UBS announces further plans to modify legal structure

Zurich and Basel - 6 May 2014

Improves resolvability and the potential for capital returns to shareholders 

UBS (NYSE:UBS)(SWX:UBSN) has already announced a series of measures to improve the resolvability of the Group. As a substantial step on this path, UBS intends to establish a group holding company through a share for share exchange offer, which will commence later this year, subject to regulatory approvals. UBS anticipates that the measures to improve resolvability will allow the firm to qualify for a capital rebate under the Swiss "too-big-to-fail" requirements. This rebate would result in lower overall capital requirements for UBS.

Following completion of the transaction, UBS expects to propose a supplementary capital return of at least CHF 0.25 per share to shareholders of the new group holding company.

As reported in 2013, UBS also intends to establish a banking subsidiary in Switzerland in mid-2015. The scope of this future subsidiary's business is expected to include the Retail & Corporate business and the Swiss-booked Wealth Management business.

In the UK, and in consultation with the UK and Swiss regulators, UBS expects to commence the implementation of a revised business and operating model for UBS Limited in the second quarter of 2014. This will result in UBS Limited bearing and retaining a greater degree of the risk and reward of its business activities. UBS AG expects to increase the capitalization of UBS Limited accordingly.

In the US, UBS will comply with new rules for foreign banks under the Dodd-Frank Wall Street Reform and Consumer Protection Act that will require an intermediate holding company to own all of its operations other than US branches of UBS AG by 1 July 2016. As a result, UBS will designate an intermediate holding company to hold all US subsidiaries of UBS.

Group Chief Executive Officer, Sergio P. Ermotti, said, "We anticipated these evolving changes and have been taking steps over the past two years to address them. Our focused business strategy and the quality and strength of our capital, means we are well positioned to execute these plans. As a result, our strategy, our business model and the way we serve our clients are not affected by these changes."

The announced plans do not require UBS to raise additional equity capital, and are not expected to materially affect the firm's capital-generating capability.

Chairman of the Board of Directors, Axel A. Weber, said, "As a consequence of the announcements we have made regarding our legal structure, we are substantially enhancing the resolvability of UBS in response to evolving global regulatory requirements. We are confident this should lead to eligibility for a capital rebate benefiting the Group as envisaged under the Swiss Too-Big-To-Fail requirements."

These structural changes have been discussed with FINMA and other regulatory authorities. The dialogue with regulators will continue and the changes remain subject to some uncertainties that may affect their feasibility, scope or timing.     

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