Note 12

Financial Assets Designated at Fair Value

CHF million	31.12.07	31.12.06
Loans	3,633	2,104
Structured loans	483	148
Reverse repurchase and securities borrowing agreements
Banks	4,289	2,942
Customers	1,232	307
Other financial assets	2,128	429
Total financial assets designated at fair value	11,765	5,930

The maximum exposure to credit loss of all items in the above table except for Other financial assets is equal to the fair value (CHF 9,637 million at 31 December 2007 and CHF 5,501 million at 31 December 2006). Other financial assets are generally comprised of equity investments and are not directly exposed to credit risk. The maximum exposure to credit loss at 31 December 2007 and 31 December 2006 is mitigated by collateral of CHF 5,830 million and CHF 3,712 million, respectively.

The amount by which credit derivatives or similar instruments mitigate the maximum exposure to credit loss of loans and structured loans designated at fair value is as follows:

CHF million		31.12.07	31.12.06
Notional amount of loans and structured loans		4,166	2,348
Credit derivatives related to loans and structured loans – notional amounts ¹		3,351	663
Credit derivatives related to loans and structured loans – fair value ¹		59	2

Additional Information
	For the year ended		Cumulative from inception until the year ended
CHF million	31.12.07	31.12.06 ²	31.12.07
Change in fair value of loans and structured loans designated at fair value, attributable to changes in credit risk ³	(87)	(8)	(98)
Change in fair value of credit derivatives and similar instruments which mitigate the maximum exposure to credit loss of loans and structured loans designated at fair value ³	58	2	59
1 Credit derivatives and similar instruments include credit default swaps, credit-linked notes, total return swaps, put options, and similar instruments. These are generally used to manage credit risk when UBS has a direct credit exposure to the counterparty, which has not otherwise been collateralized. 2 Also equals the cumulative amount from inception for the year ended 31 December 2006. 3 Current and cumulative changes in the fair value of loans attributable to changes in their credit risk are only calculated for those loans outstanding at the balance sheet date. Current and cumulative changes in the fair value of credit derivatives hedging such loans include all the derivatives which have been used to mitigate credit risk of these loans since designation at fair value. For loans reported under the fair value option, changes in fair value due to changes in the credit standing of the borrower are calculated using counterparty credit information obtained from independent market sources.

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