5 billion in third quarter 2007, up 31% compared with the same period last year, according to Dealogic. At 8.3%, we had the second highest share in the industry of the global equity issuance market in the year to date. Our market share in third quarter, however, was 10.3% - the highest in the industry. Key transactions during the quarter included:

- sole bookrunner for the EUR 3.2 billion mandatory exchangeable bond into Grupo BBVA, a leading Spanish banking group

- joint bookrunner on the USD 2.9 billion initial public offering of MF Global, a leading broker of exchange-listed futures and options

- joint global co-ordinator and joint bookrunner for the USD 1.7 billion initial public offering of Fosun International, one of the largest privately-owned enterprises in China

- joint lead manager and joint underwriter for the AUD 2.1 billion entitlement offer for Newcrest Mining, a leader in the exploration, development and operation of gold and copper mines.

Fixed income underwriting

Investor appetite for new issues fell markedly in the quarter, reflecting turbulent conditions in global credit markets. The investment grade primary market showed signs of a return to normality following the cut in US interest rates in September. The leveraged market, affected by the poor US sub-prime market, was challenging, with levels of supply significantly exceeding demand. For investment grade debt, UBS underwrote 19% more volume in the year to date than in the same period in 2006, in line with growth in overall market volume. UBS's market share of primary bond issuance was 4.0% in the nine months to date, unchanged from 2006. We lead managed 84 deals during the quarter, including:

- joint bookrunner on a USD 3 billion global deal for the European Investment Bank

- joint bookrunner on a USD 2.1 billion multi-tranche issue for Tyco Electronics Group, their debut offering since their spin-off from Tyco International in June 2007

- sole bookrunner for the EUR 750 million Tier 1 private placement for insurer AXA

- joint lead arranger and joint bookrunner on USD 685 million of senior secured credit facilities for Orbitz Worldwide, a leading global online travel company.