UBS Acquires Brazilian Investment Bank Banco Pactual S.A. for up to 2.5 billion (USD)

The present value of the entire transaction, including the retention pool, amounts up to 2.5 billion (USD). The transaction is expected to close in the third quarter 2006, subject to regulatory approval.

The businesses of Pactual will be integrated into the Investment Banking, Wealth Management and Asset Management businesses of UBS. The combined entity will be the cornerstone of UBS's operations in Brazil and a key element of the bank’s strategy to expand in emerging markets.

Pactual is the leading independent Brazilian Investment Bank and Asset Management firm in Brazil and has a fast growing Wealth Management business.

Pactual offers a full range of Investment Banking services (trading, fixed income, capital markets, corporate finance advisory) mainly focused on the local Brazilian market. The bank is also a leading participant in Brazilian fixed income and equities markets, serving an extensive base of institutional clients in both local and international markets. The research function has been ranked top three in Brazilian research and analysts provide coverage on over 150 Brazilian companies.

The capital markets business is a top tier underwriter of Brazilian equity and debt issuances and the bank acts as a distributor both in local and international markets.

Pactual Asset Management has 18.6 billion (USD) under management as of March 31, 2006. The business provides long-term investment opportunities for its clients offering a full product range from equity, fixed income, private equity and hedge funds. The Wealth Management business manages a further 4.6 billion (USD) as of March 31, 2006 for high net worth individuals.

The transaction will add significant scale to UBS’s business in Brazil making UBS one of the top providers of Investment Banking, Asset Management and Wealth Management services in the country.

Peter Wuffli, CEO of UBS said:
“Brazil has one of the world’s fastest growing financial markets and therefore is a key focus area for UBS. This acquisition represents an efficient combination between the leading independent investment bank in Brazil and UBS, one of the world’s most powerful financial services firms. The combined entity will provide an unrivaled platform for the business to grow in Brazil and throughout Latin America.”

Huw Jenkins, CEO of UBS Investment Bank said:
“This deal is a cornerstone in our strategy to increase penetration in emerging markets within fixed income and equities. In 2005 the investment banking fee pool in Brazil was one of the largest among emerging economies and made up approximately 40% of the investment bank fee pool in Latin America. Pactual’s market strength will complement UBS’s existing position in Latin America.”

Andre Esteves, Managing Partner of Pactual said:
“We are confident that the combination of a first class global bank with our leading position in Brazil’s financial industry will create an even more powerful investment bank in the Latin America region. Our clients will benefit from a significant enhancement in our product line and the overall quality of our services, and we will be a market leader in all areas.”