Investment Bank

Alex Wilmot-Sitwell and Carsten Kengeter, Co-CEOs UBS Investment Bank

Investor Day November 17, 2009

Cautionary statement regarding forward-looking statements

This presentation contains statements that constitute forward-looking statements, including but not limited to managements outlook for UBSs financial performance and statements relating to the anticipated effect of transactions and strategic initiatives on UBSs business and future development. While these forward-looking statements represent UBSs judgments and expectations concerning the matters described, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from UBSs expectations. These factors include, but are not limited to: (1) future developments in the markets in which UBS operates or to which it is exposed, including movements in securities markets, credit spreads, currency exchange rates and interest rates; (2) the effect of the current economic environment or other developments on the financial position or creditworthiness of UBSs customers and counterparties; (3) changes in the availability of capital and funding, including any changes in UBSs credit spreads and ratings; (4) the outcome and possible consequences of pending or future actions or inquiries concerning UBSs crossborder banking business by tax or regulatory authorities in various jurisdictions; (5) the degree to which UBS is successful in effecting organizational changes and implementing strategic plans, and whether those changes and plans will have the effects intended; (6) UBSs ability to retain and attract the employees that are necessary to generate revenues and to manage, support and control its businesses; (7) political, governmental and regulatory developments, including the effect of more stringent capital requirements and the possible imposition of additional legal or regulatory constraints on UBSs activities; (8) changes in accounting standards or policies, and accounting determinations affecting the recognition of gain or loss, the valuation of goodwill and other matters; (9) limitations on the effectiveness of UBSs internal processes for risk management, risk control, measurement and modeling, and of financial models generally; (10) changes in the size, capabilities and effectiveness of UBSs competitors; (11) the occurrence of operational failures, such as fraud, unauthorized trading and systems failures, either within UBS or within a counterparty; and (12) technological developments. In addition, actual results could depend on other factors that we have previously indicated could adversely affect our business and financial performance which are contained in our past and future filings and reports, including those filed with the SEC. More detailed information about those factors is set forth in documents furnished by UBS and filings made by UBS with the SEC, including UBSs restated Annual Report on Form 20-F / A for the year ended 31 December 2008. UBS is not under any obligation to (and expressly disclaims any obligation to) update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.

Key messages

1. Resized, more stable and re-organized around strengths

2. Client-centric business model based on flow and advice

3. Rebuild selected businesses, enhance strengths and increase integration

4. Achievable medium-term goals

Resized, de-risked and more stable

Balance sheet control
Assets1
(CHF billion)

Operating cost control

Operating costs
(CHF billion)

1,742 1,173 1Q08 Assets ex-PRVs Risk-weighted assets

(CHF billion)

11.7
(51%)

(36%)

1,077 580 3Q09 PRVs Personnel

(FTE, 000's)

7.4

9M07

9M09

225

(44%)

23.1 126

(30%)

16.1

1Q08
1

3Q09

1Q08

3Q09

Total assets excludes CHF 149 billion in 1Q08 and CHF 42 billion in 3Q09 of Group-related items

Franchise strengths
Attracting talent to the IB
FICC Equities IBD

200 FICC hires YTD Key hires1 115 new MDs and EDs 64% joined in last 3 months

167 Equities hires YTD 76 new MDs and EDs 58% joined in last 3 months

67 IBD hires YTD 31 new MDs and EDs 87% joined in last 3 months

Advisory Resilient positioning FX #2 globally 15% market share2 Cash Equities Top 3 globally 11% market share3 Top 4 globally 6.5% market share in 20094 ECM Top 3 global firm in 20095

which has a strong underlying business and franchise potential

1 2 3 4 5 Excludes Non Officers Based on 2009 Euromoney poll results Based on UBS management assessment Based on 9M 2009 Dealogic data Based on company and peer reported data

CHF 2.5 billion normalized 9M09 profitability1

On a normalized basis, the underlying IB business is profitable

Restructuring and other: +0.6

Funding: +0.6
(CHF billion)

Normalized 9M09 PBT1 2.5

Own credit: +2.0

CLE: +1.3

9M09 PBT (6.4) Losses on residual risk positions: +4.4

Able to generate sustainable returns with less volatility

1 Normalization details: Losses on residual risk positions based on previous disclosure. CLE adjustments based on 2004-2009 average excluding reclassified securities. Funding assumes adjustments based on 3Q09 funding. Restructuring and other adjustments based on previous disclosure

Key market challenges

While market challenges persist

Competitors building aggressively Regulatory considerations Talent retention and acquisition Introduction of FINMA leverage ratio

Regulatory changes

New BIS standards

Growth in an uncertain economic environment

Introduction of liquidity regulations

Tighter margins in flow and liquid products going forward

the Investment Bank is now well positioned

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Rigorous, disciplined risk management and control

Strengthened management and control framework
Limit framework Integrated risk control organization and change in risk culture
Adopted 1d, 95% VaR New liquidity adjusted stress methodology

Improved limit framework (portfolio, stress)

Risk methodology enhancements: stress testing / VaR

Multiple limit types customized for each asset class New position limit framework

Improved risk and financial reporting

Improved MIS and measurement of business performance through defined KPIs

the cornerstone of the strategic plan

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Key messages

1. Resized, more stable and re-organized around strengths

2. Client-centric business model based on flow and advice

3. Rebuild selected businesses, enhance strengths and increase integration

4. Achievable medium-term goals

A differentiated business model

Focused client service provider Client-centric business based on flow and advice

Everything to everybody, everywhere

Large-scale proprietary risk-taker

Provider of integrated IB/WM/AM client solutions

Market share through the balance sheet

Infrastructure / execution excellence with disciplined risk controls

A warehouse for securities or derivatives positions

Sustainably profitable in all chosen markets and products

Provider of all products, in all markets, chasing market share that is focused and disciplined
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Balance sheet efficiency and turnover

Improving return on balance sheet assets through increased velocity
Risk-weighted assets (30 Sept 2009) Historical evolution of asset utilization: normalized revenues / assets
1.8 1.6 Assets ex-PRVs (CHF tr) 1.4 1.30 1.2 1.0 0.8 0.6 0.4 0.2 2005 2006 2007 0.0 64 100 100 108 0.70 0.58 0.55 90 70 50
Greatest contribution to RoA growth from FICC

% of total

1.62

190 Indexed Revenue / Assets

10

1.39 155

170 150 130 110

FICC1 Equities IBD Residual risk positions Operational risk Other

40 11 7 25 15 1

2008

Assets ex-PRVs

Indexed RoA (normalized revenues1 / average assets ex-PRVs and ex-residual risk positions, 2005 = 100)

Excluding residual risk positions

2007 to 2009 total IB income normalized for losses. 2009 normalized for funding. Refer to slide 5 for details on normalization

Target

9M09

IB strategy simple but effective

Leveraging our strengths and building selected areas
Target

Refocus and grow select products and regions

Enhance traditional IB strengths

Enhance workbench with UBS partner divisions

Sustainable profits

High

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Key messages

1. Resized, more stable and re-organized around strengths

2. Client-centric business model based on flow and advice

3. Rebuild selected businesses, enhance strengths and increase integration

4. Achievable medium-term goals

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Restructured FICC
Restructured, refocused and delivering better performance with fewer resources
FICC permanent personnel1
(FTEs) 3,000 2,500 2,000 1,500 1,000 500 0

FICC excluding P&L from residual risk assets1

(CHF billion)

(36%)

> 2.0

2007 FICC assets ex-PRVs1

(CHF billion) 800 600 400 200 0

9M09

1.2 1.0

(64%)

2007 avg. quarter 2007 9M09

9M09 avg. norm. quarter2

Rates EM

Target quarter
Credit

FX & MM

1 2

Excludes residual risk positions and the assets and personnel related to them Refer to slide 5 for details on normalization
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FICC achievable strategy

Focused on sustainable, scalable and high quality earnings
Key areas
Credit Refocus and grow select products & regions Rates EM

Execution
Agency and flow-based trading Add sales capabilities Rebuild client coverage Onshore emerging markets platforms Agency, flow-based and selected proprietary trading Add sales capabilities

Enhance traditional IB strengths

FX&MM

Enhance workbench with UBS partner divisions

Expand bespoke product offering Across products Leverage WM flow across products Enhance current direct execution platforms to broader products set Unified Quants team Structured product offering and solutions Increase automation of execution platforms

FICC-driven securities alignment initiatives

with a target quarterly run rate of > CHF 2 billion over the medium term
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Growing the Macro business

Enhance leading FX flow business and grow the Rates business
Where we stand What we are progressing and by when
Timeline: Next 12 months

Market-leading FX franchise Industry recognized platform Experienced and talented team Client strength and support

Enhance WM&SB internalization

Expand trading capabilities and automated execution

Broaden flow-based activities

Market opportunity
Increased flow to WM, corporate and institutional clients Customized solutions
Integrate execution platforms between Rates & FX

Expand US Rates franchise

... which together are targeted to constitute over 50% of our FICC revenues
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Rebuilding the Credit business

Increasing talent and refocused client coverage
Where we stand What we are progressing and by when
Timeline: Next 18 months

Credit revenues in 2009 running higher than pre-crisis run rate Lean staff structure Existing platforms ready to be leveraged New management team in place

Re-build Credit trading bench

Re-establish client coverage

Market opportunity
Deep market for flow products Demand for tailored solutions Positioning for recovery in IG acquisition financing and refinancing in HY markets
Add & rebuild selected product capabilities

targeting a modest revenue increase over 2009 run rate

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Focus on select Emerging Markets

Leverage the existing EM platform and global footprint
Where we stand
Strong Wealth Management / IB onshore presence and brand to be leveraged Identified priority focus areas Group-wide focus Established, market-leading, local footprint in APAC
Further enhance platform in Russia Expand product range in India

What we are progressing and by when

Timeline: Next 24 months

Enhance presence in China

Market opportunity
Rebuild and enhance LatAm presence

Growth markets Onshore and offshore client demand

Aligned IB approach

almost 20% of FICC revenues expected to come from EM

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Equities leverage market position

Traditionally strong franchise to be further enhanced
Key areas
Derivatives Refocus and grow select products & regions ETD Prime brokerage Cash Equities Research

Execution
Enhance intermediaries platform Focus on efficient balance sheet usage Expand product solution capabilities for clients

Enhance traditional IB strengths

Return to full research coverage Expand and further automate direct execution

Enhance workbench with UBS partner divisions

Derivatives Cash Equities

Optimize current direct execution platforms to broaden product set Leverage WM flow including for derivatives OTC products moving on exchange

Equities-driven securities alignment initiatives

Optimize securities financing Execution platform integration IB-wide research approach

with a target quarterly run rate of > CHF 1.75 billion over the medium-term
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IBD leverage existing strengths

Lead UBS Group marketer
Key areas
Refocus and grow select products & regions US DCM1

Execution
Innovative and quick-to-market solutions Target capital raising, derivatives and securities products

Footprint Enhance traditional IB strengths ECM2 Advisory

Lead UBS corporate marketing Expand cross-product advisory solutions

Enhance workbench with UBS partner divisions

Cross referrals GCM distribution

Leverage existing senior IBD relationships Increase cross-product awareness / education Innovative and quick-to-market solutions

Leverage strengths to deliver a target quarterly run rate > CHF 1 billion
1 2 DCM Debt Capital Markets ECM Equity Capital Markets
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Key messages

1. Resized, more stable and re-organized around strengths

2. Client-centric business model based on flow and advice

3. Rebuild selected businesses, enhance strengths and increase integration

4. Achievable medium-term goals

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Double our normalized profits in the medium term

Only moderate revenue increase required to achieve target profitability
C/I Ratio: ~70%

~20.0
Revenues / PBT
IBD Equities FICC Equities IBD

12.9
IBD

~6.0

Annualization1 (CHF billion)

3.3
Norm. 9M09

Equities FICC FICC Mediumterm PBT target

Expenses

Op. costs & CLE

Op. costs & CLE Op. costs & CLE

9.6

~14.0 Based on normalized 9M09 annualized

1

Medium-term expectations

9M09 numbers annualized to show the bridge from an annual number to a full year medium-term goal. Annualized figures do not constitute estimates of the actual full-year results. Refer to slide 5 for details on normalization.

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Key messages

1. Resized, more stable and re-organized around strengths

2. Client-centric business model based on flow and advice

3. Rebuild selected businesses, enhance strengths and increase integration

4. Achievable medium-term goals

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Disclaimer
This presentation and the information contained herein is provided solely for information purposes, and is not to be construed as a solicitation of an offer to buy or sell any securities or other financial instruments in Switzerland, the United States or any other jurisdiction. No investment decision relating to securities of or relating to UBS AG or its affiliates should be made on the basis of this document. No representation or warranty is made or implied concerning, and UBS assumes no responsibility for, the accuracy, completeness, reliability or comparability of the information contained herein relating to third parties, which is based solely on public available information. UBS undertakes no obligation to update the information contained herein.

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