o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Yesþ | Noo |
Yeso | Noþ |
Yesþ | Noo |
Yes | No |
Large accelerated filerþ | Accelerated filero | Non-accelerated filero |
U.S. GAAPo | International Financial Reporting Standards as issued by the International Accounting Standards Boardþ | Othero |
Item 17o | Item 18o |
Yeso | Noþ |
2
Name of each exchange on | ||
Title of each class | which registered | |
Ordinary Shares (par value of CHF 0.10 each) | New York Stock Exchange | |
$300,000,000 Floating Rate Noncumulative Trust Preferred Securities | New York Stock Exchange | |
$300,000,000 Floating Rate Noncumulative Company Preferred Securities | New York Stock Exchange* | |
$1,000,000,000 6.243% Noncumulative Trust Preferred Securities | New York Stock Exchange | |
$1,000,000,000 6.243% Noncumulative Company Preferred Securities | New York Stock Exchange* | |
Subordinated Guarantee of UBS AG with respect to each of the Noncumulative Company Preferred Securities above | New York Stock Exchange* | |
$17,842,000 PPNs due October 2011 | NYSE Alternext US | |
$100,000,000 E-TRACS UBS Bloomberg CMCI Food ETN due April 2038 | NYSE Arca | |
$50,000,000 E-TRACS UBS Bloomberg CMCI Agriculture ETN due April 2038 | NYSE Arca | |
$50,000,000 E-TRACS UBS Bloomberg CMCI Energy ETN due April 2038 | NYSE Arca | |
$100,000,000 E-TRACS UBS Bloomberg CMCI Total Return ETN due April 2038 | NYSE Arca | |
$100,000,000 E-TRACS UBS Bloomberg Gold ETN due April 2038 | NYSE Arca | |
$50,000,000 E-TRACS UBS Bloomberg CMCI Industrial Metals due April 2038 | NYSE Arca | |
$50,000,000 E-TRACS UBS Bloomberg CMCI Livestock ETN due April 2038 | NYSE Arca | |
$50,000,000 E-TRACS UBS Bloomberg CMCI Silver ETN due April 2038 | NYSE Arca | |
$50,000,000 E-TRACS UBS Long Platinum ETN due May 2018 | NYSE Arca | |
$50,000,000 E-TRACS UBS Short Platinum ETN due May 2018 | NYSE Arca | |
$100,000,000 E-TRACS UBS S&P 500 Gold Hedged Index ETN due January 2040 | NYSE Arca | |
$100,000,000 E-TRACS Dow Jones-UBS Commodity Index Total Return ETN due October 2039 | NYSE Arca | |
$100,000,000 E-TRACS Linked to the Alerian MLP Infrastructure Index due April 2, 2040 | NYSE Arca |
3
Name of each exchange on | ||
Title of each class | which registered | |
$ | ||
NYSE Arca | ||
$100,000,000 2xMonthly Leveraged Long E-TRACS Linked to the Alerian MLP Infrastructure Index due July 9, 2040 | NYSE Arca | |
$100,000,000 E-TRACS | NYSE Arca | |
$100,000,000 E-TRACS Linked to the Wells Fargo® MLP Index due October 29, 2040 | NYSE Arca | |
$100,000,000 E-TRACS Daily Long-Short VIX ETN due | NYSE Arca |
4
5
1-3 | Please seeCorporate informationon page 6 of the Annual |
Report. | |||
4-6 | Please seeThe making of UBSon page |
Annual Report. | |||
7 |
Please refer to the |
6
Management, pages |
3 | Please refer toSeasonal characteristicson page |
Annual Report. | |||
4 | Not applicable. |
6
6 | None. |
8 | Please seeRegulation and supervisionon pages |
7
7
Please see pages |
Annual Report. | |||
4,5 | None. |
1 | Please see pages |
Annual Report. | |||
2 | Please see Note 30 to the Financial Statements,Pension and other post-employment benefits plans,on pages |
1 | Please see pages |
Annual Report. | |||
2 | Please see |
8
3 | Please seeAudit |
8
1,2,3,4,5,6 | Please see Item 18 of this Form 20-F. | ||
7 | Information on material legal and regulatory proceedings is in Note 21 to the Financial Statements,Provisions and contingent liabilities, on pages 314 to 319 of the Annual Report. For developments during the year, please see also the Financial Information section in each of our quarterly reports: First Quarter 2010 Report, filed on Form 6-K dated May 4, 2010 (Note 15,Litigation); Second Quarter 2010 Report, filed on Form 6-K dated July 27, 2010 (Note 15,Litigation); Third Quarter 2010 Report, filed on Form 6-K dated October 26, 2010 (Note 15,Litigation and regulatory matters); and Fourth Quarter 2010 Report, filed on Form 6-K dated February 8, 2011 (Note 14,Litigation and regulatory matters,and Note 15,Other contingent liabilities). The Notes in each such Quarterly Report speak only as of their respective dates. |
9
8 | Please refer toDistributions to shareholderson page 162 of the Annual Report for a description of UBS’s dividend policy. |
Not required because this Form 20-F is filed as an annual report. |
4 | Please seeStock exchange priceson page |
9
10
10
11
12
12
• | |||
• | |||
• | |||
• | |||
• | |||
• |
• | |||
• | |||
• |
• | |||
• | |||
• | |||
• | |||
• | |||
• | |||
• | |||
• |
13
13
14
14
15
15
16
• | |||
States; | |||
• | |||
corporation; | |||
• | |||
• |
16
17
17
18
1819
20
19
21
20
Item 19. Exhibits. |
21
22
Exhibit | ||
Number | Description | |
Articles of Association of UBS AG. | ||
Organization Regulations of UBS AG. | ||
2(b) | Instruments defining the rights of the holders of long-term debt issued by UBS AG and its subsidiaries. | |
We agree to furnish to the SEC upon request, copies of the instruments, including indentures, defining the rights of the holders of our long-term debt and of our subsidiaries’ long-term debt. | ||
4.1 | Deferred Prosecution Agreement between the United States of America and UBS AG, dated February 18, | |
Statement regarding ratio of earnings to fixed charges. |
22
Number | Description | |
8 | Significant Subsidiaries of UBS AG. | |
Please see Note 34 to the Financial StatementsSignificant subsidiaries and associates,on pages | ||
The certifications required by Rule 13(a)-14(a) (17 CFR 240.13a-14(a)) | ||
The certifications required by Rule 13(a)-14(b) (17 CFR 240.13a-14(b)) and Section 1350 of Chapter 63 of Title 18 of the U.S. Code (18 U.S.C. 1350). | ||
Consent of Ernst & Young Ltd. |
23
UBS AG | ||||
/s/ Oswald Grübel | ||||
Name: | Oswald Grübel | |||
Title: | Chief Executive Officer | |||
/s/ John Cryan | ||||
Name: | John Cryan | |||
Title: | Chief Financial Officer | |||
24
Exhibit | ||
Number | Description | |
1.1 | Articles of Association of UBS AG. (Incorporated by reference to UBS AG’s Report of Foreign Private Issuer on Form 6-K filed October 5, 2010) | |
1.2 | Organization Regulations of UBS AG. (Incorporated by reference to UBS AG’s Report of Foreign Private Issuer on Form 6-K filed August 4, 2010) | |
2(b) | Instruments defining the rights of the holders of long-term debt issued by UBS AG and its subsidiaries. | |
We agree to furnish to the SEC upon request, copies of the instruments, including indentures, defining the rights of the holders of our long-term debt and of our subsidiaries’ long-term debt. | ||
4.1 | Deferred Prosecution Agreement between the United States of America and UBS AG, dated February 18, 2009 (incorporated by reference to Exhibit 4.1 to UBS AG’s Annual Report on Form 20-F for the fiscal year ended December 31, 2009). | |
7 | Statement regarding ratio of earnings to fixed charges. | |
8 | Significant Subsidiaries of UBS AG. | |
Please see Note 34 to the Financial StatementsSignificant subsidiaries and associates,on pages 362 to 365 of the Annual Report. | ||
12 | The certifications required by Rule 13(a)-14(a) (17 CFR 240.13a-14(a)) | |
13 | The certifications required by Rule 13(a)-14(b) (17 CFR 240.13a-14(b)) and Section 1350 of Chapter 63 of Title 18 of the U.S. Code (18 U.S.C. 1350). | |
15 | Consent of Ernst & Young Ltd. |
25
Annual Report 2010 |
Ourperformance and responsibility
Contents
1
2
3
4
5
6
and | ||||||
190 | Corporate governance | |||||
191 | Group structure and shareholders | |||||
193 | ||||||
196 | Shareholders’ participation rights | |||||
198 | Board of Directors | |||||
205 | Group Executive Board | |||||
210 | Change of control and defense measures | |||||
211 | Auditors | |||||
213 | Information policy | |||||
215 | Regulation and supervision | |||||
218 | Compliance with NYSE listing standards on corporate governance | |||||
220 | Compensation | |||||
222 | Compensation governance | |||||
224 | Total Reward Principles | |||||
227 | Overview of our compensation model | |||||
232 | Deferred variable compensation plans | |||||
237 | Compensation funding and expenses | |||||
240 | 2010 compensation for the Group Executive Board and Board of Directors 240 | |||||
Introduction and accounting principles | ||||||
Critical accounting policies | ||||||
273 | ||||||
379 | ||||||
379 | ||||||
380 | ||||||
383 | ||||||
405 | ||||||
405 | A – Introduction | |||||
406 | ||||||
410 | C – Information on the company | |||||
411 | D – Information required by industry guide 3 |
71
Annual Report 2010
Letter to shareholders
Dear Shareholders,
2010 was a year of substantial improvement for us.We achieved a net profit attributable to UBS shareholders of CHF 7.5 billion1, compared with a loss of CHF 2.7 billion in 2009. Our return on equity for 2010 improved to 16.7% from negative 7.8% at the end of 2009. We believe that providing outstanding levels of execution and delivering sustainable profitability are the cornerstones on which we can build a successful future, and that the progress we made during 2010 has enhanced our reputation with stakeholders.
Sustaining this progress will require us to continue to act with discipline and integrity, and to maintain a sharp focus on achieving our targets.During the year we increased revenues by CHF 9 billion compared with 2009, while at the same time reducing overall risk levels. We maintained discipline over our cost base, achieving our targeted fixed costs of less than CHF 20 billion. Our clients have once again entrusted us with net new money, with net inflows stabilizing in the second half of the year. Profits for 2010 were a key driver of the increase in our Basel II tier 1 capital ratio, which stood at an industry-leading 17.8% at the year-end. While our results for 2010 showed a marked improvement, we have far greater ambitions. In 2011 we will continue to build further on our achievements.
Most of our business divisions showed an improvement compared with 2009.InWealth Management,client confidence remained subdued in volatile markets, affecting overall transaction volumes. Market rates of interest also remained low during the year. Against this backdrop, Wealth Management’s pre-tax profit increased to CHF 2,308 million compared with CHF 2,280 million in 2009, mainly as a result of reduced operating expenses. Total operating income declined marginally on lower interest income reflecting the interest rate environment as well as the effects of foreign exchange on our results, particularly the decrease in the value of the euro and US dollar against the Swiss franc. Fee income decreased on a lower average asset base, but trading income increased reflecting the work we have done to further strengthen our advisory relationship with clients. Invested assets declined by 7% as foreign exchange movements and outflows more than offset positive investment performance. Operating expenses declined by 3% mainly reflecting reduced personnel and restructuring costs.
InRetail & Corporate,pre-tax profit increased by 9% to CHF 1,772 million compared with 2009. Total operating income remained broadly stable, with net interest income impacted by low market interest rates. Operating expenses were reduced by 8%, reflecting cost-cutting measures initiated in 2009.
Wealth Management Americasreported a pre-tax loss of CHF 130 million compared with a pre-tax profit of CHF 32 million in 2009. The result belies the considerable operational progress made during the year, the benefits of which were more than offset by a significant increase in litigation provisions. We believe the restructuring of this business over the past year will allow us to leverage our strong competitive positioning going forward. Retaining talent within the business is key, and we are encouraged that financial advisors with us for more than one year delivered a strong performance, especially in the fourth quarter. Operating income was flat, with improved managed account fees and higher mutual fund revenues offset by a decrease in municipal trading income. Net new money trends in the business are encouraging, with the business delivering positive net new money in the second half of the year.
In 2010,Global Asset Managementcontinued to build on its already sound investment track record with a pre-tax profit of CHF 516 million, an increase of 18% compared with 2009. This was achieved despite a decrease in invested assets as positive investment performance and net new money inflows were more than offset by negative currency effects. Operating income was down by 4% due to lower performance fees and lower revenues also reflecting the sale of UBS Pactual. Operating expenses decreased by 9%.
OurInvestment Bankcontributed most to the improvement in our 2010 results, recording a pre-tax profit of CHF 2,197 million compared with a pre-tax loss of CHF 6,081 million in 2009. This was primarily due to a reversal of losses in our fixed income, currencies and commodities business and reflects the rebuild of our credit business where revenues rose significantly. In 2010 we recorded considerably lower net credit loss expenses and lower own credit losses, partly offset by an increase in operating expenses.
We continued to maintain tight control over our risks and balance sheet alongside improvements in profitability over the year.Risk-weighted assets were reduced by 4% during the year to CHF 199 billion, and, on 31 December 2010, our balance sheet stood at CHF 1,317 billion, down 2% compared with the prior year. The increase in our regulatory capital, together with a reduction in risk-weighted assets, led to an improvement of our BIS tier 1 capital ratio to 17.8% compared with 15.4% at the end of 2009.
During 2010 the regulatory landscape shifted substantially with the expectation of more stringent regulatory requirements becoming a reality.New global regulatory pro-
2
UBS key figures | ||||||||||||
As of or for the year ended | ||||||||||||
CHF million, except where indicated | 31.12.09 | 31.12.08 | 31.12.07 | |||||||||
Group results | ||||||||||||
Operating income | 22,601 | 796 | 31,721 | |||||||||
Operating expenses | 25,162 | 28,555 | 35,463 | |||||||||
Operating profit before tax (from continuing and discontinued operations) | (2,569 | ) | (27,560 | ) | (3,597 | ) | ||||||
Net profit attributable to UBS shareholders | (2,736 | ) | (21,292 | ) | (5,247 | ) | ||||||
Diluted earnings per share (CHF)1 | (0.75 | ) | (7.63 | ) | (2.41 | ) | ||||||
Key performance indicators, balance sheet and capital management2 | ||||||||||||
Performance | ||||||||||||
Return on equity (RoE) (%) | (7.8 | ) | (58.7 | ) | (10.5 | ) | ||||||
Return on risk-weighted assets, gross (%) | 9.9 | 1.2 | 8.6 | |||||||||
Return on assets, gross (%) | 1.5 | 0.2 | 1.3 | |||||||||
Growth | ||||||||||||
Net profit growth (%)3 | N/A | N/A | N/A | |||||||||
Net new money (CHF billion)4 | (147.3 | ) | (226.0 | ) | 140.6 | |||||||
Efficiency | ||||||||||||
Cost/income ratio (%) | 103.0 | 753.0 | 111.0 | |||||||||
Capital strength | ||||||||||||
BIS tier 1 ratio (%)5 | 15.4 | 11.0 | ||||||||||
FINMA leverage ratio (%)5 | 3.93 | 2.45 | ||||||||||
Balance sheet and capital management | ||||||||||||
Total assets | 1,340,538 | 2,014,815 | 2,274,891 | |||||||||
Equity attributable to UBS shareholders | 41,013 | 32,531 | 36,875 | |||||||||
BIS total ratio (%)5 | 19.8 | 15.0 | ||||||||||
BIS risk-weighted assets5 | 206,525 | 302,273 | ||||||||||
BIS tier 1 capital5 | 31,798 | 33,154 | ||||||||||
Additional information | ||||||||||||
Invested assets (CHF billion) | 2,233 | 2,174 | 3,189 | |||||||||
Personnel (full-time equivalents) | 65,233 | 77,783 | 83,560 | |||||||||
Market capitalization6 | 57,108 | 43,519 | 108,654 | |||||||||
Long-term ratings | ||||||||||||
Fitch, London | A+ | A+ | AA | |||||||||
Moody’s, New York | Aa3 | Aa2 | Aaa | |||||||||
Standard & Poor’s, New York | A+ | A+ | AA | |||||||||
12
13
14
15
posals were finalized by the Basel Committee on Banking Supervision early this year, and the Swiss Federal Council published draft legislation for Swiss banks based on the recommendations of the Swiss Expert Commission and designed to address the “too big to fail” issue. These proposals are due to be debated in the Swiss Parliament later this year. We will continue to evaluate the impacts of these changes, especially the effect that they may have on the profitability of our businesses, and, where necessary, we will take appropriate action. As previously stated, we will retain earnings in order to meet the recommended future capital requirements.
Recent quarters have demonstrated that our results for certain divisions, and for the Group as a whole, are highly sensitive to regulatory, legal and tax developments.In 2011, we believe that we may have opportunities to recognize further deferred tax assets in our results. We also expect that provisions for litigation and other contingencies will continue to affect us, although the timing and magnitude of these developments are not predictable.
In the current environment it is more important than ever that we focus on our clients’ needs.During the year we continued to implement our global and integrated bank strategy. We
3
Annual Report 2010
Letter to shareholders
improved the way in which we deliver our products and services to clients, which in turn should help us achieve further revenue growth. As part of this strategy we established our Investment Products and Services unit. We believe that this unit will play a crucial role, ensuring that our clients receive fast and efficient access to products and services tailored to their individual needs. Alongside this we set up our Global Family Office Group, catering to the often complex needs of many of the world’s wealthiest families.
We continued our tradition of supporting the local communities in which we live and work.We believe that our success stems not only from our employees’ skills and resources and from our relationships with our clients, but also from a healthy social environment. All over the world, our regional Community Affairs teams organize a wide variety of charitable activities in addition to direct donations made by the firm. Across all of our business regions, our employees continue to play a very active role in our community investment efforts, in particular through their volunteering activities. In 2010, our employees spent nearly 81,000 hours volunteering. We support their commitment by offering up to two working days a year for volunteering efforts, and also match employee donations to selected charities. In 2010 we also announced our support of the UBS Kids Cup, an athletics competition in Switzerland involving up to 70,000 children aged 7 to 15, helping to promote health and well-being.
During the year there were signs of improved client confidence in UBS.Building on this momentum, in August we launched our new brand campaign, our first global campaign for two years. The “We will not rest” campaign conveys our commitment to and focus on our clients at every level of the organization.
The ultimate responsibility for the firm’s strategy and the supervision of its executive management rests with the Board of Directors.We welcome the announcement that Joseph Yam, founder and former Chief Executive of the Hong Kong Monetary Authority, has been nominated for election to the Board. His expected appointment following the 2011 Annual General Meeting should further strengthen UBS’s Board of Directors, allowing us to benefit from his considerable experience. We recently announced that Sally Bott has resigned from the Board. We would like to express our gratitude to Sally for her outstanding contributions and great commitment during the past two and a half years.
2010 was a year of substantial improvement in our financial performance and our financial condition, and we would like to take this opportunity to thank you, our shareholders, for your continued support, and all of our employees for their hard work and commitment.In 2011, we are confident that we can consolidate the progress already made throughout the firm, helping to deliver our goal of long-term sustainable profitability for our shareholders.
15 March 2011
Yours sincerely,
UBS
Kaspar Villiger | Oswald J. Grübel | |
Chairman of the | Group Chief | |
Board of Directors | Executive Officer |
4
Information sources
Reporting publications
Annual publications:Annual report (SAP no. 80531): Published in both English and German, this single volume report provides a description of: our UBS Group strategy, performance and responsibility; the strategy and performance of the business divisions and the Corporate Center; risk and treasury management; corporate governance and senior management and Board of Directors compensation; and financial information, including the financial statements.Review (SAP no. 80530): The booklet contains key information on our strategy and financials. It is published in English, German, French and Italian.Compensation Report (SAP no. 82307): The report discusses compensation for senior management and the Board of Directors (executive and non-executive members). It is published in English and German.
Quarterly publications:Letter to shareholders: The letter provides a quarterly update from executive management on our strategy and performance. The letter is published in English, German, French and Italian.Financial report (SAP no. 80834): The quarterly financial report provides an update on our strategy and performance for the respective quarter. It is published in English.
How to order reports
The annual and quarterly publications are available in PDF format on the internet atwww.ubs.com/investors/topicsin the “Financial information” section. Printed copies can be ordered from the same website by accessing the order / subscribe panel on the left-hand side of the screen. Alternatively, they can be ordered by quoting the SAP number and the language preference where applicable, from UBS AG, F2AL-AUL, P.O. Box, CH-8098 Zurich, Switzerland.
Other information
Website: The “Analysts & Investors” section atwww.ubs.com/ investorsprovides the following information on UBS: financial in-
Result presentations: Our quarterly results presentations are webcast live. A playback of most presentations is downloadable atwww.ubs.com/presentations.
Messaging service / UBS news alert: On thewww.ubs.com/ newsalertswebsite, it is possible to subscribe to receive news alerts about UBS via SMS or e-mail. Messages are sent in English, German, French or Italian and it is possible to state theme preferences for the alerts received.
Form 20-F and other submissions to the US Securities and Exchange Commission: We file periodic reports and submit other information about UBS to the US Securities and Exchange Commission (SEC). Principal among these filings is the annual report on Form 20-F, filed pursuant to the US Securities Exchange Act of 1934. The filing of Form 20-F is structured as a “wraparound” document. Most sections of the filing can be satisfied by referring to parts of the annual report. However, there is a small amount of additional information in Form 20-F which is not presented elsewhere, and is particularly targeted at readers in the US. Readers are encouraged to refer to this additional disclosure. Any document that we file with the SEC is available to read and copy on the SEC’s website,www.sec.gov,or at the SEC’s public reference room at 100 F Street, N.E., Room 1580, Washington, DC, 20549. Please call the SEC by dialing +1-800-SEC-0330 for further information on the operation of its public reference room. Much of this additional information may also be found on the UBS website atwww.ubs.com/investors,and copies of results-related filings with the SEC may be obtained from our Investor Relations team atwww.ubs.com/investors.
5
Annual Report 2010
UBS AG shares are currently listed on the SIX Swiss Exchange and the New York Stock Exchange.
Investor Relations
Office of the Company Secretary
US Transfer Agent
Corporate calendar
Imprint
Publisher: UBS AG, Zurich and Basel, Switzerland | www.ubs.com Languages: English/German | SAP-No. 80531E © UBS 2011. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved. Printed in Switzerland on chlorine-free paper with mineral oil-reduced inks. Paper production from socially responsible and ecologically sound forestry practices. |
6
Strategy, performance and responsibility
Content of the sections “Our employees” and “Corporate responsibility” has been assured by SGS Société Générale de Surveillance SA (SGS) using the GRI Sustainability Reporting Guidelines, as evidenced in the SGS Assurance Statement on page 70. The assurance by SGS also covered text and data on the website of UBS. Both the relevant text in the Annual Report 2010 and on the website are referenced in the GRI Index (www.ubs.com/gri), which defines the scope of the assurance. SGS has confirmed the level of assurance as GRI A+.
Strategy and performance
– | We are a client-focused financial services firm that offers a strong combination of wealth management, asset management and investment banking services on a global and regional basis. | |
– | We aim to generate sustainable earnings and create value for our shareholders. |
Our strategic priorities
We are concentrating on:
– | further strengthening our position as a leading bank for high net worth and ultra high net worth clients around the world; | |
– | continuing our leadership across all client segments in Switzerland; | |
– | attaining a top-tier position in the growth regions in which we choose to operate; and | |
– | remaining a leading investment bank with a client-centric business model, focusing on flow trading and advice, leveraging our traditional strengths and maximizing our scope by working in close conjunction with our wealth management and asset management businesses. |
Re-focusing the business portfolio
We will further foster collaboration between our wealth management, asset management and investment banking businesses, reflecting our commitment to serve our clients comprehensively across all segments. We believe this will improve our operating and financial results and will generate more shareholder value. From a geographic perspective, we want to leverage our strong existing global footprint. We are continuously investing in our Asia Pacific businesses as well as other growth markets such as the Middle East and Latin America.
Transforming the way we operate
Our transformation is geared towards exploiting the full potential of our strengths based on our three strategic guidelines of reputation, integration and execution.
Our reputation is our most valuable asset. It is ultimately defined by the actions and decisions we take every day. In order to restore and safeguard our reputation, we have introduced more disciplined and effective governance processes.
Integration is a key factor in serving our clients and driving efficiencies across our businesses, and is essential to our ability to achieve our financial targets. Integration is being achieved through a series of measures, including several dedicated client-related initiatives around the globe, and related improvements in client coverage and management processes.
We are committed to execution at the highest standards, ensuring consistent high-quality delivery to clients as well as within the firm. Furthermore, we are further developing our performance-oriented culture to help us to attract, develop and retain top industry talent.
UBS key figures | ||||||||||||
As of or for the year ended | ||||||||||||
CHF million, except where indicated | 31.12.10 | 31.12.09 | 31.12.08 | |||||||||
Group results | ||||||||||||
Operating income | 31,994 | 22,601 | 796 | |||||||||
Operating expenses | 24,539 | 25,162 | 28,555 | |||||||||
Operating profit from continuing operations before tax | 7,455 | (2,561 | ) | (27,758 | ) | |||||||
Net profit attributable to UBS shareholders | 7,534 | (2,736 | ) | (21,292 | ) | |||||||
Diluted earnings per share (CHF)1 | 1.96 | (0.75 | ) | (7.63 | ) | |||||||
Key performance indicators, balance sheet and capital management2 | ||||||||||||
Performance | ||||||||||||
Return on equity (RoE) (%) | 16.7 | (7.8 | ) | (58.7 | ) | |||||||
Return on risk-weighted assets, gross (%) | 15.5 | 9.9 | 1.2 | |||||||||
Return on assets, gross (%) | 2.3 | 1.5 | 0.2 | |||||||||
Growth | ||||||||||||
Net profit growth (%)3 | N/A | N/A | N/A | |||||||||
Net new money (CHF billion)4 | (14.3 | ) | (147.3 | ) | (226.0 | ) | ||||||
Efficiency | ||||||||||||
Cost / income ratio (%) | 76.5 | 103.0 | 753.0 | |||||||||
Capital strength | ||||||||||||
BIS tier 1 ratio (%)5 | 17.8 | 15.4 | 11.0 | |||||||||
FINMA leverage ratio (%)5 | 4.45 | 3.93 | 2.45 | |||||||||
Balance sheet and capital management | ||||||||||||
Total assets | 1,317,247 | 1,340,538 | 2,014,815 | |||||||||
Equity attributable to UBS shareholders | 46,820 | 41,013 | 32,531 | |||||||||
BIS total ratio (%)5 | 20.4 | 19.8 | 15.0 | |||||||||
BIS risk-weighted assets5 | 198,875 | 206,525 | 302,273 | |||||||||
BIS tier 1 capital5 | 35,323 | 31,798 | 33,154 | |||||||||
Additional information | ||||||||||||
Invested assets (CHF billion) | 2,152 | 2,233 | 2,174 | |||||||||
Personnel (full-time equivalents) | 64,617 | 65,233 | 77,783 | |||||||||
Market capitalization6 | 58,803 | 57,108 | 43,519 | |||||||||
The 2010 results and the balance sheet in this report differ from those presented in our fourth quarter 2010 report issued on 8 February 2011. The net impact of adjustments made subsequent to the publication of the unaudited fourth quarter 2010 financial report on net profit attributable to UBS shareholders was a gain of CHF 373 million, which increased basic and diluted earnings per share by CHF 0.10.
è | Refer to “Note 33 Events after the reporting period” in the “Financial information” section of this report for more information |
Strategy, performance and responsibility
Strategy and structure
Strategy and structure
UBS draws on its 150-year heritage to serve private, institutional and corporate clients worldwide, as well as retail clients in Switzerland. We combine our wealth management, investment banking and asset management businesses with our Swiss operations to deliver superior financial solutions. Headquartered in Zurich and Basel, Switzerland, UBS has offices in more than 50 countries, including all major financial centers, and employs approximately 65,000 people. Under Swiss company law, UBS is organized as an Aktiengesellschaft, a corporation that has issued shares of common stock to investors.
UBS business model and aspiration
UBS AG is the parent company of the UBS Group (Group). The operational structure of the Group comprises the Corporate Center and four business divisions: Wealth Management & Swiss Bank, Wealth Management Americas, Global Asset Management and the Investment Bank.
– | further strengthening our position as a leading bank for high net worth and ultra high net worth clients around the world; | |
– | continuing our leadership across all client segments in Switzerland; | |
– | attaining a top-tier position in the growth regions in which we choose to operate; and | |
– | remaining a leading investment bank with a client-centric business model, focusing on flow trading and advice, leveraging our traditional strengths and maximizing our scope by working in close conjunction with our wealth management and asset management businesses. |
Wealth Management & Swiss Bank
Wealth Management & Swiss Bank focuses on delivering comprehensive financial services to high net worth and ultra high net worth individuals around the world – except to those served by
Wealth Management Americas – as well as private and corporate clients in Switzerland. Our Wealth Management business unit provides clients in over 40 countries, including Switzerland, with financial advice, products and tools to fit their individual needs. Our Retail & Corporate business unit provides individual and business clients with an array of banking services, such as deposits and lending, and maintains a leading position across its client segments in Switzerland.
Wealth Management Americas
Wealth Management Americas provides advice-based solutions through financial advisors who deliver a fully integrated set of products and services specifically designed to address the needs of ultra high net worth, high net worth and core affluent individuals and families. It includes the domestic United States business (Wealth Management US), the domestic Canadian business and international business booked in the United States.
Global Asset Management
Global Asset Management is a large-scale asset manager with businesses diversified across regions, capabilities and distribution channels. It offers investment capabilities and styles across all major traditional and alternative asset classes including equities, fixed income, currency, hedge fund, real estate and infrastructure that can also be combined into multi-asset strategies. The fund
10
Strategy, performance and responsibility |
services unit provides legal fund set-up and accounting and reporting for retail and institutional funds.
Investment Bank
Corporate Center
è | Refer to the “Accounting and reporting structure changes” and “UBS business divisions and Corporate Center” sections of this report for more information on our businesses |
UBS’s competitive profile
Our business mix reflects decades of continuous development, organic growth and acquisitions. As a leader in the wealth management industry in terms of total invested assets, we offer a combination of wealth management, investment banking and asset management and services in local and regional markets. Specifically, we are a leading wealth manager in Switzerland, Europe, and the Asia Pacific region and are well positioned in
main growth markets such as the Middle East and Latin America. In the US, we are a leading wealth management service provider and are the biggest foreign-owned wealth manager. Furthermore, we have the largest ultra high net worth business globally in terms of invested assets. Our Investment Bank maintains a strong presence among global corporate and institutional clients, and holds leading positions in equities, foreign exchange, money markets, mergers and acquisitions and financial advisory services. In the Asia Pacific region, we operate leading investment banking, wealth management and asset management businesses.
UBS’s strategy
At the end of 2009, we established strategic objectives to improve our financial performance and reposition the firm in order to generate sustainable profitability and increased shareholder value. These strategic objectives and the related medium-term financial targets were reiterated at our Investor Day in November 2010. Our strategy is built on two primary pillars: re-focusing our business portfolio to fully capitalize on our strengths, and transforming the way we operate, exploiting the full potential of our strengths based on our three strategic guidelines of reputation, integration and execution. We are delivering against this strategy and have made progress in improving our financial performance during 2010.
Re-focusing the business portfolio
11
Strategy, performance and
responsibility Strategy and structure
è | Refer to the “UBS business divisions and Corporate Center” section of this report for more information on the business division strategies |
Transforming the way we operate
We are committed to our Swiss home market. Switzerland is the only country in which retail, corporate and institutional banking, wealth and asset management as well as investment banking are present. We strive to be the leading bank with regard to client satisfaction, employee engagement and sustainable profitability. Within the Swiss market, we maintain a leading position in all of our businesses.
Through our network of over 300 branches including around 4,700
client-facing staff, we reach approximately 80% of Swiss wealth. We serve every third household, every third wealthy individual and almost half of all Swiss companies.
Our strategy leverages our strengths and leading position in Switzerland and our integrated bank model allows us to offer a very broad range of products and services to our clients. For example, we can offer our private clients banking products and services needed throughout
their lives, ensuring the stability and continuity of the relationship. The same holds true for our corporate and institutional clients. We also offer our clients in Switzerland access to our global asset gathering and investment banking expertise.
UBS Switzerland operates with an integrated management team consisting of the heads of all Swiss business segments and support functions.
12
Strategy, performance and responsibility |
step in this process. Also, we launched a new corporate identity program in 2010, including the world-wide brand campaign “We will not rest”, and a corresponding sponsorship strategy to raise our brand awareness.
13
Strategy, performance and responsibility
Strategy and structure
Board of Directors
14
Strategy, performance and responsibility |
The Board of Directors (BoD) is our most senior body. Under the leadership of the Chairman, it determines the strategy of the Group based upon the recommendations of the Group Chief Executive Officer (Group CEO). It exercises ultimate supervision of management and Nominating Committeeis responsible for the appointment and dismissal of all Group Executive Board (GEB) members, the Company Secretary and the head of Group Internal Audit as well as supervising and setting appropriate risk management and control principles for the firm. With the exception of its current Chairman, Kaspar Villiger, all members of the BoD are independent.
è | Refer to the “Corporate governance” section of this report for more information about the BoD |
15
Strategy, performance and responsibility
Strategy and structure
Group Executive Board
16
Strategy, performance and responsibility |
17
Management of the firm is delegated by the BoD to the GEB. Under the leadership of the Group CEO, the GEB has executive management responsibility for the Group and its businesses. It assumes overall responsibility for the development of the Group and business division strategies and the implementation of approved strategies.
è | Refer to the “Corporate governance” section of this report for more information about the GEB |
1817
19
The making of UBS
è | Refer to www.ubs.com/history for more information |
2018
Strategy, performance and responsibility |
21
19
Strategy, performance and responsibility
Current market climate and industry drivers
Current market climate and industry drivers
The recent crisisquest for greater systemic stability continues and its aftermath will have enduring effects onresilience has been tested once again by the financial services industry.
Financial crisis and global recession
Global growth accelerated in the unemployment ratefirst half of 2010, as businesses reducedcompanies restocked their employment levels to adjust toinventories and improved consumer confidence kick-started spending. Monetary policies remained expansionary in nature given the changes in global demand.
Euro crisis
Europe’s sovereign debt crisis resulted in a major dip in confidence in the euro. The situation had its origins as much in the establish-
ment and subsequent development of the common currency itself as in the effects of the financial market crisis. When the global recession struck in 2008, much of the debt accumulated mostly (but not exclusively) in the private sectors of some European Monetary Union (EMU) countries became unsustainable. The governments faced falling tax revenues, rising social outlays and costs for supporting their economies and their failing financial institutions. Public debt-to-gross domestic product (GDP) ratios in the EMU rose by around 20 percentage points on average. The weaker and most severely affected countries saw their annual public deficits swell to double-digit levels as a percentage of GDP. Holders of government bonds grew increasingly nervous about their investments, triggering today’s sovereign debt crisis in Europe.
Macroeconomic perspectives
The global growth sharply increases following the downturn, often surpassing the pre-crisis growth rate, and then eventually falls back to its long-term growth rate. In the current market environment, the return to pre-crisis growth ratesrecovery, while weak, appears to be taking longer to materialize, mostly as a result of deleveraging inincreasingly self-sustaining. We believe that the private and corporate sectors. Secondly,global economy has the ongoing economic recovery also appears to be uneven from a geographical point of view. While emerging markets are expected to show the strongest performance, growth in advanced economies is predicted to remain low as the household and
2220
Strategy, performance and responsibility |
to grow at between 3% and responsibility
Industry drivers
A number of drivers are expected to have a significant impact on banks’ earnings andas well as the structure of the financial services industry in the short-to medium-term.industry. The most relevant factorsfactor over the coming years will be the new business environment arising out of regulatory reform. This is likely to have far reaching and transformational consequences for markets, firm structures and business models.
è | Refer to the “Regulatory developments” section for more information |
Changing business models
Changes in regulation are described below.
Increasing role of emerging market banks
Emerging market banks came out of the global financial crisis in much better shape than their peers in developed markets, given their limited exposure to the US sub-prime market. As such, their capital position, on average, is already well above the Basel minimal requirement for 2019. Global emerging market banks are also strongly funded with deposits, which, together with a mostly supportive macro outlook, make them well positioned to capture future growth. In 2010, a number of emerging market countries enacted additional regulations for local banks. These include higher reserve requirements (China, India, Indonesia, and Turkey), more stringent provisioning (India, Indonesia and Mexico), compulsory lending (Korea), banking taxes (Hungary) and mortgage restrictions (China, Hong Kong, India, Malaysia, Poland and Thailand).
Demographics
The demographic dividend brought by a fall in child dependency and a rise in the share of the working population has been exhausted in western countries, and will soon be exhausted in a few developing countries (e.g. China). For most of the developing world this point lies 20–30 years ahead. Countries that have lost the demographic dividend will confront fiscal and social stresses from increases in the old age dependency ratio. In Japan, today there are 3.4 people working for every person over 65. By 2050, it is estimated the ratio will be 1.3. In Western Europe continuedthe ratio would fall from nearly four to decrease their balance sheetstwo. Many pension funds – particularly pay-as-you-go public pensions – are underfunded, leaving many with insufficient retirement income. As baby-boomers retire, they will roll over trillions of assets from defined contribution plans and raiseindividual retirement accounts to other accounts. The need for stable income will increase the demand for fixed income investments and target date funds.
Development of major currencies versus the Swiss franc
21
Strategy, performance and responsibility
Regulatory developments
Regulatory developments
Banking sector re-regulation remained high on the agenda throughout 2010. The pace of regulatory reform often varies among countries, raising the prospect of an uneven playing field among banks. Regulatory reforms will have a significant impact on capital to reinforce their financial position. While the deleveraging process withinlevels, future revenue and earnings, and ultimately investment returns for the banking sector is likelyas a whole. In particular, the impact will be felt in certain business areas, such as fixed income.
Global capital and liquidity standard – Basel III
The enhanced Basel II framework (increased weighting of market risks) and Basel III capital requirements mandate that banking businesses will have to continue forbe underpinned by a higher quantity and quality of capital going forward. The definition of core tier 1 capital (common equity) will be more restrictive. Risk-weighted assets (RWA) will rise significantly, notably at banks with large trading portfolios, due to the introduction of additional charges as well as increased calibration percentages. It will take some time to implement fully the Basel reforms and further capital might be raised in the futureglobal standards, and, as a result, the focus is on local regulations and their comparison. It is apparent that the pace of ongoing regulatory changes,change varies considerably from country to country, and it appearsis likely that financial sector leverage level has fallen substantially fromthere will be different rules in different jurisdictions.
ing buffers amounts 10.5–13%.These requirements will be phased-in from 2013 to emergethe end of 2018. The risk-based capital requirements are supplemented by a tier 1 leverage ratio of 3% that will be tested from 2013 to 2016, with a view to perform a final calibration and implementation as of 1 January 2018.
Basel II market risk framework
Further to the publication of the enhanced Basel II market risk framework in July 2009, the BCBS has issued certain adjustments to the revision in June 2010. For a transition period of two years, the capital charges for non-correlation trading securitization positions may be based on the larger of the capital charges for net long and net short positions instead of the sum of net long and net short positions. Also, for correlation trading securitization positions, banks applying an internally developed model are subject to a floor of at least 8% of the capital charge for specific risk according to the standardized measurement method. Finally, the BCBS agreed to a coordinated start-date of not later than 31 December 2011.
è | Refer to the “Treasury management” section of our 2009 Annual Report for the 2009 developments of the Basel II market risk framework |
Systemically important financial institutions
Regulatory attention is clearly focused on the question of systemically important financial institutions. However, at present, an in-
22
Strategy, performance and responsibility |
Swiss Commission of Experts on “Too big to fail”
and public consultation
Of special relevance for UBS is expectedthe “too big to continue throughoutfail” discussion in Switzerland. On 4 October 2010, the Commission of Experts appointed by the Swiss Federal Council presented its final report, proposing measures to be applied to systemically relevant banks, with recommendations for increased capital requirements (including a return to sustained growth specifically in Asialeverage ratio) and other emerging markets.
1. | Capital: Common equity of at least 10% of RWA and additional capital equivalent instruments (contingent convertibles [CoCos]) of 9% of RWA. The CoCos would automatically convert into common equity in the event that the capital ratios of the issuing bank fall below certain predefined thresholds (trigger levels). Of the 9% capital equivalent instruments, the Commission of Experts recommended that 3% consist of CoCos with a trigger at a 7% common equity capital ratio. Alternatively, this 3% may also be held in the form of common equity. The remaining 6% would be issued as CoCos with a lower trigger, set at a 5% common equity capital ratio. This progressive component would be variable, based on the bank’s degree of systemic importance, and depend on market share in Swiss systemic functions and total balance sheet size of the bank. These proposed capital requirements exceed the proposed Basel III minimum standards. The calibration of the three components was based on the assumption that RWA would increase to approximately CHF 400 billion under Basel III. The 6% progressive component, calibrated as at the end of 2009, is based on a balance sheet total of approximately CHF 1,500 billion and a market share of around 20%. Furthermore, the Commission recommended a leverage ratio (minimum capital level as a proportion of the balance sheet) as an additional capital rule. The timeframe for the imple- |
mentation of the Swiss capital requirements is the same as it is for the Basel III standards. | ||
2. | Liquidity: Proposals concerning liquidity requirements largely correspond to the FINMA principles that were effective as of 30 June 2010. It has been proposed that the agreed-upon FINMA principles should be given legal form. The FINMA liquidity regulations require banks to hold a balance of highly liquid assets sufficient to offset the projected outflows under the stress scenario for a period of 30 days. Similar to the FINMA liquidity regime, our established internal liquidity stress tests consider a severe stress scenario. We believe that our internal model enables us to sustain our business in stress conditions for a period substantially beyond the minimum regulatory horizon. |
3. | Risk diversification: The measures presented by the Commission to improve risk diversification are similar to the adjustments envisaged in other jurisdictions, notably the European Union. One objective of these measures is to reduce the degree of interconnectedness within the banking sector, and thus limit the dependence of other banks on systemically important banks. |
4. | Organization: The Commission stressed that it is the responsibility of a systemically important bank to organize itself in such a way that maintenance of the Swiss systemically important functions would be guaranteed in the event of a crisis. No specific structural measures were recommended by the Commission for systemically important banks. | |
On 22 December 2010, the Swiss Federal Council launched a consultation on the “too big to fail” legislative proposals. The draft contains the measures recommended by the Commission of Experts which form the heart of the proposals. There were two additional elements compared with the Commission’s final report: (i) proposed legal changes to grant tax relief for the Swiss capital market, and (ii) a paragraph that empowers the Federal Council to rule on variable compensation for bank employees in case of future government support for a bank. The consultation is scheduled to end on 23 March 2011 and, after consolidation, the papers will enter the parliamentary process with a view to conclude the debate in 2011. The Swiss administration took strides to further clarify the measures stipulated by the Commission, while the abovementioned four main pillars remained in place. | ||
The revised legislation would require each systemically relevant institution such as UBS to develop a plan to ensure the continuation of systemically relevant functions within Switzerland in the event that the institution approaches insolvency. It would empower FINMA to impose far-reaching structural changes, including among other things the separation of lines of business into separate legal entities and restrictions on intragroup funding and guarantees, should any such institution be deemed to have failed to develop an adequate plan. |
23
Strategy, performance and responsibilityCurrent market climateRegulatory developments
Regulatory developments in other jurisdictions
Other notable regulatory initiatives include the Dodd-Frank Wall Street Reform and industry drivers
24
Strategy, performance and responsibility |
Risk factors
Certain risks, including those described below, canmay impact our ability to carry outexecute our business strategiesstrategy and directly affect our business activities, financial condition, results of operations and prospects. Because the business of a broad-based international financial services firm such as UBS is inherently exposed to risks that only become apparent with the benefit of hindsight, risks of which we are not presently aware could also materially affect our business activities, financial condition, results of operations and prospects. The sequence in which the risk factors are presented below is not indicative of their likelihood of occurrence or the potential magnitude of their financial consequences.
Our reputation is key to the success of our business
In the wake of the recent financial crisis, regulators and legislators arehave proposed and adopted, or continue to actively consideringconsider, a wide range of measures designed to address the perceived causes of the crisis and to limit the systemic risks posed by major financial institutions. Potential changesThese measures include:
– | significantly higher regulatory capital requirements | |
– | changes in the definition and calculation of regulatory capital, including in the capital treatment of certain capital instruments issued by UBS and other banks | |
– | changes in the calculation of risk-weighted assets | |
– | new or significantly enhanced liquidity requirements | |
– | requirements to maintain liquidity and capital in multiple jurisdictions where activities are conducted |
– | limitations on principal trading activities | |
– | limitations on risk concentrations and maximum levels of risk | |
– | taxes and government | |
– | a variety of measures constraining, taxing or imposing additional requirements relating to compensation | |
– | requirements to adopt structural and other changes designed to reduce systemic risk and to make major financial institutions easier to wind down or disassemble | |
– | outright size limitations |
A number of measures have been adopted (or in the case of Basel III, the framework established) and will be implemented in the next several years, or in some cases are subject to legislative action or to further rulemaking by regulatory authorities before final implementation. As a result, there is a high level of uncertainty regarding a number of the measures described above. The timing and implementation of changes could have a material and adverse effect on our business.
regulation may be imposed in a manner that makes it more difficult to manage a global institutions. institution. The absence of a coordinated approach is also likely to disadvantage certain banks, such as UBS, as they attempt to compete with less strictly regulated peers based in other jurisdictions.
25
Strategy, performance and responsibility
Risk factors
We are exposedOur reputation is critical to possible further reductionthe success of our business
Damage to our reputation can have fundamental negative effects on our business and prospects. As the events of the past few years have demonstrated, our reputation is critical to the success of our strategic plans. Reputational damage is difficult to reverse. The process is slow and success can be difficult to measure. This was demonstrated in recent years as our very large losses during the financial crisis, the US cross-border matter and other matters seriously damaged our reputation. This was an important factor in our loss of clients and client assets across our asset-gathering businesses, and to a lesser extent in our wealth managementloss of and asset management businesses
Our capital strength is important in supporting our client assetsfranchise; changes in capital requirements are likely to constrain certain business activities in our wealth managementInvestment Bank
Our capital position, as measured by the BIS tier 1 and asset management businesses. This resulted fromtotal capital ratios, is determined by (i) risk-weighted assets (RWA) (balance sheet, off-balance sheet and other market and operational risk positions, measured and risk-weighted according to regulatory criteria) and (ii) eligible capital. Both RWA and eligible capital are subject to change. Eligible capital would be reduced if we experience net losses, as determined for the purpose of the regulatory capital calculation. Eligible capital can also be reduced for a number of different factors,other reasons, including certain reductions in the ratings of securitization exposures, adverse currency movements directly affecting the value of equity and prudential adjustments that may be required due to the valuation uncertainty associated with certain types of positions. RWA, on the other hand, are driven by our business activities and by changes in the risk profile of our exposures. For instance, substantial losses,market volatility, a widening of credit spreads (the major driver of our value-at-risk), a change in regulatory treatment of certain positions, adverse currency movements, increased counterparty risk or a deterioration in the damageeconomic environment could result in a rise in RWA. Any such reduction in eligible capital or increase in RWA could potentially reduce our capital ratios, and such reductions could be material.
We hold proprietary risk positions that may be adversely affected by conditions in the financial markets
UBS, like many other financial market participants, was severely affected by the financial crisis that began in 2007. The deterioration of financial markets since the beginning of the
25
26
Strategy, performance and responsibility |
The continued illiquidity of most of these legacy risk positions is likely to makemakes it increasingly difficult to reduce our exposures to them.
Performance in the financial services industry depends on the economic climate
The financial services industry prospers in conditions of economic growth, stable geopolitical conditions, capital markets that are transparent, liquid and buoyant capital markets and positive investor sentiment. An economic downturn, inflation or a severe financial crisis (as seen in 2008 and to a lesser extent in 2009)the last few years) can negatively affect our revenues and ultimately our capital base.
– | a general reduction in business activity and market volumes would affect fees, commissions and margins from market-making and | |
– | a market downturn is likely to reduce the volume and valuations of assets we manage on behalf of clients, reducing our asset- and performance-based fees; | |
– | reduced market liquidity limits trading and arbitrage opportunities and impedes our ability to manage risks, impacting both trading income and performance-based fees; | |
– | assets we own and account for as investments or trading positions could | |
– | impairments and defaults on credit exposures and on trading and investment positions could increase, and losses may be exacerbated by falling collateral values; and | |
– | if individual countries impose restrictions on cross-border payments or other exchange or capital controls, we could suffer losses from enforced default by counterparties, be unable to access our own assets, or be impeded in – or prevented from – managing our risks. |
Because UBS has very substantial exposures to other major financial institutions, the failure of any such institution could have a material effect on UBS.
Our global presence subjects us to risk from currency fluctuations
We prepare our consolidated financial statements in Swiss francs. However, a substantial portion of our assets, liabilities, invested assets, revenues and expenses are denominated in other currencies, particularly the economyUS dollar, the euro and the British pound. Accordingly, changes in foreign exchange rates, particularly between the Swiss franc and the US dollar (US dollar revenue represents the major part of our businessnon-Swiss franc revenue) have an effect on our reported income and funding costs.
We are dependent upon our risk management and control processes to avoid or limit potential losses in our trading and counterparty credit businesses
Controlled risk-taking is a major part of the business of a financial services firm. Credit is an integral part of many of our retail, wealth management and Investment Bank activities. This includes
27
Strategy, performance and responsibility
Risk factors
lending, underwriting and derivatives businesses and positions. Changes in interest rates, credit spreads, equity prices, foreign exchange levels and other market fluctuations can adversely affect our earnings. Some losses from risk-taking
26
– | we do not fully identify the risks in our portfolio, in particular risk concentrations and correlated risks; | |
– | our assessment of the risks identified or our response to negative trends proves to be inadequate or incorrect; | |
– | markets move in ways that | |
– | third parties to whom we have credit exposure or whose securities we hold for our own account are severely affected by events not anticipated by our models, and we accordingly suffer defaults and impairments beyond the level implied by our risk assessment; or | |
– | collateral or other security provided by our counterparties proves inadequate to cover their obligations at the time of their default. |
We also manage risk on behalf of our clients in our asset and wealth management businesses. Our performance in these activities could be harmed by the same factors. If clients suffer losses or the performance of their assets held with us is not in line with relevant benchmarks against which clients assess investment performance, we may suffer reduced fee income and a decline in assets under management or withdrawal of mandates.
required to be held beyond a normal trading horizon. They are subject to a distinct control framework. Deteriorations in the fair value of these positions would have a negative impact on our earnings.
Valuations of certain assets rely on models. For some
of the inputs to these models there is no observable source
Where possible, we mark our trading book assets at their quoted market price in an active market. In the current environment, suchSuch price information ismay not be available for certain instruments and we therefore apply valuation techniques to measure such instruments. Valuation techniques use “market observable inputs” where available, derived from similar assets in similar and active markets, from recent transaction prices for comparable items or from other observable market data. ForIn the case of positions offor which some or all of the reference data are not observable or have limited observability, we use valuation models with non-market observable inputs. There is no single market standard for valuation models inof this area.type. Such models have inherent limitations; different assumptions and inputs would generate different results, and these differences could have a significant impact on our financial results. We regularly review and update our valuation models to incorporate all factors that market participants would consider in setting a price, including factoring in current market conditions. Judgment is an important component of this process. Changes in model inputs or in the models themselves, or failure to make the changes necessary to reflect evolving market conditions, could have a material adverse effect on our financial results.
Credit ratingsWe are exposed to possible further reduction in client
assets in our wealth management and liquidityasset management
businesses
In 2008 and 2009, we experienced substantial net outflows of client assets in our wealth management and asset management businesses. Our wealth management businesses continued to experience net outflows in the first half of 2010, albeit at significantly reduced levels. The net outflows resulted from a number of different factors, including our substantial losses, the damage to our reputation, the loss of client advisors, difficulty in recruiting qualified client advisors and developments concerning our cross-border private banking business. Some of these factors have been successfully addressed, but others, such as the long-term changes affecting the cross-border private banking business model, will continue to affect client flows for an extended period of time. If we again experience material net outflows of client assets, the results of our wealth management and asset management businesses are likely to be adversely affected.
Liquidity and funding management are critical to
our ongoing performance
Reductions in our credit rating couldratings can increase our funding costs, in particular with regard to funding from wholesale unsecured sources. Some
28
Strategy, performance and responsibility |
sources, and can affect the availability of thesecertain kinds of funding. In addition, as we experienced in 2008 and 2009, ratings downgrades have requiredcan require us to post additional collateral or make additional cash payments or post additional collateral, and additional reductions in the credit ratings could have similar effects.under master trading agreements relating to our derivatives businesses. Our credit ratings also have an impact on the performance of our businesses. Alongcontribute, together with our capital strength and reputation, our credit ratings contribute to maintaining client and counterparty confidence in us.
27
è | Refer to the “Risk and treasury management” section of this report for more information on our approach to liquidity and funding management |
Operational risks may affect our business
All of our businesses are dependent on our ability to process a large number of complex transactions across multiple and
Legal claims and regulatory risks and restrictions
arise in the conduct of our business
Due to the ordinary coursenature of our business, we are subject to regulatory oversight and liability risk. We are involved in a variety of claims, disputes, legal proceedings and government investigations in jurisdictions where we are active. These types of proceedings expose us to substantial monetary damages and legal defense costs, injunctive relief and criminal and civil penalties, in addition to potential regulatory restrictions on our businesses. The outcome of these matters cannot be predicted and they could adversely affect our future business. We continue to be subject to government inquiries and investigations, and are involved in a number of litigationsliti-
gations and disputes, related tomany of which arose out of the financial crisis. These matters concern, among other things, our valuations, accounting classifications, disclosures, investment suitability, writedowns underwriting and contractual obligations, as well as our role as an underwriterobligations. We are also subject to potentially material exposure in securities offerings forconnection with claims relating to US RMBS and mortgage loan sales, the Madoff investment fraud, Lehman principal protection notes and other issuers.
28
è | Refer to “Note 21 Provisions and |
We might be unable to identify or capture revenue or
competitive opportunities, or retain and attract qualified
employees
The financial services industry is characterized by intense competition, continuous innovation, detailed (and sometimes fragmented) regulation and ongoing consolidation. We face competition at the level of local markets and individual business lines, and from global financial institutions that are comparable to UBS in their size and breadth. Barriers to entry in individual markets are being eroded by new technology. We expect these trends to continue and competition to increase in the future.
29
Strategy, performance and responsibility
Risk factors
leave UBS, or that we may be less successful than our competitors in attracting qualified employees. This riskAlthough changes in regulatory requirements and pressure from regulators and other stakeholders affect not only UBS but also arises in connection with the increasing legislation, regulation and regulatory pressure relating to remuneration in general and variable compensation in particular. Although this affects many if not all of theother major international banks, the constraints are likely toand pressures differ by jurisdiction, and therefore less regulated competitorsthis may tend to have angive some of our peers a competitive advantage.
Our global presence exposes usWe are exposed to risks arising from being subject tothe different
regulatory, legal and tax regimes as well as from currency fluctuationapplicable to our
global businesses
We operate in more than 50 countries, earn income and hold assets and liabilities in many different currencies and are subject to many different legal, tax and regulatory regimes.
The effects of taxes on our financial accountsresults are significantly
influenced by changes in our deferred tax assets
and final determinations on audits by tax authorities
The deferred tax assets we accrue taxes,have recognized on our balance sheet as of 31 December 2010 in respect of prior years’ tax losses are based on profitability assumptions over a five-year horizon. If the business plan earnings and assumptions in future periods sub-
stantially deviate from the current outlook, the amount of deferred tax assets may need to be adjusted in the future. This could include write-offs of deferred tax assets through the income statement if actual results come in substantially below the business plan forecasts and/or if future business plan forecasts are substantially revised downwards.
2930
Strategy, performance and responsibility |
Financial performance
Our performance is reported in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. This section provides a discussion and analysis of our results for 2009,2010, commenting on the underlying operational performance of the business, with a focus on continuing operations.
UBS key figures
As of or for the year ended | ||||||||||||
CHF million, except where indicated | 31.12.10 | 31.12.09 | 31.12.08 | |||||||||
Group results | ||||||||||||
Operating income | 31,994 | 22,601 | 796 | |||||||||
Operating expenses | 24,539 | 25,162 | 28,555 | |||||||||
Operating profit from continuing operations before tax | 7,455 | (2,561 | ) | (27,758 | ) | |||||||
Net profit attributable to UBS shareholders | 7,534 | (2,736 | ) | (21,292 | ) | |||||||
Diluted earnings per share (CHF)1 | 1.96 | (0.75 | ) | (7.63 | ) | |||||||
Key performance indicators, balance sheet and capital management2 | ||||||||||||
Performance | ||||||||||||
Return on equity (RoE) (%) | 16.7 | (7.8 | ) | (58.7 | ) | |||||||
Return on risk-weighted assets, gross (%) | 15.5 | 9.9 | 1.2 | |||||||||
Return on assets, gross (%) | 2.3 | 1.5 | 0.2 | |||||||||
Growth | ||||||||||||
Net profit growth (%)3 | N/A | N/A | N/A | |||||||||
Net new money (CHF billion)4 | (14.3 | ) | (147.3 | ) | (226.0 | ) | ||||||
Efficiency | ||||||||||||
Cost / income ratio (%) | 76.5 | 103.0 | 753.0 | |||||||||
Capital strength | ||||||||||||
BIS tier 1 ratio (%)5 | 17.8 | 15.4 | 11.0 | |||||||||
FINMA leverage ratio (%)5 | 4.45 | 3.93 | 2.45 | |||||||||
Balance sheet and capital management | ||||||||||||
Total assets | 1,317,247 | 1,340,538 | 2,014,815 | |||||||||
Equity attributable to UBS shareholders | 46,820 | 41,013 | 32,531 | |||||||||
BIS total ratio (%)5 | 20.4 | 19.8 | 15.0 | |||||||||
BIS risk-weighted assets5 | 198,875 | 206,525 | 302,273 | |||||||||
BIS tier 1 capital5 | 35,323 | 31,798 | 33,154 | |||||||||
Additional information | ||||||||||||
Invested assets (CHF billion) | 2,152 | 2,233 | 2,174 | |||||||||
Personnel (full-time equivalents) | 64,617 | 65,233 | 77,783 | |||||||||
Market capitalization6 | 58,803 | 57,108 | 43,519 | |||||||||
As of or for the year ended | |||||||||||||||||||||||||||||||||||||||||||||||||
CHF million, except where indicated | 31.12.09 | 31.12.08 | 31.12.07 | ||||||||||||||||||||||||||||||||||||||||||||||
Group results | |||||||||||||||||||||||||||||||||||||||||||||||||
Operating income | 22,601 | 796 | 31,721 | ||||||||||||||||||||||||||||||||||||||||||||||
Operating expenses | 25,162 | 28,555 | 35,463 | ||||||||||||||||||||||||||||||||||||||||||||||
Operating profit before tax (from continuing and discontinued operations) | (2,569 | ) | (27,560 | ) | (3,597 | ) | |||||||||||||||||||||||||||||||||||||||||||
Net profit attributable to UBS shareholders | (2,736 | ) | (21,292 | ) | (5,247 | ) | |||||||||||||||||||||||||||||||||||||||||||
Diluted earnings per share (CHF)1 | (0.75 | ) | (7.63 | ) | (2.41 | ) | |||||||||||||||||||||||||||||||||||||||||||
Key performance indicators, balance sheet and capital management2 | |||||||||||||||||||||||||||||||||||||||||||||||||
Performance | |||||||||||||||||||||||||||||||||||||||||||||||||
Return on equity (RoE) (%) | (7.8 | ) | (58.7 | ) | (10.5 | ) | |||||||||||||||||||||||||||||||||||||||||||
Return on risk-weighted assets, gross (%) | 9.9 | 1.2 | 8.6 | ||||||||||||||||||||||||||||||||||||||||||||||
Return on assets, gross (%) | 1.5 | 0.2 | 1.3 | ||||||||||||||||||||||||||||||||||||||||||||||
Growth | |||||||||||||||||||||||||||||||||||||||||||||||||
Net profit growth (%)3 | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||
Net new money (CHF billion)4 | (147.3 | ) | (226.0 | ) | 140.6 | ||||||||||||||||||||||||||||||||||||||||||||
Efficiency | |||||||||||||||||||||||||||||||||||||||||||||||||
Cost/income ratio (%) | 103.0 | 753.0 | 111.0 | ||||||||||||||||||||||||||||||||||||||||||||||
Capital strength | |||||||||||||||||||||||||||||||||||||||||||||||||
BIS tier 1 ratio (%)5 | 15.4 | 11.0 | |||||||||||||||||||||||||||||||||||||||||||||||
FINMA leverage ratio (%)5 | 3.93 | 2.45 | |||||||||||||||||||||||||||||||||||||||||||||||
Balance sheet and capital management | |||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | 1,340,538 | 2,014,815 | 2,274,891 | ||||||||||||||||||||||||||||||||||||||||||||||
Equity attributable to UBS shareholders | 41,013 | 32,531 | 36,875 | ||||||||||||||||||||||||||||||||||||||||||||||
BIS total ratio (%)5 | 19.8 | 15.0 | |||||||||||||||||||||||||||||||||||||||||||||||
BIS risk-weighted assets5 | 206,525 | 302,273 | |||||||||||||||||||||||||||||||||||||||||||||||
BIS tier 1 capital5 | 31,798 | 33,154 | |||||||||||||||||||||||||||||||||||||||||||||||
Additional information | |||||||||||||||||||||||||||||||||||||||||||||||||
Invested assets (CHF billion) | 2,233 | 2,174 | 3,189 | ||||||||||||||||||||||||||||||||||||||||||||||
Personnel (full-time equivalents) | 65,233 | 77,783 | 83,560 | ||||||||||||||||||||||||||||||||||||||||||||||
Market capitalization6 | 57,108 | 43,519 | 108,654 | ||||||||||||||||||||||||||||||||||||||||||||||
Long-term ratings | |||||||||||||||||||||||||||||||||||||||||||||||||
Fitch, London | A+ | A+ | AA | ||||||||||||||||||||||||||||||||||||||||||||||
Moody’s, New York | Aa3 | Aa2 | Aaa | ||||||||||||||||||||||||||||||||||||||||||||||
Standard & Poor’s, New York | A+ | A+ | AA | ||||||||||||||||||||||||||||||||||||||||||||||
3031
Strategy, performance and responsibility
Measurement and analysis of performance
Key factors affecting our financial position and results
of operations in 20092010
– | In | |
– | ||
We recognized a net income tax benefit of CHF | ||
31
è | Refer to “Note |
– | As our credit spreads continued to tighten in 2010, the |
è | Refer to “Note 27 Fair value of financial instruments” in the “Financial information” section of this |
– | In 2010, we recorded a gain on our option to acquire the equity of the SNB StabFund of CHF 745 million compared with CHF 117 million in 2009, following higher asset valuations supporting a higher valuation of the SNB StabFund. |
– | In January 2010, UBS closed the sale of its investments in several associated entities owning office space in New York. A significant portion of the office space is leased by the Group until 2018. The sales price was CHF 187 million with a resulting |
gain on sale of CHF 180 million recorded in the first quarter. In the fourth quarter, we recognized a gain of CHF 158 million from the sale of a property in Zurich. |
– | In 2010, we incurred a credit loss expense of CHF 66 million, of which CHF 64 million occurred in Wealth Management & Swiss Bank. The net credit loss expense in the Investment Bank was nil. In 2009, we recorded an overall credit loss expense of CHF 1,832 million, mainly in the Investment Bank. |
è | Refer to the “Risk and treasury management” section of this report for more information |
– | During 2010, we incurred net restructuring charges of CHF 113 million compared with CHF 791 million in 2009. |
è | Refer to “Note 38 Reorganizations and disposals” in the “Financial information” section of this report for more information |
– | Charges related to the UK Bank Payroll Tax in 2010 amounted to CHF 200 million. |
– | Other comprehensive income attributable to UBS shareholders was negative CHF 1,659 million in 2010 due to: (1) losses in the currency translation account of CHF 909 million (net of tax) mainly related to the Swiss franc carrying value of investments in US, Eurozone and British subsidiaries; (2) fair value losses on financial investments available-for-sale of CHF 607 million (net of tax) predominantly relating to our fixed-interest bearing long-term bond portfolio, which consists of US and UK government bonds; and (3) changes in the replacement values of interest rate swaps designated as hedging instruments of negative CHF 143 million (net of tax). |
è | Refer to the “Statement of comprehensive income” in the “Financial information” section of this report for more information |
– | At the end of 2010, our invested asset base was CHF 2,152 billion, down from CHF 2,233 billion at year-end 2009. This decline was mainly due to unfavorable currency effects, as both the US dollar and the |
– | We ended 2010 with an industry-leading Basel II tier 1 capital ratio of 17.8%, up from 15.4% at the |
32
Strategy, performance and responsibility |
35.3 billion, due to the |
– | Our total balance sheet assets stood at CHF 1,317 billion on 31 December 2010, down CHF 23 billion compared with year-end 2009. Our funded asset volume, which excludes positive replacement values, remained relatively unchanged, declining by CHF 3 billion in 2010. |
è | Refer to the “Risk and treasury management” section of this report for more information |
– | On | |
è | Refer to “Note 26 Capital increase and mandatory convertible notes” in the |
Seasonal characteristics
Our main businesses do not generally show significant seasonal patterns, although the Investment Bank’s revenues have been affected in some years by the seasonal characteristics of general financial market activity and deal flows in investment banking. Other business divisions are only slightly impacted by seasonal components, such as asset withdrawals that tend to occur in the fourth quarter and by lower client activity levels related to the summer and end-of-year holiday season.
Performance measures
Key performance indicators
32
è | Refer to the |
33
– | The measure “client assets” encompasses all client assets managed by or deposited with us, including custody-only assets and assets held for purely transactional purposes. | |
– | The measure “invested assets” is a more restrictive term and includes all client assets managed by or deposited with us for investment purposes. |
Of the two, invested assets is our central measure and includes, for example, discretionary and advisory wealth management portfolios, managed institutional assets, managed fund assets and wealth management securities or brokerage accounts. It excludes all assets held for purely transactional and custody-only purposes, as we only administer the assets and do not offer advice on how these assets should be invested. Non-bankable assets (for example, art collections) and deposits from third-party banks for funding or trading purposes are excluded from both measures.
33
Strategy, performance and responsibility
Financial performance
è | Refer to “Note 35 Invested assets and net new money” in the “Financial information” section of this report for more information |
Group / business division key performance indicators
Wealth Management & | ||||||||||||||
Swiss Bank | ||||||||||||||
Wealth | Global | |||||||||||||
Wealth | Retail & | Management | Asset | Investment | ||||||||||
Key performance indicators | Definition | Group | Management | Corporate | Americas | Management | Bank | |||||||
Net profit growth (%) | Change in net profit attributable to UBS shareholders from continuing operations between current and comparison periods / net profit attributable to UBS shareholders from continuing operations of comparison period | l | ||||||||||||
Pre-tax profit growth (%) | Change in business division performance before tax between current and comparison periods / business division performance before tax of comparison period | l | l | l | l | l | ||||||||
Cost / income ratio (%) | Operating expenses / operating income before credit loss (expense) or recovery | l | l | l | l | l | l | |||||||
Return on equity (%) | Net profit attributable to UBS shareholders on a year-to-date basis (annualized as applicable) / average equity attributable to UBS shareholders (year-to-date basis) | l | ||||||||||||
Return on attributed equity (%) | Business division performance before tax on a year-to-date basis (annualized as applicable) / average attributed equity (year-to-date basis) | l | ||||||||||||
Return on assets, gross (%) | Operating income before credit loss (expense) or recovery on a year-to-date basis (annualized as applicable) / average total assets (year-to-date basis) | l | l | |||||||||||
Return on risk-weighted assets, gross (%) | Operating income before credit loss (expense) or recovery on a year-to-date basis (annualized as applicable) /average risk-weighted assets (year-to-date basis) | l | ||||||||||||
FINMA leverage ratio (%) | BIS tier 1 capital / average adjusted assets as per definition by FINMA | l | ||||||||||||
BIS tier 1 ratio (%) | BIS tier 1 capital / BIS risk-weighted assets | l | ||||||||||||
Net new money (CHF billion)1 | Inflow of invested assets from new and existing clients less outflows from existing clients or due to client defection | l | l | l | l | |||||||||
Gross margin on invested assets | Operating income before credit loss (expense) or recovery (annualized as applicable) / average invested assets | l | l | l | ||||||||||
Impaired lending portfolio as a % of total lending portfolio, gross | Impaired lending portfolio, gross / total lending portfolio, gross | l | ||||||||||||
Average management VaR (1-day, 95% confidence, five years of historical data) | Value-at-risk (VaR) expresses maximum potential loss measured to a 95% confidence level, over a 1-day time horizon and based on five years of historical data | l | ||||||||||||
34
Strategy, performance and responsibility |
Accounting and reporting structure changes
Wealth Management & Swiss Bank reorganization
From 2010 onwards, the internal reporting of Financial Statements
– | “Wealth Management”, encompassing all wealth management business conducted out of Switzerland and in our Asian and European booking centers; |
– | “Retail & Corporate”, including services provided to Swiss retail private clients, small and medium enterprises and corporate and institutional clients. |
In 2009, in line with the classification of trust preferred securities as equity instruments, we recognize liabilities for the full dividend payment obligation once a coupon payment becomes mandatory, i.e. when it is triggered by a contractually determined event. In the income statement, the same amount is reclassified from net profit attributable to UBS shareholders to net profit attributable to minority interests.
Allocation of additional Corporate Center costs to reportable segments
From 2010 onwards, almost all costs incurred by the Corporate Center related to shared services and control functions are allocated to the reportable segments, which replaced IAS 14Segment Reporting.Underdirectly and indirectly receive the requirementsvalue of the new standard, our external segment reporting is nowservices, either based on a full cost recovery or on a periodically agreed flat fee. The allocated costs are shown in the internal management reporting to the GEB (or the “chief operating decision maker”), which makes decisions on the allocation of resources and assesses the performancerespective expense lines of the reportable segments.segments in “Note 2a Segment reporting” in the “Financial information” section, and in the “UBS business divisions and Corporate Center” section of this report.
penses and performance before tax would have been as shown in the table below.
è | Refer to “Note 1a) 33) Segment reporting” in the “Financial information” section of this report for more details |
Cash collateral from derivative transactions and prime brokerage receivables and payables
From 2010 onwards, we have changed the presentation of cash collateral from derivative transactions and prime brokerage receivables and payables to improve transparency.
Personnel expenses
In accordance2010, we reclassified certain elements ofOther personnel expensestoVariable compensation – otherin order to align the presentation with the new structure announced in February 2009, we disclosed four reportable segments. TheseFINMA definition of variable compensation.
Corporate Center cost allocation impact on 2009 figures | ||||||||||||||||||||||||||||
Wealth | Total | |||||||||||||||||||||||||||
Wealth Management & | Management | Global Asset | Investment | business | Corporate | |||||||||||||||||||||||
Swiss Bank | Americas | Management | Bank | divisions | Center | |||||||||||||||||||||||
Wealth | Retail & | |||||||||||||||||||||||||||
CHF million | Management | Corporate | ||||||||||||||||||||||||||
Estimated increase in 2009 operating expenses and decrease in performance before tax | 128 | 96 | 84 | 44 | 288 | 640 | (640 | ) | ||||||||||||||||||||
35
Strategy, performance and laterresponsibility
Financial performance
Cash collateral from derivative transactions and prime brokerage receivables and payables | ||||||||||||||||||||||||
31.12.09 | 31.12.08 | |||||||||||||||||||||||
Before | After | Before | After | |||||||||||||||||||||
CHF million | reclassification | Reclassification | reclassification | reclassification | Reclassification | reclassification | ||||||||||||||||||
Due from banks | 46,574 | (29,770 | ) | 16,804 | 64,451 | (46,757 | ) | 17,694 | ||||||||||||||||
Cash collateral receivables on derivatives instruments | 0 | 53,774 | 53,774 | 0 | 85,703 | 85,703 | ||||||||||||||||||
Loans | 306,828 | (40,351 | ) | 266,477 | 340,308 | (48,852 | ) | 291,456 | ||||||||||||||||
Other assets | 7,336 | 16,347 | 23,682 | 9,931 | 9,906 | 19,837 | ||||||||||||||||||
Due to banks | 65,166 | (33,244 | ) | 31,922 | 125,628 | (48,806 | ) | 76,822 | ||||||||||||||||
Cash collateral payables on derivatives instruments | 0 | 66,097 | 66,097 | 0 | 92,937 | 92,937 | ||||||||||||||||||
Due to customers | 410,475 | (71,212 | ) | 339,263 | 465,741 | (103,102 | ) | 362,639 | ||||||||||||||||
Other liabilities | 33,986 | 38,359 | 72,344 | 42,998 | 58,971 | 101,969 | ||||||||||||||||||
Furthermore, we reclassified the pension costs related to bonus toPension and other post-employment benefit plans. Previously, those amounts were reported underSocial security. Prior period amounts have been adjusted accordingly. The change in the presentation did not impact our personnel expenses. The related amounts are disclosed in the footnotes to “Note 6 Personnel expenses” in the “Financial information” section of this report.
IFRS 9 Financial Instruments
In November 2009, the International Accounting Standards Board (IASB) has initiated a comprehensive project to replace IAS 39Financial instruments: recognition and measurement.The first phase of this project has been completed by issuing IFRS 9Financial Instruments.Phase two and three address the classification and measurement of financial liabilities, impairment of financial assets at amortized cost, hedge accounting and derecognition of financial instruments. The IASB plans to complete phase two and three during 2010, although mandatory application is not expected before 1 January 2013.
instruments may be accounted for at fair value through equity, but the subsequent release of amounts booked directly to equity into theother comprehensive income statement(OCI). Such a designation is available on initial recognition on an instrument-by-instrument basis and is irrevocable. There is no longer permitted.subsequent recycling of realized gains or losses from OCI to profit or loss. All other financial assets are measured at fair value through profit or loss.
3536
Strategy, performance and responsibility |
UBS results
Income statement | ||||||||||||||||
For the year ended | % change from | |||||||||||||||
CHF million | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | ||||||||||||
Continuing operations | ||||||||||||||||
Interest income | 18,872 | 23,461 | 65,679 | (20 | ) | |||||||||||
Interest expense | (12,657 | ) | (17,016 | ) | (59,687 | ) | 26 | |||||||||
Net interest income | 6,215 | 6,446 | 5,992 | (4 | ) | |||||||||||
Credit loss (expense) / recovery | (66 | ) | (1,832 | ) | (2,996 | ) | 96 | |||||||||
Net interest income after credit loss expense | 6,149 | 4,614 | 2,996 | 33 | ||||||||||||
Net fee and commission income | 17,160 | 17,712 | 22,929 | (3 | ) | |||||||||||
Net trading income | 7,471 | (324 | ) | (25,820 | ) | |||||||||||
Other income | 1,214 | 599 | 692 | 103 | ||||||||||||
Total operating income | 31,994 | 22,601 | 796 | 42 | ||||||||||||
Personnel expenses | 16,920 | 16,543 | 16,262 | 2 | ||||||||||||
General and administrative expenses | 6,585 | 6,248 | 10,498 | 5 | ||||||||||||
Depreciation of property and equipment | 918 | 1,048 | 1,241 | (12 | ) | |||||||||||
Impairment of goodwill | 0 | 1,123 | 341 | (100 | ) | |||||||||||
Amortization of intangible assets | 117 | 200 | 213 | (42 | ) | |||||||||||
Total operating expenses | 24,539 | 25,162 | 28,555 | (2 | ) | |||||||||||
Operating profit from continuing operations before tax | 7,455 | (2,561 | ) | (27,758 | ) | |||||||||||
Tax expense / (benefit) | (381 | ) | (443 | ) | (6,837 | ) | 14 | |||||||||
Net profit from continuing operations | 7,836 | (2,118 | ) | (20,922 | ) | |||||||||||
Discontinued operations | ||||||||||||||||
Profit from discontinued operations before tax | 2 | (7 | ) | 198 | ||||||||||||
Tax expense | 0 | 0 | 1 | |||||||||||||
Net profit from discontinued operations | 2 | (7 | ) | 198 | ||||||||||||
Net profit | 7,838 | (2,125 | ) | (20,724 | ) | |||||||||||
Net profit attributable to non-controlling interests | 304 | 610 | 568 | (50 | ) | |||||||||||
from continuing operations | 303 | 600 | 520 | (50 | ) | |||||||||||
from discontinued operations | 1 | 10 | 48 | (90 | ) | |||||||||||
Net profit attributable to UBS shareholders | 7,534 | (2,736 | ) | (21,292 | ) | |||||||||||
from continuing operations | 7,533 | (2,719 | ) | (21,442 | ) | |||||||||||
from discontinued operations | 1 | (17 | ) | 150 | ||||||||||||
Performance by business division | ||||||||||||||||
Wealth Management | 2,308 | 2,280 | 3,631 | 1 | ||||||||||||
Retail & Corporate | 1,772 | 1,629 | 2,382 | 9 | ||||||||||||
Wealth Management & Swiss Bank | 4,080 | 3,910 | 6,013 | 4 | ||||||||||||
Wealth Management Americas | (130 | ) | 32 | (823 | ) | |||||||||||
Global Asset Management | 516 | 438 | 1,333 | 18 | ||||||||||||
Investment Bank | 2,197 | (6,081 | ) | (34,300 | ) | |||||||||||
Treasury activities and other corporate items | 793 | (860 | ) | 19 | ||||||||||||
Operating profit from continuing operations before tax | 7,455 | (2,561 | ) | (27,758 | ) | |||||||||||
37
Strategy, performance and responsibility
Financial performance
2010
Results
In 2010, we reported a Group net profit attributable to shareholders of CHF 7,534 million, a profit before tax from continuing operations of CHF 7,455 million and a profit before tax from discontinued operations of CHF 2 million. In 2009, we recorded a net loss attributable to shareholders of CHF 2,736 million.
Operating income
Total operating income was CHF 31,994 million in 2010, up from CHF 22,601 million in 2009. Net interest income was CHF 6,215 million compared with CHF 6,446 million in the prior year. Net trading income was positive CHF 7,471 million compared with negative CHF 324 million in 2009.
Net income from trading businesses
Net income from trading businesses, including lending activities of the Investment Bank. WhileBank, was CHF 7,508 million for full-year 2010 compared with CHF 382 million in the Corporate Center does not meet the requirements ofprior year.
è | Refer to “Note |
Net income from interest margin businesses
Net income from interest margin businesses was CHF 4,624 million compared with CHF 5,053 million in the prior year. This de-
crease was primarily attributable to lower margins and negative currency effects.
Net income from treasury activities and other
Net income from treasury activities and other was CHF 1,554 million compared with CHF 687 million in 2009. Income from treasury activities was nearly unchanged from last year. A CHF 745 million gain on the valuation of our option to acquire the SNB StabFund’s equity was recorded in 2010, compared with a CHF 117 million gain in the prior year. Additionally, 2009 included a net gain of CHF 297 million (including interest expenses) on the valuation of the mandatory convertible notes (MCN) issued in December 2008 and converted in August 2009.
Credit loss expenses
In 2010, we reported net credit loss expenses of CHF 66 million. This included CHF 172 million of impairment charges taken on reclassified and acquired securities, partially offset by recoveries on certain loan positions. The net credit loss expenses in 2009 amounted to CHF 1,832 million.
è | Refer to the “Risk management and control” section of this report for more information on our |
Net fee and commission income
Net fee and commission income was CHF 17,160 million, compared with CHF 17,712 million in the previous year. Income declined slightly in all major fee categories except for portfolio management and advisory fees, as outlined below:
– | Underwriting feeswere CHF 1,912 million compared with CHF 2,386 million in the prior year, due to a decline in both equity and debt underwriting fees. The decrease in equity underwriting fees resulted from an overall market slowdown. Debt underwriting fees declined due to lower revenues in the Investment Bank’s debt capital market business. | |
– | Mergers and acquisitions and corporate finance fees were CHF 857 million, a decrease from CHF 881 million in the prior year. This was due to reduced market activity as deal appetite remained subdued in the first half of 2010. | |
– | Net brokerage feesfell 8% to CHF 3,837 million mainly due to low transaction volumes and margin compression in 2010. | |
– | Investment fund feeswere CHF 3,898 million, a 3% decrease compared with the prior year. Lower asset based commission |
38
Strategy, performance and responsibility |
Net interest and trading income | ||||||||||||||||
For the year ended | % change from | |||||||||||||||
CHF million | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | ||||||||||||
Net interest and trading income | ||||||||||||||||
Net interest income | 6,215 | 6,446 | 5,992 | (4 | ) | |||||||||||
Net trading income | 7,471 | (324 | ) | (25,820 | ) | |||||||||||
Total net interest and trading income | 13,686 | 6,122 | (19,828 | ) | 124 | |||||||||||
Breakdown by businesses | ||||||||||||||||
Net income from trading businesses1 | 7,508 | 382 | (27,203 | ) | ||||||||||||
Net income from interest margin businesses | 4,624 | 5,053 | 6,160 | (8 | ) | |||||||||||
Net income from treasury activities and other | 1,554 | 687 | 1,214 | 126 | ||||||||||||
Total net interest and trading income | 13,686 | 6,122 | (19,828 | ) | 124 | |||||||||||
Credit loss (expense) / recovery | ||||||||||||||||
For the year ended | % change from | |||||||||||||||
CHF million | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | ||||||||||||
Wealth Management | 11 | 45 | (388 | ) | (76 | ) | ||||||||||
Retail & Corporate | (76 | ) | (178 | ) | (4 | ) | (57 | ) | ||||||||
Wealth Management & Swiss Bank | (64 | ) | (133 | ) | (392 | ) | (52 | ) | ||||||||
Wealth Management Americas | (1 | ) | 3 | (29 | ) | |||||||||||
Investment Bank | 0 | 1 | (1,698 | ) | (2,575 | ) | (100 | ) | ||||||||
of which: related to reclassified securities2 | (133) | (425 | ) | (125 | ) | (69 | ) | |||||||||
of which: related to acquired securities | (39) | (18 | ) | 0 | 117 | |||||||||||
Treasury activities and other corporate items | 0 | (5 | ) | 0 | (100 | ) | ||||||||||
UBS | (66 | ) | (1,832 | ) | (2,996 | ) | (96 | ) | ||||||||
Net fee and commission income | ||||||||||||||||
For the year ended | % change from | |||||||||||||||
CHF million | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | ||||||||||||
Equity underwriting fees | 1,157 | 1,590 | 1,138 | (27 | ) | |||||||||||
Debt underwriting fees | 755 | 796 | 818 | (5 | ) | |||||||||||
Total underwriting fees | 1,912 | 2,386 | 1,957 | (20 | ) | |||||||||||
M&A and corporate finance fees | 857 | 881 | 1,662 | (3 | ) | |||||||||||
Brokerage fees1 | 4,930 | 5,400 | 7,150 | (9 | ) | |||||||||||
Investment fund fees | 3,898 | 4,000 | 5,583 | (3 | ) | |||||||||||
Portfolio management and advisory fees | 5,959 | 5,863 | 7,667 | 2 | ||||||||||||
Insurance-related and other fees | 361 | 264 | 317 | 37 | ||||||||||||
Total securities trading and investment activity fees | 17,918 | 18,794 | 24,335 | (5 | ) | |||||||||||
Credit-related fees and commissions | 448 | 339 | 273 | 32 | ||||||||||||
Commission income from other services | 850 | 878 | 1,010 | (3 | ) | |||||||||||
Total fee and commission income | 19,216 | 20,010 | 25,618 | (4 | ) | |||||||||||
Brokerage fees paid1 | 1,093 | 1,231 | 1,164 | (11 | ) | |||||||||||
Other1 | 964 | 1,068 | 1,524 | (10 | ) | |||||||||||
Total fee and commission expense | 2,057 | 2,299 | 2,689 | (11 | ) | |||||||||||
Net fee and commission income | 17,160 | 17,712 | 22,929 | (3 | ) | |||||||||||
of which: net brokerage fees1 | 3,837 | 4,169 | 5,985 | (8 | ) | |||||||||||
39
Strategy, performance and responsibility
Financial performance
fees on UBS funds were partly offset by higher fees on third-party funds and sales-based commission income. | ||
– | Portfolio management and advisory feesincreased 2% to CHF 5,959 million, mainly due to higher portfolio management fees in our Wealth Management Americas business division. This was partly offset by lower portfolio management fees in Global Asset Management, primarily resulting from lower performance fees in its alternative and quantitative investments business, and by lower portfolio management and advisory fees in Wealth Management & Swiss Bank and the Investment Bank. | |
– | Other commission expensefell 10% to CHF 964 million, mainly due to lower commissions paid for payment transactions, other services and management advisory. |
Other income
è | Refer to “Note |
Operating expenses
Total operating expenses were CHF 24,539 million in 2010,
Personnel expenses
General and control functions intoadministrative expenses
Depreciation, amortization and impairment of goodwill
Income tax
We recognized a net income tax benefit in our income statement of CHF 381 million for 2010. This included a deferred tax benefit of CHF 605 million and current tax expenses of CHF 224 million.
3640
Strategy, performance and responsibility |
è | Refer to “Note 33 Events after the reporting period” in the “Financial information” section of this report for more information |
Net profit attributable to non-controlling interests
Net profit attributable to non-controlling interests for 2010 was CHF 304 million, compared with CHF 610 million for 2009. This decrease was primarily the consequence of the attribution in 2009, rather than in 2010, of CHF 132 million of net profit to non-controlling interests in connection with certain dividends payable in 2010 on hybrid capital instruments classified as non-owner equity. This attribution was made out of 2009’s net profit following a determination that a triggering event had occurred that caused the 2010 dividend payments to become obligatory under the terms of these hybrid capital instruments. The triggering event was the cash payment made by UBS in 2009 to the Swiss Confederation in consideration of the Confederation’s waiver of its right to receive future coupon payments on the mandatory convertible notes due in 2011.
Comprehensive income attributable to UBS shareholders
Comprehensive income attributable to UBS shareholders includes all changes in equity (including net profit) attributed to UBS shareholders during a period, except those resulting from investments by and distributions to shareholders as well as equity settled share-based payments. Items included in comprehensive income, but not in net profit, are reported under other comprehensive income (OCI). Most of those items will be recognized in net profit when the underlying item is sold or realized.
Comprehensive income attributable to UBS shareholders in 2010 was CHF 5,875 million, including net profit attributable to UBS shareholders of CHF 7,534 million, partially offset by other comprehensive income attributable to UBS shareholders of negative CHF 1,659 million.
è | Refer to the “Statement of comprehensive income” section and “Note 1 Summary of significant accounting policies” in the “Financial information” section of this report for more information |
Invested assets
Total invested assets were CHF 2,152 billion on 31 December 2010, a decrease of 4% from CHF 2,233 billion on 31 December 2009. Positive market developments were more than offset by negative currency effects and net new money outflows.
Invested assets | ||||||||||||||||
As of | % change from | |||||||||||||||
CHF billion | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | ||||||||||||
Wealth Management | 768 | 825 | 833 | (7 | ) | |||||||||||
Retail & Corporate | 136 | 135 | 122 | 1 | ||||||||||||
Wealth Management & Swiss Bank | 904 | 960 | 955 | (6 | ) | |||||||||||
Wealth Management Americas | 689 | 690 | 644 | 0 | ||||||||||||
Traditional investments | 487 | 502 | 493 | (3 | ) | |||||||||||
Alternative and quantitative investments | 34 | 41 | 41 | (17 | ) | |||||||||||
Global real estate | 36 | 39 | 40 | (8 | ) | |||||||||||
Infrastructure | 1 | 1 | 1 | 0 | ||||||||||||
Global Asset Management | 559 | 583 | 575 | (4 | ) | |||||||||||
Total | 2,152 | 2,233 | 2,174 | (4 | ) | |||||||||||
For the year ended | % change from | ||||||||||||||||||||||||||||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.08 | |||||||||||||||||||||||||||||||||||||||||||||
Continuing operations | |||||||||||||||||||||||||||||||||||||||||||||||||
Interest income | 23,461 | 65,679 | 109,112 | (64 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Interest expense | (17,016 | ) | (59,687 | ) | (103,775 | ) | (71 | ) | |||||||||||||||||||||||||||||||||||||||||
Net interest income | 6,446 | 5,992 | 5,337 | 8 | |||||||||||||||||||||||||||||||||||||||||||||
Credit loss (expense) / recovery | (1,832 | ) | (2,996 | ) | (238 | ) | (39 | ) | |||||||||||||||||||||||||||||||||||||||||
Net interest income after credit loss expense | 4,614 | 2,996 | 5,099 | 54 | |||||||||||||||||||||||||||||||||||||||||||||
Net fee and commission income | 17,712 | 22,929 | 30,634 | (23 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Net trading income | (324 | ) | (25,820 | ) | (8,353 | ) | 99 | ||||||||||||||||||||||||||||||||||||||||||
Other income | 599 | 692 | 4,341 | (13 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Total operating income | 22,601 | 796 | 31,721 | ||||||||||||||||||||||||||||||||||||||||||||||
Personnel expenses | 16,543 | 16,262 | 25,515 | 2 | |||||||||||||||||||||||||||||||||||||||||||||
General and administrative expenses | 6,248 | 10,498 | 8,429 | (40 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Depreciation of property and equipment | 1,048 | 1,241 | 1,243 | (16 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Impairment of goodwill | 1,123 | 341 | 0 | 229 | |||||||||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets | 200 | 213 | 276 | (6 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Total operating expenses | 25,162 | 28,555 | 35,463 | (12 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Operating profit from continuing operations before tax | (2,561 | ) | (27,758 | ) | (3,742 | ) | 91 | ||||||||||||||||||||||||||||||||||||||||||
Tax expense | (443 | ) | (6,837 | ) | 1,369 | 94 | |||||||||||||||||||||||||||||||||||||||||||
Net profit from continuing operations | (2,118 | ) | (20,922 | ) | (5,111 | ) | 90 | ||||||||||||||||||||||||||||||||||||||||||
Discontinued operations | |||||||||||||||||||||||||||||||||||||||||||||||||
Profit from discontinued operations before tax | (7 | ) | 198 | 145 | |||||||||||||||||||||||||||||||||||||||||||||
Tax expense | 0 | 1 | (258 | ) | (100 | ) | |||||||||||||||||||||||||||||||||||||||||||
Net profit from discontinued operations | (7 | ) | 198 | 403 | |||||||||||||||||||||||||||||||||||||||||||||
Net profit | (2,125 | ) | (20,724 | ) | (4,708 | ) | 90 | ||||||||||||||||||||||||||||||||||||||||||
Net profit attributable to minority interests | 610 | 568 | 539 | 7 | |||||||||||||||||||||||||||||||||||||||||||||
from continuing operations | 600 | 520 | 539 | 15 | |||||||||||||||||||||||||||||||||||||||||||||
from discontinued operations | 10 | 48 | 0 | (79 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Net profit attributable to UBS shareholders | (2,736 | ) | (21,292 | ) | (5,247 | ) | 87 | ||||||||||||||||||||||||||||||||||||||||||
from continuing operations | (2,719 | ) | (21,442 | ) | (5,650 | ) | 87 | ||||||||||||||||||||||||||||||||||||||||||
from discontinued operations | (17 | ) | 150 | 403 | |||||||||||||||||||||||||||||||||||||||||||||
Performance by business division | |||||||||||||||||||||||||||||||||||||||||||||||||
Wealth Management & Swiss Bank | 3,910 | 6,013 | 8,543 | (35 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Wealth Management Americas | 32 | (823 | ) | 621 | |||||||||||||||||||||||||||||||||||||||||||||
Global Asset Management | 438 | 1,333 | 1,454 | (67 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Investment Bank | (6,081 | ) | (34,300 | ) | (16,669 | ) | 82 | ||||||||||||||||||||||||||||||||||||||||||
Corporate Center | (860 | ) | 19 | 2,310 | |||||||||||||||||||||||||||||||||||||||||||||
Operating profit from continuing operations before tax | (2,561 | ) | (27,758 | ) | (3,742 | ) | 91 | ||||||||||||||||||||||||||||||||||||||||||
3741
Strategy, performance and responsibility
Financial performance
2009
Results
In 2009, we reported a Group net loss attributable to shareholders (“attributable loss”) of CHF 2,736 million, – a loss before tax of CHF 2,561 million from continuing operations and a loss before tax of CHF 7 million from discontinued operations. In 2008, we recorded ana net loss attributable lossto shareholders of CHF 21,292 million.
Operating income
Total operating income was CHF 22,601 million in 2009, up from CHF 796 million in 2008. Net interest income at CHF 6,446 million was up 8% compared with CHF 5,992 million a year earlier. Net trading income was negative CHF 324 million compared with negative CHF 25,820 million in 2008.
Net income from trading businesses
è | Refer to “Note 27 Fair value of financial instruments” in the “Financial information” section of |
For the year ended | % change from | |||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.08 | ||||||||||||||
Net interest income | 6,446 | 5,992 | 5,337 | 8 | ||||||||||||||
Net trading income | (324 | ) | (25,820 | ) | (8,353 | ) | 99 | |||||||||||
Total net interest and trading income | 6,122 | (19,828 | ) | (3,016 | ) | |||||||||||||
Breakdown by businesses | ||||||||||||||||||
Net income from trading businesses1 | 382 | (27,203 | ) | (10,658 | ) | |||||||||||||
Net income from interest margin businesses | 5,053 | 6,160 | 6,230 | (18 | ) | |||||||||||||
Net income from treasury activities and other | 687 | 1,214 | 1,412 | (43 | ) | |||||||||||||
Total net interest and trading income | 6,122 | (19,828 | ) | (3,016 | ) | |||||||||||||
38
decrease was primarily attributable to lower margins on loans and liabilities.
Net income from treasury activities and other
Credit loss expenses
è | Refer to the “Risk management and control” section of |
Net fee and commission income
– | Underwriting feesincreased 22% to CHF 2,386 million, |
– | Mergers and acquisitions and corporate finance fees fell 47% to CHF 881 million due to reduced market activity as deal appetite remained subdued. |
– | Net brokerage feesfell | |
– | Investment fund feesfell 28% to CHF 4,000 million as a result of lower |
42
Strategy, performance and responsibility |
– | Portfolio management and advisory feesfell 24% to CHF 5,863 million, mainly due to the decreased average asset base, especially in the wealth management businesses. | |
– | ||
For the year ended | % change from | ||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.08 | |||||||||||||
Wealth Management & Swiss Bank | (133 | ) | (392 | ) | 30 | (66 | ) | ||||||||||
Wealth Management Americas | 3 | (29 | ) | (2 | ) | ||||||||||||
Investment Bank1 | (1,698 | ) | (2,575 | ) | (266 | ) | (34 | ) | |||||||||
of which: related to reclassified securities | (425 | ) | (125 | ) | 240 | ||||||||||||
Corporate Center | (5 | ) | |||||||||||||||
UBS | (1,832 | ) | (2,996 | ) | (238 | ) | (39 | ) | |||||||||
1
39
For the year ended | % change from | |||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.08 | ||||||||||||||
Equity underwriting fees | 1,590 | 1,138 | 2,564 | 40 | ||||||||||||||
Debt underwriting fees | 796 | 818 | 1,178 | (3 | ) | |||||||||||||
Total underwriting fees | 2,386 | 1,957 | 3,742 | 22 | ||||||||||||||
M&A and corporate finance fees | 881 | 1,662 | 2,768 | (47 | ) | |||||||||||||
Brokerage fees1 | 6,217 | 8,209 | 10,211 | (24 | ) | |||||||||||||
Investment fund fees | 4,000 | 5,583 | 7,422 | (28 | ) | |||||||||||||
Portfolio management and advisory fees2 | 5,863 | 7,667 | 9,454 | (24 | ) | |||||||||||||
Insurance-related and other fees | 264 | 317 | 423 | (17 | ) | |||||||||||||
Total securities trading and investment activity fees | 19,611 | 25,394 | 34,020 | (23 | ) | |||||||||||||
Credit-related fees and commissions | 339 | 273 | 279 | 24 | ||||||||||||||
Commission income from other services | 878 | 1,010 | 1,017 | (13 | ) | |||||||||||||
Total fee and commission income | 20,827 | 26,677 | 35,316 | (22 | ) | |||||||||||||
Brokerage fees paid1 | 1,748 | 1,763 | 2,540 | (1 | ) | |||||||||||||
Other | 1,368 | 1,984 | 2,142 | (31 | ) | |||||||||||||
Total fee and commission expense | 3,116 | 3,748 | 4,682 | (17 | ) | |||||||||||||
Net fee and commission income | 17,712 | 22,929 | 30,634 | (23 | ) | |||||||||||||
of which: net brokerage fees | 4,469 | 6,445 | 7,671 | (31 | ) | |||||||||||||
è | Refer to “Note 5 Other income” in the “Financial information” section of |
Operating expenses
Total operating expenses were down 12% to CHF 25,162 million in 2009 from CHF 28,555 million in 2008.
Personnel expenses
General and administrative expenses
40
è | Refer to “Note 21 Provisions and litigation” in the “Financial information” section of |
Depreciation, amortization and impairment of goodwill
Income tax
We recognized a net income tax benefit in our income statement of CHF 443 million for the full-year 2009. This includesincluded a deferred tax benefit of CHF 960 million, which reflectsreflected the recognition of additional deferred tax assets in respect of tax losses and temporary differences in certain locations, includ-
Invested assets
Total invested assets stood atwere CHF 2,233 billion on 31 December 2009, an increase of 3% from CHF 2,174 billion on 31 December 2008. Positive market developments were nearly offset by net new money outflows, a reduction of invested assets related to divestments, and negative currency translation effects. On 31 December 2009, CHF 960 billion of invested assets were attributable to Wealth Management & Swiss Bank, CHF 690 billion were attributable to Wealth Management Americas and CHF 583 billion were attributable to Global Asset Management.
As of | % change from | ||||||||||||||||||||||||||||||||||||||||||||||||
CHF billion | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.08 | |||||||||||||||||||||||||||||||||||||||||||||
Swiss clients | 337 | 325 | 455 | 4 | |||||||||||||||||||||||||||||||||||||||||||||
International clients | 624 | 631 | 937 | (1 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Wealth Management & Swiss Bank | 960 | 955 | 1,392 | 1 | |||||||||||||||||||||||||||||||||||||||||||||
Wealth Management Americas | 690 | 644 | 906 | 7 | |||||||||||||||||||||||||||||||||||||||||||||
Institutional | 346 | 335 | 522 | 3 | |||||||||||||||||||||||||||||||||||||||||||||
Wholesale intermediary | 237 | 240 | 369 | (1 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Global Asset Management | 583 | 575 | 891 | 1 | |||||||||||||||||||||||||||||||||||||||||||||
UBS | 2,233 | 2,174 | 3,189 | 3 | |||||||||||||||||||||||||||||||||||||||||||||
41
42
43
Strategy, performance and responsibility
Financial performance
Balance sheet
Balance sheet
% change from | ||||||||||||
CHF million | 31.12.10 | 31.12.09 | 31.12.09 | |||||||||
Assets | ||||||||||||
Cash and balances with central banks | 26,939 | 20,899 | 29 | |||||||||
Due from banks | 17,133 | 16,804 | 2 | |||||||||
Cash collateral on securities borrowed | 62,454 | 63,507 | (2 | ) | ||||||||
Reverse repurchase agreements | 142,790 | 116,689 | 22 | |||||||||
Trading portfolio assets | 167,463 | 188,037 | (11 | ) | ||||||||
Trading portfolio assets pledged as collateral | 61,352 | 44,221 | 39 | |||||||||
Positive replacement values | 401,146 | 421,694 | (5 | ) | ||||||||
Cash collateral receivables on derivative instruments | 38,071 | 53,774 | (29 | ) | ||||||||
Financial assets designated at fair value | 8,504 | 10,223 | (17 | ) | ||||||||
Loans | 262,877 | 266,477 | (1 | ) | ||||||||
Financial investments available-for-sale | 74,768 | 81,757 | (9 | ) | ||||||||
Accrued income and prepaid expenses | 5,466 | 5,816 | (6 | ) | ||||||||
Investments in associates | 790 | 870 | (9 | ) | ||||||||
Property and equipment | 5,467 | 6,212 | (12 | ) | ||||||||
Goodwill and intangible assets | 9,822 | 11,008 | (11 | ) | ||||||||
Deferred tax assets | 9,522 | 8,868 | 7 | |||||||||
Other assets | 22,681 | 23,682 | (4 | ) | ||||||||
Total assets | 1,317,247 | 1,340,538 | (2 | ) | ||||||||
Liabilities | ||||||||||||
Due to banks | 41,490 | 31,922 | 30 | |||||||||
Cash collateral on securities lent | 6,651 | 7,995 | (17 | ) | ||||||||
Repurchase agreements | 74,796 | 64,175 | 17 | |||||||||
Trading portfolio liabilities | 54,975 | 47,469 | 16 | |||||||||
Negative replacement values | 393,762 | 409,943 | (4 | ) | ||||||||
Cash collateral payables on derivative instruments | 58,924 | 66,097 | (11 | ) | ||||||||
Financial liabilities designated at fair value | 100,756 | 112,653 | (11 | ) | ||||||||
Due to customers | 332,301 | 339,263 | (2 | ) | ||||||||
Accrued expenses and deferred income | 7,738 | 8,689 | (11 | ) | ||||||||
Debt issued | 130,271 | 131,352 | (1 | ) | ||||||||
Other liabilities | 63,719 | 72,344 | (12 | ) | ||||||||
Total liabilities | 1,265,384 | 1,291,905 | (2 | ) | ||||||||
Equity | ||||||||||||
Share capital | 383 | 356 | 8 | |||||||||
Share premium | 34,393 | 34,824 | (1 | ) | ||||||||
Cumulative net income recognized directly in equity, net of tax | (6,534 | ) | (4,875 | ) | (34 | ) | ||||||
Retained earnings | 19,285 | 11,751 | 64 | |||||||||
Equity classified as obligation to purchase own shares | (54 | ) | (2 | ) | ||||||||
Treasury shares | (654 | ) | (1,040 | ) | 37 | |||||||
Equity attributable to UBS shareholders | 46,820 | 41,013 | 14 | |||||||||
Equity attributable to non-controlling interests | 5,043 | 7,620 | (34 | ) | ||||||||
Total equity | 51,863 | 48,633 | 7 | |||||||||
Total liabilities and equity | 1,317,247 | 1,340,538 | (2 | ) | ||||||||
% change from | |||||||||||||||||||||||||||||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.08 | ||||||||||||||||||||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||||||||||||||||||||
Cash and balances with central banks | 20,899 | 32,744 | (36 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Due from banks | 46,574 | 64,451 | (28 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Cash collateral on securities borrowed | 63,507 | 122,897 | (48 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Reverse repurchase agreements | 116,689 | 224,648 | (48 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Trading portfolio assets | 188,037 | 271,838 | (31 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Trading portfolio assets pledged as collateral | 44,221 | 40,216 | 10 | ||||||||||||||||||||||||||||||||||||||||||||||
Positive replacement values | 421,694 | 854,100 | (51 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Financial assets designated at fair value | 10,223 | 12,882 | (21 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Loans | 306,828 | 340,308 | (10 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Financial investments available-for-sale | 81,757 | 5,248 | |||||||||||||||||||||||||||||||||||||||||||||||
Accrued income and prepaid expenses | 5,816 | 6,141 | (5 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Investments in associates | 870 | 892 | (2 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Property and equipment | 6,212 | 6,706 | (7 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Goodwill and intangible assets | 11,008 | 12,935 | (15 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Deferred tax assets | 8,868 | 8,880 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||
Other assets | 7,336 | 9,931 | (26 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Total assets | 1,340,538 | 2,014,815 | (33 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||
Due to banks | 65,166 | 125,628 | (48 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Cash collateral on securities lent | 7,995 | 14,063 | (43 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Repurchase agreements | 64,175 | 102,561 | (37 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Trading portfolio liabilities | 47,469 | 62,431 | (24 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Negative replacement values | 409,943 | 851,864 | (52 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Financial liabilities designated at fair value | 112,653 | 101,546 | 11 | ||||||||||||||||||||||||||||||||||||||||||||||
Due to customers | 410,475 | 465,741 | (12 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Accrued expenses and deferred income | 8,689 | 10,196 | (15 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Debt issued | 131,352 | 197,254 | (33 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Other liabilities | 33,986 | 42,998 | (21 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Total liabilities | 1,291,905 | 1,974,282 | (35 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Equity | |||||||||||||||||||||||||||||||||||||||||||||||||
Share capital | 356 | 293 | 22 | ||||||||||||||||||||||||||||||||||||||||||||||
Share premium | 34,786 | 25,250 | 38 | ||||||||||||||||||||||||||||||||||||||||||||||
Net income recognized directly in equity, net of tax | (4,875 | ) | (4,335 | ) | (12 | ) | |||||||||||||||||||||||||||||||||||||||||||
Revaluation reserve from step acquisitions, net of tax | 38 | 38 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||
Retained earnings | 11,751 | 14,487 | (19 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Equity classified as obligation to purchase own shares | (2 | ) | (46 | ) | 96 | ||||||||||||||||||||||||||||||||||||||||||||
Treasury shares | (1,040 | ) | (3,156 | ) | 67 | ||||||||||||||||||||||||||||||||||||||||||||
Equity attributable to UBS shareholders | 41,013 | 32,531 | 26 | ||||||||||||||||||||||||||||||||||||||||||||||
Equity attributable to minority interests | 7,620 | 8,002 | (5 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Total equity | 48,633 | 40,533 | 20 | ||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities and equity | 1,340,538 | 2,014,815 | (33 | ) | |||||||||||||||||||||||||||||||||||||||||||||
44
Strategy, performance and responsibility |
2010 asset development
Balance sheet development
31.12.10 vs. 31.12.08:
Balance sheet development – assets
2010 liabilities and equity development
offset by an increaseincreases in financial investments available-for-sale,collateral trading assets, which grewrose by CHF 7725 billion to CHF 82205 billion, while lending assets remained stable around CHF 315 billion.
Balance sheet development – liabilities and equity
45
Strategy, performance and responsibility
Financial performance
CHF 4 billion to CHF 20 billion.16 billion, and Wealth Management Americas’ balance sheet increasedassets decreased by CHF 143 billion to CHF 53 billion and the Corporate Center’s balance sheet increased by CHF 8 billion to CHF 2750 billion. The balance sheet asset size of Wealth ManagementRetail & Swiss Bank remained relatively stable atCorporate increased by CHF 24815 billion to CHF 153 billion. Treasury activities and other corporate items rose by CHF 10 billion to CHF 37 billion.
è | Refer to the table “FINMA leverage ratio calculation” in the “Capital management” section of this report for our average month-end balance sheet size for the fourth quarter 2010 and 2009 |
Lending and borrowing
Lending
è | Refer to the “Risk and treasury management” section for more information |
Borrowing
è | Refer to | ||
Repurchase/Repurchase / reverse repurchase agreements and
securities borrowing/borrowing / lending
Cash collateral on securities borrowed and reverse repurchase agreements declinedincreased year-on-year by CHF 25 billion to CHF 180205 billion on 31 December 2009. The CHF 167 billion decline occurred almost entirely in the Investment Bank,2010. This increase was partly
45
Trading portfolio
Trading portfoliowhich assets declined by CHF 803 billion during 2009. At the end of 2009, the trading portfolio stoodto stand at CHF 232 billion.229 billion on 31 December 2010. The majority of thethis decrease is related to thecurrency effects and trading inventory held for regulatory requirements within our wealth management business. The Investment Bank’s overall balance sheet reductions, including USD 6.6 billion of illiquid assets transferred to the SNB StabFund. Money market paper was reducedtrading portfolio grew by CHF 469 billion, partly related to the rebalancingprimarily as a result of our liquidity reserve. Other debt instruments decreased byan increase in holdings of money market papers (mainly treasury bills) of CHF 3311 billion and traded loans decreased byprecious metals (mainly silver and palladium) of CHF 6 billion. These decreases were2 billion, partially offset by precious metalsdebt instruments, which increaseddeclined by CHF 7 billion.
Replacement values
Thepositiveand thenegative replacement values(RVs) (RV) of derivative instruments decreaseddeveloped roughly in parallel, decreasing by CHF 43221 billion (51%(5%) and CHF 44216 billion (52%(4%), respectively, and ending the year2010 at CHF 422401 billion and CHF 410394 billion, mainly due to movements in interest rates, credit spreads and currencies.
46
Strategy, performance and responsibility |
spreads. Interest rate contracts dropped by CHF 11 billion due to a steepening in interest rate yield curves, specifically those denominated in euro and a reduction of notional valuesBritish pound. These declines were partially offset by approximately one third, largelyforeign exchange contracts, which grew by CHF 16 billion, related to trade compression and “tear-up” initiatives in 2009.
Financial investments available-for-sale
Financial investments available-for-sale declined by CHF 19 billion and CHF 18 billion, and equity/index contracts by CHF 10 billion and CHF 19 billion, respectively.
Other assets / other liabilities
Commencing in the US dollarfourth quarter of 2010, UBS has changed the presentation of prime brokerage receivables and euro.payables and cash collateral from derivative transactions to improve transparency. Prime brokerage receivables and prime brokerage payables have been transferred out ofDue from banksandLoanstoOther assets, and out ofDue to banks andDue to customerstoOther liabilities, respectively.Cash collateral receivables and payables on derivatives are presented in the new balance sheet linesCash collateral receivables on derivative instrumentsandCash collateral payables on derivative instrumentsby transferring the amounts out ofDue from banksandLoans, andDue to banksandDue to customers, respectively. In the aforementioned waterfall graphs,Cash collateral receivable and payable on derivative instrumentsare shown inOther assetsandOther liabilities. Comparative periods have been adjusted accordingly.
è | Refer to the “Note 1 Summary of significant accounting policies” in the “Financial information” section of this report for more information |
Shareholders’ equity
On 31 December 2009,Equity2010, equity attributable to UBS shareholderswas CHF 41.046.8 billion, representing an increase of CHF 8.55.8 billion compared with 31 December 2008.2009. The increase in 20092010 reflects thea net profit of CHF 3.87.5 billion, of shareholders’ equity the firm generated through our share placement in the second quarter and CHF 6.7 billion from the conversion by the Swiss Confederation in August 2009 of the MCNs issued in December 2008, and waspartially offset by the Group’s full-year lossnegative effects recognized in equity (including currency translation effects) of CHF 2.71.7 billion.
è | Refer to the “Shares and capital instruments” section of this report for more information |
4647
Strategy, performance and responsibility
Off-balance sheet
Off-balance sheet arrangements
Off-balance sheet arrangements include purchased and retained interests and derivatives, as well as other involvements in non-consolidated entities and structures originated by us or set up by third parties.
because we have not assumed the related risks and rewards (financial assets) and/or because we did not become party to the contractual provisions of the financial instruments. We recognize these types of arrangements on the balance sheet only to the extent of itstheir involvement, which, for example, may be in the form of derivatives, guarantees, financing commitments or servicing rights.
Off-balance sheet arrangements, risks, consolidation and fair value measurements | Disclosure in the annual report | ||||
Contractual obligations | Strategy, performance and responsibility, section “Off-balance sheet” | ||||
Credit guarantees, performance guarantees, loan commitments, underwriting commitments, forward starting transactions and similar instruments | Strategy, performance and responsibility, section “Off-balance sheet” | ||||
Guarantees issued by UBS AG to subsidiaries | Financial information, “Note 41 Supplemental guarantor information required under SEC rules” | ||||
Other contingent liabilities | Financial information, “Note 21 Provisions and contingent liabilities” | ||||
Derivative financial instruments | Financial information, “Note 23 Derivative instruments and hedge accounting” Risk and treasury management, section “Basel II Pillar 3 disclosures” | ||||
Credit derivatives | Financial information, “Note 23 Derivative instruments and hedge accounting” Risk and treasury management, section “Basel II Pillar 3 disclosures” | ||||
Leases | Financial information, “Note 25 Operating lease commitments” | ||||
Non-consolidated securitization vehicles – non-agency transactions | Strategy, performance and responsibility, section “Off-balance sheet” | ||||
Support to non-consolidated investment funds | Strategy, performance and responsibility, section “Off-balance sheet” | ||||
Securitizations (banking book only) | Risk and treasury management, section “Basel II Pillar 3 disclosures” | ||||
Risk concentrations | Risk and treasury management, section “Risk concentrations” | ||||
Credit risk information | Risk and treasury management, section “Credit risk” | ||||
Market risk information | Risk and treasury management, section “Market risk” | ||||
Liquidity risk information | Risk and treasury management, section “Liquidity and funding management” | ||||
Consolidation | Financial information, “Note 1 Summary of significant accounting policies” | ||||
Fair value measurements | Financial information, “Note 27 Fair value of financial instruments” | ||||
48
Strategy, performance and responsibility |
Risk positions
Liquidity facilities and similar obligations
Non-consolidated securitization vehicles and collateralized
debt obligations
47
è | Refer to “Note 1 Summary of significant accounting policies” in the “Financial information” section of this report for more information |
Non-consolidated securitization vehicles and collateralized debt obligations – non-agency transactions1 | ||||||||||||||||||||||||
CHF billion | Total SPE assets | Involvements in non-consolidated SPE held by UBS | ||||||||||||||||||||||
Purchased and | ||||||||||||||||||||||||
retained interests | ||||||||||||||||||||||||
Original principal | Current principal | Delinquency | held by UBS2 | Derivatives held by UBS | ||||||||||||||||||||
As of 31 December 2010 | outstanding | outstanding | amounts | Carrying value | Fair value | Nominal value | ||||||||||||||||||
Originated by UBS | ||||||||||||||||||||||||
CDOs | ||||||||||||||||||||||||
Residential mortgage | 5.3 | 3.9 | 0.0 | 0.7 | 0.0 | 0.9 | ||||||||||||||||||
Commercial mortgage | 0.0 | 0.0 | 0.0 | 0.0 | 0.1 | 1.3 | ||||||||||||||||||
Other ABS | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.1 | ||||||||||||||||||
Securitizations | ||||||||||||||||||||||||
Residential mortgage | 2.9 | 1.7 | 0.1 | 0.1 | 0.0 | 2.4 | ||||||||||||||||||
Commercial mortgage | 22.1 | 19.3 | 2.1 | 0.1 | 0.0 | 0.0 | ||||||||||||||||||
Other ABS | 0.9 | 1.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||||||||||||
Total | 31.2 | 25.9 | 2.2 | 0.9 | 0.0 | 4.6 | ||||||||||||||||||
Not originated by UBS | ||||||||||||||||||||||||
CDOs | ||||||||||||||||||||||||
Residential mortgage | 43.7 | 20.1 | 0.1 | 0.4 | 0.0 | 0.1 | ||||||||||||||||||
Commercial mortgage | 13.4 | 8.8 | 0.0 | 0.8 | 0.0 | 0.0 | ||||||||||||||||||
Other ABS | 78.9 | 64.7 | 0.0 | 5.5 | 0.3 | 2.3 | ||||||||||||||||||
Securitizations | ||||||||||||||||||||||||
Residential mortgage | 625.1 | 212.6 | 38.4 | 1.3 | (1.1 | ) | 4.1 | |||||||||||||||||
Commercial mortgage | 608.4 | 515.5 | 63.7 | 2.3 | 0.0 | 0.0 | ||||||||||||||||||
Other ABS | 946.0 | 607.7 | 20.1 | 3.5 | 0.0 | 0.0 | ||||||||||||||||||
Total | 2,315.5 | 1,429.4 | 122.3 | 13.8 | (0.7 | ) | 6.4 | |||||||||||||||||
49
Strategy, performance and responsibility
Financial performance
CHF billion | Total SPE assets | Involvements in non-consolidated SPEs held by UBS | |||||||||||||||||||||||||||||||||||||||||||||||
Purchased and | |||||||||||||||||||||||||||||||||||||||||||||||||
retained interests | |||||||||||||||||||||||||||||||||||||||||||||||||
Original | Current | held by UBS2 | Derivatives held by UBS | ||||||||||||||||||||||||||||||||||||||||||||||
principal | principal | Delinquency | |||||||||||||||||||||||||||||||||||||||||||||||
As of 31 December 2009 | outstanding | outstanding | amounts | Carrying value | Fair value | Nominal value | |||||||||||||||||||||||||||||||||||||||||||
Originated by UBS3 | |||||||||||||||||||||||||||||||||||||||||||||||||
CDOs and CLOs | |||||||||||||||||||||||||||||||||||||||||||||||||
Residential mortgage | 6.3 | 4.1 | 0.0 | 0.9 | 0.8 | 2.6 | |||||||||||||||||||||||||||||||||||||||||||
Commercial mortgage | 0.0 | 0.0 | 0.0 | 0.0 | (0.6 | ) | 0.7 | ||||||||||||||||||||||||||||||||||||||||||
Other ABS | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.1 | |||||||||||||||||||||||||||||||||||||||||||
Securitizations | |||||||||||||||||||||||||||||||||||||||||||||||||
Residential mortgage | 5.7 | 2.3 | 0.2 | 0.0 | 0.0 | 3.9 | |||||||||||||||||||||||||||||||||||||||||||
Commercial mortgage | 21.3 | 21.1 | 0.9 | 0.0 | 0.0 | 0.0 | |||||||||||||||||||||||||||||||||||||||||||
Other ABS | 1.8 | 0.4 | 0.1 | 0.0 | 0.0 | 3.2 | |||||||||||||||||||||||||||||||||||||||||||
Total | 35.1 | 27.9 | 1.2 | 0.9 | 0.2 | 10.5 | |||||||||||||||||||||||||||||||||||||||||||
Not originated by UBS | |||||||||||||||||||||||||||||||||||||||||||||||||
CDOs and CLOs | |||||||||||||||||||||||||||||||||||||||||||||||||
Residential mortgage | 130.0 | 59.4 | 9.7 | 2.8 | 0.1 | 0.1 | |||||||||||||||||||||||||||||||||||||||||||
Commercial mortgage | 7.6 | 3.3 | 0.0 | 0.7 | 0.2 | 0.9 | |||||||||||||||||||||||||||||||||||||||||||
Other ABS | 78.6 | 38.8 | 0.1 | 3.9 | 0.6 | 2.7 | |||||||||||||||||||||||||||||||||||||||||||
Securitizations | |||||||||||||||||||||||||||||||||||||||||||||||||
Residential mortgage | 872.5 | 338.8 | 69.7 | 1.8 | (1.8 | ) | 7.6 | ||||||||||||||||||||||||||||||||||||||||||
Commercial mortgage | 656.9 | 552.6 | 21.7 | 3.8 | 0.0 | 0.0 | |||||||||||||||||||||||||||||||||||||||||||
Other ABS | 692.8 | 521.2 | 19.8 | 3.5 | 0.0 | 0.0 | |||||||||||||||||||||||||||||||||||||||||||
Total | 2,438.4 | 1,514.1 | 121.0 | 16.5 | (0.9 | ) | 11.3 | ||||||||||||||||||||||||||||||||||||||||||
48
Consolidation of securitization vehicles and CDOs
è | Refer to “Note 1 Summary of significant accounting policies” in the “Financial information” section of this report for further information on consolidation of securitization vehicles and CDO |
Risks resulting from non-consolidated securitization vehiclesvehicles and CDOscollateralized debt obligations
Support to non-consolidated investment funds
49
Guarantees and similar obligations
50
Strategy, performance and responsibility |
Clearinghouse and future exchange memberships
31.12.09 | 31.12.08 | ||||||||||||||||||||||||||||||||||||||||||||||||
Sub- | Sub- | ||||||||||||||||||||||||||||||||||||||||||||||||
CHF million | Gross | participations | Net | Gross | participations | Net | |||||||||||||||||||||||||||||||||||||||||||
Credit guarantees and similar instruments | 11,180 | (222 | ) | 10,958 | 13,124 | (344 | ) | 12,780 | |||||||||||||||||||||||||||||||||||||||||
Performance guarantees and similar instruments | 3,484 | (582 | ) | 2,902 | 3,596 | (446 | ) | 3,150 | |||||||||||||||||||||||||||||||||||||||||
Documentary credits | 2,406 | (288 | ) | 2,117 | 2,979 | (415 | ) | 2,564 | |||||||||||||||||||||||||||||||||||||||||
Total commitments | 17,070 | (1,092 | ) | 15,977 | 19,699 | (1,205 | ) | 18,494 | |||||||||||||||||||||||||||||||||||||||||
Undrawn irrevocable credit facilities | 59,328 | (1,793 | ) | 57,534 | 60,316 | (1,920 | ) | 58,396 | |||||||||||||||||||||||||||||||||||||||||
50
Swiss deposit insurance
Private equity funding commitments, equity and equity debt
underwriting commitments
Financial liabilities not recognized on balance sheet | ||||||||||||||||||||||||
The table below shows the maximum irrevocable amount of guarantees, commitments and forward starting transactions. | ||||||||||||||||||||||||
31.12.10 | 31.12.09 | |||||||||||||||||||||||
Sub- | Sub- | |||||||||||||||||||||||
CHF million | Gross | participations | Net | Gross | participations | Net | ||||||||||||||||||
Guarantees | ||||||||||||||||||||||||
Credit guarantees and similar instruments | 8,612 | (401 | ) | 8,212 | 11,180 | (222 | ) | 10,958 | ||||||||||||||||
Performance guarantees and similar instruments | 3,362 | (506 | ) | 2,856 | 3,484 | (582 | ) | 2,902 | ||||||||||||||||
Documentary credits | 4,561 | (255 | ) | 4,306 | 2,406 | (288 | ) | 2,117 | ||||||||||||||||
Total guarantees | 16,535 | (1,162 | ) | 15,374 | 17,070 | (1,092 | ) | 15,977 | ||||||||||||||||
Commitments | ||||||||||||||||||||||||
Loan commitments | 56,851 | (1,475 | ) | 55,376 | 59,328 | (1,793 | ) | 57,534 | ||||||||||||||||
Underwriting commitments | 404 | (196 | ) | 208 | 2,251 | (556 | ) | 1,695 | ||||||||||||||||
Total Commitments | 57,255 | (1,671 | ) | 55,584 | 61,579 | (2,349 | ) | 59,229 | ||||||||||||||||
Forward starting transactions1 | ||||||||||||||||||||||||
Reverse repurchase agreements | 39,036 | 43,020 | ||||||||||||||||||||||
Securities borrowing agreements | 454 | 904 | ||||||||||||||||||||||
Repurchase agreements | 22,468 | 18,044 | ||||||||||||||||||||||
Securities lending agreements | 783 | 47 | ||||||||||||||||||||||
51
Strategy, performance and responsibility
Financial performance
Contractual obligations
The table below includes contractual obligations as of 31 December 2009.
Contractual obligations | Contractual obligations | |||||||||||||||||||||||||||||||
Payment due by period | Payment due by period | |||||||||||||||||||||||||||||||
CHF million | < 1 year | 1–3 years | 3–5 years | > 5 years | < 1 year | 1-3 years | 3-5 years | > 5 years | ||||||||||||||||||||||||
Long-term debt | 42,759 | 46,796 | 31,515 | 71,357 | ||||||||||||||||||||||||||||
Long-term debt obligations | 36,742 | 47,582 | 32,387 | 58,279 | ||||||||||||||||||||||||||||
Capital lease obligations | 57 | 83 | 0 | 0 | ||||||||||||||||||||||||||||
Finance lease obligations | 46 | 55 | ||||||||||||||||||||||||||||||
Operating leases | 989 | 1,655 | 1,214 | 2,113 | ||||||||||||||||||||||||||||
Operating lease obligations | 862 | 1,387 | 1,018 | 1,818 | ||||||||||||||||||||||||||||
Purchase obligations | 302 | 113 | 39 | 23 | 438 | 376 | 191 | 36 | ||||||||||||||||||||||||
Other liabilities | 538 | 5 | 0 | 0 | 484 | 1 | ||||||||||||||||||||||||||
Total | 44,645 | 48,652 | 32,768 | 73,493 | 38,572 | 49,401 | 33,596 | 60,133 |
5152
Strategy, performance and responsibility |
Cash flows
2010
As of 31 December 2010, the level of cash and cash equivalents declined to CHF 140.8 billion, down CHF 24.2 billion from CHF 165.0 billion at the end of 2009.
Operating activities
Operating activities generated a cash inflow of CHF 12.0 billion in 2010 compared with a cash inflow of CHF 54.5 billion in 2009. Operating cash inflows (before changes in operating assets and liabilities and income taxes paid, net of refunds) totaled CHF 8.8 billion in 2010, a decrease of CHF 1.0 billion from 2009. Net profit improved CHF 10.0 billion compared with 2009.
Investing activities
Net cash flow used in investing activities was CHF 25.7 billion compared with cash flow used in investing activities of CHF 20.6 billion in 2009.
è | Refer to “Note 36 Business combinations” and “Note 38 Reorganizations and disposals” in the “Financial information” section of this report for more information about our investing activities |
Financing activities
In 2010, financing activities generated net cash inflows of CHF 1.8 billion. This reflected the cash outflow for redemptions and dividends paid for preferred securities reflected in non-controlling interests of CHF 2.1 billion, the issuance of CHF 78.4 billion of long-term debt and the long-term debt repayments, which totaled CHF 77.5 billion. The money market papers issued generated a net cash inflow of CHF 4.5 billion. In 2009, UBS had a net cash outflow of CHF 54.2 billion from financing activities.
2009
As of 31 December 2009, the level of cash and cash equivalents declined to CHF 165.0 billion, down CHF 14.7 billion from CHF 179.7 billion at the end of 2008.
Operating activities
Operating activities generated a cash inflow of CHF 54.5 billion in 2009 compared with a cash inflow of CHF 77.0 billion in 2008. Operating cash inflows (before changes in operating assets and liabilities and income taxes paid)paid, net of refunds) totaled CHF 9.9 billion in 2009, an increase of CHF 81.5 billion from 2008. Net profit improved by CHF 18.6 billion compared with 2008.
Investing activities
Net cash flow used in investing activities was CHF 20.6 billion compared with an overall cash outflowflow used in investing activities of CHF 1.7 billion in 2008.
|
In 2009, financing activities generated net cash outflows of CHF 54.2 billion. This reflected the net repayment of money market paper of CHF 60.0 billion, the issuance of CHF 67.1 billion inof long-term debt and the long-term debt repayments, which totaled CHF 65.0 billion. That outflow was partly offset by inflows attributable to capital issuances of CHF 3.7 billion. In 2008, weUBS had a net cash outflow of CHF 5.6 billion from financing activities.
5253
Strategy, performance and responsibility
Our employees
Our employees
The excellence, inspiration client focus and commitment of our employees are critical to implementing our business strategy and to meeting the needs of our clients. Our commitment to our employees is reflected in the investment we make in managing talent, and in the development of our performance-oriented culture and our leadership.
Our workforce
In 2010, we focused on enhancing integration across the firm and investing in our workforce by making a number of improvements to the way we managed our employees. For example, we instituted measures to further develop our performance-oriented culture and revised our Code of Business Conduct and Ethics (the Code) to clearly set out the principles and practices we expect all our employees to follow. Additionally, we launched a corporate university to provide more training opportunities and promote continuous development.
Personnel by region | ||||||||||||||||
As of | % change from | |||||||||||||||
Full-time equivalents | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | ||||||||||||
Switzerland | 23,284 | 24,050 | 26,406 | (3 | ) | |||||||||||
UK | 6,634 | 6,204 | 7,071 | 7 | ||||||||||||
Rest of Europe | 4,122 | 4,145 | 4,817 | (1 | ) | |||||||||||
Middle East /Africa | 137 | 134 | 145 | 2 | ||||||||||||
USA | 22,031 | 22,702 | 27,362 | (3 | ) | |||||||||||
Rest of Americas | 1,147 | 1,132 | 1,984 | 1 | ||||||||||||
Asia Pacific | 7,263 | 6,865 | 9,998 | 6 | ||||||||||||
Total | 64,617 | 65,233 | 77,783 | (1 | ) | |||||||||||
Personnel by business division | ||||||||||||||||
As of | % change from | |||||||||||||||
Full-time equivalents | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | ||||||||||||
Wealth Management | 15,663 | 15,408 | 17,910 | 2 | ||||||||||||
Retail & Corporate | 12,089 | 12,140 | 13,105 | 0 | ||||||||||||
Wealth Management & Swiss Bank | 27,752 | 27,548 | 31,016 | 1 | ||||||||||||
Wealth Management Americas | 16,330 | 16,925 | 20,623 | (4 | ) | |||||||||||
Global Asset Management | 3,481 | 3,471 | 3,914 | 0 | ||||||||||||
Investment Bank | 16,860 | 15,666 | 19,132 | 8 | ||||||||||||
Treasury activities and other corporate items | 194 | 1,624 | 3,098 | (88 | ) | |||||||||||
Total | 64,617 | 65,233 | 77,783 | (1 | ) | |||||||||||
of which: personnel managed centrally | 19,406 | 19,993 | 23,997 | (3 | ) | |||||||||||
5354
Strategy, performance and responsibility |
Recruiting new employees
Strengthening and sustaining aour diverse workforce
ing culture, merit-based career advancement and a sense of individual contribution. The scope of our diversity initiatives is global, with regional teams translating this commitment into action by working with local business and HR leaders. In addition, more than 20 employee networks help to build cross-business relationships and strengthen our inclusive culture.
Gender distribution by geographical region1
55
Strategy, performance and responsibility
Our employees
Gender distribution by employee category1 | ||||||||||||||||||||||||
Officers | Non-officers | Total | ||||||||||||||||||||||
As of 31.12.10 | Number | % | Number | % | Number | % | ||||||||||||||||||
Male | 32,068 | 72.0 | 9,680 | 43.5 | 41,748 | 62.5 | ||||||||||||||||||
Female | 12,474 | 28.0 | 12,560 | 56.5 | 25,034 | 37.5 | ||||||||||||||||||
Total | 44,542 | 100.0 | 22,240 | 100.0 | 66,782 | 100.0 | ||||||||||||||||||
Global network guidelines enable employees to set up or join employee networks / affinity groups in any of our operating regions. We have more than 20 employee networks to help build cross-business relationships and strengthen our inclusive culture.
As of 31.12.09 | Officers | Non-officers | Total | ||||||||||||||||||||||||||||||||||||||||||||||
Number | % | Number | % | ||||||||||||||||||||||||||||||||||||||||||||||
Male | 31,557 | 72.8 | 10,537 | 43.6 | 42,094 | 62.3 | |||||||||||||||||||||||||||||||||||||||||||
Female | 11,817 | 27.2 | 13,607 | 56.4 | 25,424 | 37.7 | |||||||||||||||||||||||||||||||||||||||||||
Total | 43,374 | 100.0 | 24,144 | 100.0 | 67,518 | 100.0 | |||||||||||||||||||||||||||||||||||||||||||
54
Managing performance
Our approach to people management
Compensation
56
Strategy, performance and responsibility |
placed on the variable component as an incentive to excel and to foster a performance-driven culture, while supporting appropriate and controlled risk taking. Our Total Reward Principles are the foundation of our compensation programs. We always take a holistic view of employee compensation within a total reward framework that takes into account base salary, discretionary incentives and benefits.
è | Refer to the |
Employee share ownership
Education and talent development
We take a structured approach to both leadership development and business education understanding that these capabilities are important factors in ensuring high-quality client serviceto ensure our employees have the knowledge and long-termskills required to meet our business success.needs and support our strategic goals. In August 2009, the GEB approved the formation ofJanuary 2010, we launched the UBS Business University, a global and largely virtual corporate university that brings all educational opportunities under one virtual umbrella. Creating a corporate university will significantly increase the efficiency ofintegrates our learning activities under one umbrella. The Business University effectively aligns all training and processes while eliminating duplication. It shouldeducation elements across the firm and promotes a culture of continuous development. Having one Group-wide learning organization also help to further reduceleverages the expertise within our various former learning organizations, increases efficiency, eliminates duplication and significantly reduces training costs, combinewhile focusing on positively impacting business results.
Building a leadership culture
In 2010, the UBS Business University worked closely with the Group Executive Board (GEB) and the business divisions to put our new strategy into practice, and to further develop our leadership culture. The Business University also supported the design, development and roll out of our GEB-sponsored “Leading UBS forward” employee training program (which will continue into 2011). The program raises awareness and understanding of our strategy and identity, our values and our strategic principles. Face-to-face workshops open to all employees are led by “ambassadors” who are nominated senior employees from across the firm.
55
Truth
Clarity
Performance
57
Strategy, performance and responsibility
Our employees
These sessions provide an opportunity for everyone to better understand key components of our strategy, commit to changing our culture, and embed our values in their daily work.
Commitment
Meeting the needs of clients is a core objective. Our corporate valuesobjective for UBS, and relationships based on respect, trust and mutual understanding are the foundation for our success. The Code sets out the principles and practices that enables usall employees are expected to befollow. It also underscores the critical importance of responsible corporate behavior. In 2010, we put in place a goodprocess to affirm the Code and provided training to all employees. We are committed to upholding our corporate citizenvalues of truth, clarity and responsible employer in addition to realizing long-term profitability and business growth. These valuesperformance. They are integrated into our corporate decision making and people management processes, as well asand are aimed at shaping the daily interactions amongactions of our employees.
Employee assistance
lost to accident or illness are tracked, with 18,915 and 103,635 days respectively accounted for in 2010.
Employee representation
56
5758
Strategy, performance and responsibility |
Corporate responsibility
In 2010, we took strides to enhance our key themesperformance in 2009, as we continued to contend with the effectsall areas of the major financial crisis we experienced in 2007 and 2008. We have, as detailed elsewhere incorporate responsibility. An important foundation for this report, assumed responsibility to resolve key issues arising from the crisis.
In 2010, we made major steps in delivering on our commitment to our key driverprinciples, including our values of sustainable value for the companytruth, clarity, and performance; our strategic principles of reputation, integration, and performance; and our stakeholders.
è | Refer to www.ubs.com/responsibility for more information on the contents of this section |
Governance, strategy, and commitments
Corporate responsibility governance
pectations. The CRC thus supports the BoD’s efforts to ensure and advance our reputation for responsible corporate conduct. Headed by the Chairman of the BoD, the committee includes twoincluded three other BoD members. It is advised by a panel consisting of members of the GEBGroup Executive Board (GEB) and other senior managers. The members of the advisory panel participate in committee meetings and implement its recommendations.
58
è | Refer to www.ubs.com/environment for more information on our environmental and human rights governance |
Corporate Responsibility at UBS
59
Strategy, performance and responsibility
Corporate responsibility
Led by the Head of Global AML Compliance, our efforts to fight money laundering, corruption and theterrorist financing of terrorism are supported by a network of expert global business teams. We are streamlining our policies and processes to enhance consistency between business divisions, as well as
è | Refer to the discussion on combating financial crime below for more information on our AML activities |
The global diversity team supports senior management and HR business partners in developing diversity-related strategies and goals for each business division. The implementation of these strategies and goals is monitored by the GEB. The global diversity team also coordinates regional efforts and integration into the HR process. Regional diversity heads, along with senior business managers, consider and decide ondesign diversity /and business-aligned plans that are linked to regional and divisional business and talent strategies. They are also responsibleprovide regional support for advising and supporting regional diversity boards, or their regional equivalent,divisional management in assessing the progress made on relevant issues. The global diversity team coordinatesobjectives. Additionally, regional effortsdiversity heads support our numerous employee networks, including the development and integration into the HR process.
è | Refer to the “Our employees” section of this report for more information on labor standards and diversity programs |
Community affairs at UBS are founded on a global strategy defined by the GEB, and are based on a global community affairs guideline. Activities are governed by a central framework and regional guidelines and embedded in UBS’s regional structures. Every region has a dedicated community affairs team which coordinates charitable commitments by our firm and our employees. The Corporate Center ensures global coordination of these activities and also provides a central reporting structure to collate community investment data from across UBS as a whole.
è | Refer to the discussion on community investment below for more information on our charitable and related activities |
59
External ratings, assurance and awards
Our corporate responsibility governance process
60
Strategy, performance and responsibility |
since their inception. With regard to the three dimensions ratedIn 2010, we increased our total score for the DJSI – economic, environmental, and social – we scored wellWorld, mainly due to substantially improved performance in the socialeconomic dimension and are one of the financial sector’s leadersan increased performance in the environmental dimension. A lower score
è | Refer to the “Our employees” section of this report for information on diversity awards |
Stakeholder dialogue and capacity building
Training and awareness raising
60
Responsible banking
We have set our focusare focused on earning the trust of our stakeholders, aiming for more sustainable earnings and creating long-term shareholder value. In ensuring that banking activities are undertaken in a responsible manner, and that products and services are suited to the needs and requirements of our clients, we aim to fulfill the heightened expectations of clients and stakeholders.
Combating financial crime
61
Strategy, performance and responsibility
Corporate responsibility
correspond with those risks, and that relationships thatwhich are classified as higher risk are dealt with appropriately. We adhere to strict know-your-clients regulations, which do not, however, seek to undermine clients’ legitimate right to privacy. Ongoing due diligence and monitoring is undertaken to assist in the identification of suspicious activities, including the utilization ofusing advanced technology to assist in the identification of transaction patterns or unusual dealings which, if discovered, are promptly escalated to management or control functions.
Managing environmental and social risks
Our environmental policy
61
– | Endangered species of wild flora and fauna listed in Appendix 1 of the Convention on International Trade in Endangered Species; |
62
Strategy, performance and responsibility |
– | High conservation value forests as defined by the six categories of the Forestry Stewardship Council (FSC); |
– | Illegal use of fire: uncontrolled and/or illegal use of fire for land clearance; |
– | Illegal logging including purchase of illegal harvested timber (logs or roundwood); |
– | Palm oil production unless a member in good standing of the Roundtable on Sustainable Palm Oil and actively seeking to enhance certification of its production; | |
– | Wetlands: on the RAMSAR list; and | |
– | World heritage sites as classified by UNESCO. |
All commercial activities that engage in, or threaten:
– | Child labor: according to ILO-conventions 138 (minimum age) and 182 (worst forms); |
– | Forced labor: according to ILO-convention 29; |
– | Indigenous peoples’ rights in accordance with IFC Performance Standard 7; and |
– | Diamond mining and trading of rough diamonds unless Kimberly Process certified. |
We also require enhanced due diligence and approval processes in certain other areas, such as coal mining practices that use mountain top removal (MTR) in the US Appalachian Mountains as an extraction method. As part of this review, we assess to what extent companies rely on MTR mining for their revenue generation, and we need to be satisfied that the client is committed to reducing its exposure to this form of mining over time.
Products and services
Investment products and advisory
62
63
Strategy, performance and responsibility
Corporate responsibility
Engagement and voting rights
Research
% change | |||||||||||||||||||||||||||||||||||||||||||||||||
For the year ended | from | ||||||||||||||||||||||||||||||||||||||||||||||||
CHF billion, except where indicated | GRI2 | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.08 | ||||||||||||||||||||||||||||||||||||||||||||
UBS | 2,233 | 2,174 | 3,189 | 3 | |||||||||||||||||||||||||||||||||||||||||||||
UBS SRI products and mandates | |||||||||||||||||||||||||||||||||||||||||||||||||
positive criteria | FS11 | 2.72 | 2.12 | 5.20 | 28 | ||||||||||||||||||||||||||||||||||||||||||||
exclusion criteria | FS11 | 22.44 | 14.05 | 33.33 | 60 | ||||||||||||||||||||||||||||||||||||||||||||
Third-party | FS11 | 1.69 | 1.85 | 1.08 | (9 | ) | |||||||||||||||||||||||||||||||||||||||||||
Total SRI invested assets | FS11 | 26.85 | 3 | 18.03 | 39.61 | 49 | |||||||||||||||||||||||||||||||||||||||||||
Proportion of total invested assets (%)4 | 1.20% | 0.83% | 1.24% | ||||||||||||||||||||||||||||||||||||||||||||||
63
Financing and advisory services
Socially responsible investments invested assets1 | ||||||||||||||||||||
% change | ||||||||||||||||||||
For the year ended | from | |||||||||||||||||||
CHF billion, except where indicated | GRI2 | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | |||||||||||||||
UBS | 2,152 | 2,233 | 2,174 | (4 | ) | |||||||||||||||
UBS SRI products and mandates | ||||||||||||||||||||
positive criteria | FS11 | 2.00 | 2.72 | 2.12 | (36 | ) | ||||||||||||||
exclusion criteria | FS11 | 21.27 | 22.44 | 14.05 | (6 | ) | ||||||||||||||
Third-party3 | FS11 | 2.40 | 1.69 | 1.85 | 30 | |||||||||||||||
Total SRI invested assets | FS11 | 25.67 | 4 | 26.85 | 18.03 | (5 | ) | |||||||||||||
Proportion of total invested assets (%)5 | 1.19 | 1.20 | 0.83 | |||||||||||||||||
64
Strategy, performance and responsibility |
Carbon trading
Corporate responsibility in operations
We havecontinue to build on a long takenheritage of managing our internal environmental impact, which, since the 1970s, has focused on increasing energy efficiency, reducing consumption of paper and other resources, actively managing waste volumes and encouraging our employees to replace air travel with more sustainable options. Now delivering the program through a very keennetwork of global, regional and active interest in lowering thelocal environmental footprint of our operations and in our supply chain. Following the establishment of our first energy functional unit in the late 1970s,specialists, we were also the first Swiss bank to establish the position ofmanage an environmental officer in the 1980s. Years later, we persistmanagement system accredited to improve the environmental efficiency of our operations.
Environmental and CO2 footprints
CO2 strategy and emission reduction
– | adopting in-house energy efficiency measures that reduce energy consumption in the buildings we operate; | |
– | increasing the proportion of renewable energy used | |
– | ||
64
Renewable energy
Business travel and offsetting
Our greenhouse gas (GHG) footprint
65
Strategy, performance and labor rights, the environment and corruption. Examples of human rights issues that have been included are avoidance of child and forced labor, non-discrimination, remuneration, hours of work, freedom of association, humane treatment, and health and safety. In 2008, we started implementing this guideline and have gradually broadened its application to new contracts and contract renewals with suppliers over the course of 2009. Since its introduction, approximately 400 suppliers have been screened according to the guideline’s social and environmental criteria, and responsible supply chain require-
Environmental indicators per full-time employee
Unit | 2009 | Trend | 2008 | 2007 | Unit | 2010 | Trend | 2009 | 2008 | |||||||||||||||||||||||||||||||
Direct and intermediate energy | kWh / FTE | 11,986 | à | 11,792 | 11,942 | kWh / FTE | 12,633 | ì | 11,986 | 11,792 | ||||||||||||||||||||||||||||||
Business travel | Pkm / FTE | 7,016 | â | 10,281 | 12,685 | Pkm / FTE | 8,743 | é | 7,016 | 10,281 | ||||||||||||||||||||||||||||||
Paper consumption | kg / FTE | 130 | â | 167 | 190 | kg / FTE | 119 | î | 130 | 167 | ||||||||||||||||||||||||||||||
Waste | kg / FTE | 265 | â | 298 | 299 | kg / FTE | 251 | î | 265 | 298 | ||||||||||||||||||||||||||||||
Water consumption | m3 / FTE | 31.9 | á | 28.1 | 26.7 | m3 / FTE | 33.3 | è | 31.9 | 28.1 | ||||||||||||||||||||||||||||||
CO2 footprint | t / FTE | 3.12 | à | 3.07 | 3.43 | t / FTE | 3.66 | é | 3.12 | 3.07 |
65
20092 | 20082 | 20072 | |||||||||||||||||||||||||||||||||||||||||||||||
Absolute | Absolute | Absolute | |||||||||||||||||||||||||||||||||||||||||||||||
GRI3 | normalized4 | Data quality5 | Trend6 | normalized4 | normalized4 | ||||||||||||||||||||||||||||||||||||||||||||
Total direct and intermediate energy consumption7 | 957 GWh | *** | æ | 1,016 GWh | 981 GWh | ||||||||||||||||||||||||||||||||||||||||||||
Total direct energy consumption8 | EN3 | 132 GWh | ** | à | 127 GWh | 130 GWh | |||||||||||||||||||||||||||||||||||||||||||
natural gas | 84.6% | ** | à | 83.3 | % | 83.3 | % | ||||||||||||||||||||||||||||||||||||||||||
heating oil | 10.9% | *** | â | 12.2 | % | 12.1 | % | ||||||||||||||||||||||||||||||||||||||||||
fuels (petrol, diesel, gas) | 4.5% | *** | à | 4.5 | % | 4.6 | % | ||||||||||||||||||||||||||||||||||||||||||
renewable energy (solar power, etc.) | 0.05% | *** | á | 0.03 | % | 0.03 | % | ||||||||||||||||||||||||||||||||||||||||||
Total intermediate energy purchased9 | EN4 | 825 GWh | *** | æ | 890 GWh | 851 GWh | |||||||||||||||||||||||||||||||||||||||||||
electricity from gas-fired power stations | 10.6% | ** | à | 11.7 | % | 12.3 | % | ||||||||||||||||||||||||||||||||||||||||||
electricity from oil-fired power stations | 2.9% | *** | â | 3.7 | % | 4.2 | % | ||||||||||||||||||||||||||||||||||||||||||
electricity from coal-fired power stations | 17.5% | ** | à | 18.4 | % | 18.6 | % | ||||||||||||||||||||||||||||||||||||||||||
electricity from nuclear power stations | 9.5% | ** | æ | 11.1 | % | 13.6 | % | ||||||||||||||||||||||||||||||||||||||||||
electricity from hydroelectric power stations | 28.0% | *** | ä | 25.8 | % | 25.5 | % | ||||||||||||||||||||||||||||||||||||||||||
electricity from other renewable resources | 23.6% | *** | à | 23.1 | % | 22.0 | % | ||||||||||||||||||||||||||||||||||||||||||
district heating | 7.8% | *** | á | 6.2 | % | 3.8 | % | ||||||||||||||||||||||||||||||||||||||||||
Share of renewable energy and district heating | 51% | *** | ä | 48% | 45 | % | |||||||||||||||||||||||||||||||||||||||||||
Total business travel | EN29 | 560 m Pkm | *** | â | 886 m Pkm | 1,042 m Pkm | |||||||||||||||||||||||||||||||||||||||||||
rail travel10 | 3.7% | ** | à | 3.5 | % | 3.3 | % | ||||||||||||||||||||||||||||||||||||||||||
road travel10 | 1.0% | ** | á | 0.6 | % | 0.5 | % | ||||||||||||||||||||||||||||||||||||||||||
air travel | 95.3% | *** | à | 96.0 | % | 96.2 | % | ||||||||||||||||||||||||||||||||||||||||||
Number of flights (segments) | 258,396 | *** | â | 398,369 | 446,274 | ||||||||||||||||||||||||||||||||||||||||||||
Total paper consumption | EN1 | 10,349 t | *** | â | 14,403 t | 15,593 t | |||||||||||||||||||||||||||||||||||||||||||
post-consumer recycled | EN2 | 16.7% | *** | à | 16.2 | % | 10.5 | % | |||||||||||||||||||||||||||||||||||||||||
new fibers FSC11 | 17.1% | *** | à | 16.6 | % | 10.7 | % | ||||||||||||||||||||||||||||||||||||||||||
new fibers ECF + TCF11 | 65.9% | *** | à | 66.8 | % | 78.6 | % | ||||||||||||||||||||||||||||||||||||||||||
new fibers chlorine bleached | 0.4% | ** | ä | 0.4 | % | 0.2 | % | ||||||||||||||||||||||||||||||||||||||||||
Total waste | EN22 | 21,183 t | *** | â | 25,644 t | 24,589 t | |||||||||||||||||||||||||||||||||||||||||||
valuable materials separated and recycled | 54.4% | *** | à | 54.6 | % | 56.3 | % | ||||||||||||||||||||||||||||||||||||||||||
incinerated | 12.5% | *** | â | 14.3 | % | 15.8 | % | ||||||||||||||||||||||||||||||||||||||||||
landfilled | 33.1% | ** | à | 31.1 | % | 27.9 | % | ||||||||||||||||||||||||||||||||||||||||||
Total water consumption | EN8 | 2.55 m m3 | ** | à | 2.42 m m3 | 2.19 m m3 | |||||||||||||||||||||||||||||||||||||||||||
Greenhouse Gas (GHG) Emissions in CO2e | |||||||||||||||||||||||||||||||||||||||||||||||||
Direct GHG emissions (Scope 1)12 | EN16 | 25,723 t | *** | à | 26,490 t | 26,701 t | |||||||||||||||||||||||||||||||||||||||||||
Gross indirect GHG emissions (Gross Scope 2)12 | EN16 | 298,338 t | ** | à | 313,582 t | 311,808 t | |||||||||||||||||||||||||||||||||||||||||||
Gross other indirect GHG emissions (Gross Scope 3)12 | EN17 | 87,867 t | *** | â | 129,364 t | 149,323 t | |||||||||||||||||||||||||||||||||||||||||||
Total Gross GHG Emissions | 411,928 t | *** | â | 469,436 t | 487,832 t | ||||||||||||||||||||||||||||||||||||||||||||
GHG reductions from renewable energy13 | 99,248 t | *** | æ | 109,238 t | 93,127 t | ||||||||||||||||||||||||||||||||||||||||||||
CO2e offsets (business air travel)14 | 63,579 t | *** | â | 96,000 t | 113,000 | ||||||||||||||||||||||||||||||||||||||||||||
Total Net GHG Emissions (GHG Footprint)15 | 249,101 t | *** | æ | 264,197 t | 281,705 t | ||||||||||||||||||||||||||||||||||||||||||||
âPaper and waste,á). 7 Refers
Supply chain management
66
Community investment
We are continuing the well-established tradition of supporting the advancement and empowerment of organizations and individuals within the communities we do business in. From an early focus on direct cash donations, we have progressed to a position where our community investment program encompasses employee volunteering, matched-giving schemes, in-kind donations, disaster relief efforts and/and / or partnerships with community groups, educational institutions and cultural organizations in all of our business regions.
Community affairs
66
Strategy, performance and responsibility |
Environmental indicators1
20102 | 2009 | 2 | 2008 | 2 | ||||||||||||||||||||
Absolute | Data | Absolute | Absolute | |||||||||||||||||||||
GRI3 | normalized4 | quality5 | Trend6 | normalized4 | normalized4 | |||||||||||||||||||
Total direct and intermediate energy consumption7 | 859 GWh | *** | ê | 957 GWh | 1,016 GWh | |||||||||||||||||||
Total direct energy consumption8 | EN3 | 137 GWh | ** | è | 132 GWh | 127 GWh | ||||||||||||||||||
natural gas | 82.6% | ** | è | 84.6% | 83.3% | |||||||||||||||||||
heating oil | 15.0% | *** | é | 10.9% | 12.2% | |||||||||||||||||||
fuels (petrol, diesel, gas) | 2.3% | *** | ê | 4.5% | 4.5% | |||||||||||||||||||
renewable energy (solar power, etc.) | 0.02% | *** | ê | 0.05% | 0.03% | |||||||||||||||||||
Total intermediate energy purchased9 | EN4 | 722 GWh | *** | ê | 825 GWh | 890 GWh | ||||||||||||||||||
electricity from gas-fired power stations | 16.3% | ** | é | 10.6% | 11.7% | |||||||||||||||||||
electricity from oil-fired power stations | 4.1% | *** | é | 2.9% | 3.7% | |||||||||||||||||||
electricity from coal-fired power stations | 17.1% | ** | è | 17.5% | 18.4% | |||||||||||||||||||
electricity from nuclear power stations | 11.5% | ** | é | 9.5% | 11.1% | |||||||||||||||||||
electricity from hydroelectric power stations | 29.1% | *** | è | 28.0% | 25.8% | |||||||||||||||||||
electricity from other renewable resources | 13.5% | *** | ê | 23.6% | 23.1% | |||||||||||||||||||
district heating | 8.5% | *** | ì | 7.8% | 6.2% | |||||||||||||||||||
Share of renewable energy and district heating | 43% | *** | ê | 51% | 48% | |||||||||||||||||||
Total business travel | EN29 | 595 m Pkm | *** | ì | 560 m Pkm | 886 m Pkm | ||||||||||||||||||
rail travel10 | 1.9% | *** | ê | 3.7% | 3.5% | |||||||||||||||||||
road travel10 | 0.5% | ** | ê | 1.0% | 0.6% | |||||||||||||||||||
air travel | 97.6% | *** | è | 95.3% | 96.0% | |||||||||||||||||||
Number of flights (segments) | 258,766 | *** | è | 258,396 | 398,369 | |||||||||||||||||||
Total paper consumption | EN1 | 8,076 t | *** | ê | 10,349 t | 14,403 t | ||||||||||||||||||
post-consumer recycled | EN2 | 21.9% | *** | é | 16.7% | 16.2% | ||||||||||||||||||
new fibers FSC11 | 20.9% | *** | é | 17.1% | 16.6% | |||||||||||||||||||
new fibers ECF +TCF11 | 57.0% | *** | ê | 65.9% | 66.8% | |||||||||||||||||||
new fibers chlorine bleached | 0.3% | ** | ê | 0.4% | 0.4% | |||||||||||||||||||
Total waste | EN22 | 17,053 t | *** | ê | 21,183 t | 25,644 t | ||||||||||||||||||
valuable materials separated and recycled | 53.7% | *** | è | 54.4% | 54.6% | |||||||||||||||||||
incinerated | 18.1% | *** | é | 12.5% | 14.3% | |||||||||||||||||||
landfilled | 28.2% | ** | î | 33.1% | 31.1% | |||||||||||||||||||
Total water consumption | EN8 | 2.27 m m3 | ** | î | 2.55 m m | 3 | 2.42 m m | 3 | ||||||||||||||||
Greenhouse Gas (GHG) Emissions in CO2e | ||||||||||||||||||||||||
Direct GHG emissions (Scope 1)12 | EN16 | 27,153 t | ** | è | 25,723 t | 26,490 t | ||||||||||||||||||
Gross indirect GHG emissions (Gross Scope 2)12 | EN16 | 253,556 t | *** | ê | 298,338 t | 313,582 t | ||||||||||||||||||
Gross other indirect GHG emissions (Gross Scope 3)12 | EN17 | 89,957 t | *** | è | 87,867 t | 129,364 t | ||||||||||||||||||
Total Gross GHG Emissions | 370,666 t | *** | ê | 411,928 t | 469,436 t | |||||||||||||||||||
GHG reductions from renewable energy13 | 61,889 t | *** | ê | 99,248 t | 109,238 t | |||||||||||||||||||
CO2e offsets (business air travel)14 | 69,152 t | *** | ì | 63,579 t | 96,000 t | |||||||||||||||||||
Total Net GHG Emissions (GHG Footprint)15 | 239,624 t | *** | è | 249,101 t | 264,197 t | |||||||||||||||||||
67
Strategy, performance and responsibility
Corporate responsibility
Client foundation
dations, it has contributed over CHF 80 million to more than 170 projects in over 60 countries. All of the end of 2009, and proudly looked back at a successful year inprojects which it donated CHF 22 million in supportsupports are dedicated to improving the lives of 93 projects and two major initiatives in Africa, Asia Pacific, Europe and North and South America. Over the past ten years, the UBS Optimus Foundation has supported 146 projects in 63 countries with a total of more than CHF 79 million. For its anniversary year, it has set itself ambitious targets to further expand the benefits it extends to charitable projectschildren around the globe.
6768
Strategy, performance and |
One of our employees. By making a significant monetary contribution (nearly USD 600,000) towardssignature volunteer efforts is the enhancement of school buildings, and the gathering
doesn’t feel possible to break away from the office and their families have volunteered acrosschange your focus, but when you walk into the country.
Asia Pacific: In order to maximize the impact of– Building upon our grantsground-breaking Community Leadership Experience, developed in partnership with Charities Aid Foundation India in 2008, UBS subsequently developed and launched a program for Singapore and Tokyo, we are now workingnon-profit sector leaders in partnership with the Community FoundationCentre for Non-Profit Leadership in 2009. Now in its second year, the Experience program combines a two-day residential retreat workshop with one-to-one partnering between UBS senior executives and executives of Singaporenon-governmental organizations. The opportunity for both sets of leaders to interact and Social Venture Partners Tokyo. With both partners, we are ableshare experiences has proven to strengthen the capacity of community organizations to meet local needs and provide corporate philanthropic leadership. Through the creation ofbe highly successful, resulting in a donor-advised fund in Singapore in 2009, we will continue to support our existing community partners. “UBS’s leadership in corporate responsibility in Singapore is a great example for other corporations”, says Stanley Tan, Chairmandeeper understanding of the Community Foundationchallenges faced by the community in Singapore. Additional workshops focusing on common human resource issues, such as talent recruitment and retention, have also been organized as part of Singapore. “Their strategic approach to the commitment of funds and employee skills are a tremendous investment in our community.” In Tokyo, promising social entrepreneurs have the opportunity to apply for funding through a competitive process, with the successful projects receiving strategic business counseling as well as funding.
Europe, Middle East and Africa:Africa
leagues in projects supportingLuxembourg to increase our contribution. In the development and educationUK, this year the firm was amongst a very small number of young adults from disadvantaged communities. In London, our efforts were recognized by thefirms to receive three Business in the Community Example of Excellence AwardNational Big Tick Awards for Project Shoreditch, a targeted and collaborative regeneration partnership involving UBS, Deutsche Bank, Linklaters, and community partners East London Business Alliance and Shoreditch Trust. Project Shoreditch has placed over 5,000 employee volunteers with organizations in the Shoreditch area, and leveraged over GBP 450,000 in in-kind support. Carsten Kengeter, co-CEO of the Investment Bank, joined a group of 30 colleagues to take part in an employee volunteering project in Shoreditch, working with students at The Bridge Academy, Hackney,our Community Affairs program; our flagship EMEA Community Affairs partnership raising student aspirations by taking part in practical and group work.
Switzerland– In October, more than 180 employees participated in the traditional Finance Forum sponsored walk on the shores of Lake Zurich. They were joined by 1,100 colleagues from other Swiss financial and IT firms. With CHF 50,000 raised in just two hours, our employees achieved the highest amount of all participating companies. The non-profit organization focuses on young people who are empoweredtotal amount raised by the walk (CHF 187,000) was donated to network in economic relations, act entrepreneurially,the Swiss Multiple Sclerosis Society which supports research into this disease and be responsibleadvises and successful in finding their way within the global economy. Thanks to a quadrennial partnership, YES and UBS jointly enhance the powerhelps families of innovation and competitivenessafflicted children free of young Swiss students.
è | Refer towww.ubs.com/communityfor more information on our community investment activities |
68
69
Strategy, performance and responsibility
Corporate responsibility
ASSURANCE STATEMENT |
SGS STATEMENT ON ASSURANCE OF UBS GRI Sustainability Disclosure 2010
SCOPE
CONTENT
ASSUROR INDEPENDENCE AND COMPETENCIES
METHODOLOGY
OPINION
SIGNED FOR AND ON BEHALF OF SGS
Dr. Christine Jasch | Elvira Bieri | |
Lead auditor, SGS | Lead auditor, SGS | |
Zurich, 18 February 2011 | WWW.SGS.COM |
70
UBS business divisions and
Corporate Center
– | Starting from 2010, external reporting of Wealth Management & Swiss Bank was revised to better reflect management structure and responsibilities, and was split into two business units: Wealth Management and Retail & Corporate. | |||
– | The Investment Products and Services (IPS) unit was created to provide comprehensive service to Wealth Management clients with complex needs using the capabilities and expertise of the entire firm. | |||
– | In the Investment Bank, the implementation of the securities platform to unify our capabilities in equities and fixed income, currencies and commodities combined previously distinct trading and sales activities into a holistic business with the goal of improving our market position and overall client service. | |||
– | In the first half of the year, we took an important step to expand our presence into emerging markets by agreeing to acquire Link Investimentos, one of the largest independent broker-dealers in Brazil. | |||
– | The Global Family Office unit was established as a joint venture between Wealth Management and the Investment Bank to provide a cross-divisional platform for the delivery of integrated products and services. |
Performance from continuing operations before tax | ||||||||||||||||
For the year ended | % change from | |||||||||||||||
CHF million | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | ||||||||||||
Wealth Management | 2,308 | 2,280 | 3,631 | 1 | ||||||||||||
Retail & Corporate | 1,772 | 1,629 | 2,382 | 9 | ||||||||||||
Wealth Management & Swiss Bank | 4,080 | 3,910 | 6,013 | 4 | ||||||||||||
Wealth Management Americas | (130 | ) | 32 | (823 | ) | |||||||||||
Global Asset Management | 516 | 438 | 1,333 | 18 | ||||||||||||
Investment Bank | 2,197 | (6,081 | ) | (34,300 | ) | |||||||||||
Treasury activities and other corporate items | 793 | (860 | ) | 19 | ||||||||||||
Operating profit from continuing operations before tax | 7,455 | (2,561 | ) | (27,758 | ) | |||||||||||
Wealth Management & Swiss Bank
Wealth Management –In 2010, pre-tax profit increased 1% to CHF 2,308 million from CHF 2,280 million in 2009, mainly due to a 3% decrease in operating expenses. Total operating income in 2010 was CHF 7,356 million, down 2% from CHF 7,471 million a year earlier. Operating expenses declined 3% to CHF 5,049 million from CHF 5,191 million.
During 2010, net new money outflows declined to CHF 12.1 billion from CHF 87.1 billion in 2009. International wealth management net new money outflows declined significantly to CHF 12.9 billion from CHF 79.9 billion. While Europe saw ongoing net outflows, net inflows were recorded in the Asia Pacific region as well as globally from ultra high net worth clients. Swiss wealth management reported net inflows of CHF 0.8 billion in 2010 compared with CHF 7.2 billion net outflows the year before.
Retail & Corporate –In 2010, pre-tax profit increased 9% to CHF 1,772 million compared with CHF 1,629 million in 2009, mainly due to a decrease in operating expenses. Total operating income in 2010 was CHF 3,870 million, down 1% from CHF 3,918 million a year earlier. Operating expenses declined 8% to CHF 2,098 million from CHF 2,289 million as a result of cost-cutting measures initiated in 2009.
Wealth Management Americas
Wealth Management Americas reported a pre-tax loss of CHF 130 million in 2010 compared with a pre-tax profit of CHF 32 million in 2009, due to higher litigation provisions. Operating income of CHF 5,564 million was essentially flat compared with CHF 5,550 million in 2009, but increased 4% in US dollar terms. In 2010, operating expenses increased 3% to CHF 5,694 million from CHF 5,518 million, and included CHF 162 million in restructuring charges compared with CHF 152 million in restructuring charges in 2009.
Net new money outflows for Wealth Management Americas were CHF 6.1 billion in 2010 compared with CHF 11.6 billion in the prior year. The Wealth Management US business saw net new money outflows of CHF 5.5 billion in 2010 compared with CHF 9.8 billion in 2009. We experienced net new money outflows during the first half of 2010, but reported net new money inflows in the second half of 2010 due to improved financial advisor retention and improved net new money inflows from financial advisors employed with UBS for more than one year.
Global Asset Management
Pre-tax profit for 2010 was CHF 516 million compared with CHF 438 million in 2009. Excluding a net goodwill impairment charge of CHF 191 million related to the sale of UBS Pactual in 2009, the pre-tax profit for 2010 would have decreased by CHF 113 million compared with 2009. Total operating income was CHF 2,058 million in 2010, compared with CHF 2,137 million in 2009. Total operating expenses were CHF 1,542 million in 2010, compared with CHF 1,698 million in 2009.
Net new money inflows were CHF 1.8 billion in 2010 compared with net outflows of CHF 45.8 billion in 2009. Net inflows from third parties were CHF 18.2 billion in 2010 compared with net outflows of CHF 5.1 billion in 2009. Net outflows from clients of our wealth management businesses were CHF 16.4 billion in 2010 compared with net outflows of CHF 40.7 billion in 2009.
Investment Bank
In 2010, we recorded a pre-tax profit of CHF 2,197 million compared with a pre-tax loss of CHF 6,081 million in 2009, primarily as a result of increased revenues in fixed income, currency and commodities, a significant reduction in net credit loss expenses and lower own credit losses. Total operating income in 2010 was CHF 12,010 million compared with CHF 3,135 million in the prior year. Net credit loss expense in 2010 was nil compared with net credit loss expense of CHF 1,698 million in 2009. Total operating expenses were CHF 9,813 million in 2010, compared with CHF 9,216 million in 2009.
Investment banking revenues were CHF 2,414 million in 2010, marginally down from CHF 2,466 million in the previous year. Revenues in equities were CHF 4,469 million, down 9% from CHF 4,937 million in 2009. Revenues in the fixed income, currencies and commodities business were positive CHF 5,675 million in 2010 compared with negative CHF 547 million in 2009, when the business was materially affected by losses on residual risk positions.
Corporate Center
The Corporate Center allocates operating expenses to the business divisions according to service consumption. In 2010, the Corporate Center had a cost base excluding variable compensation of just below CHF 7.5 billion. The Corporate Center has improved Group-wide cost management, and has implemented simple service delivery models with clear responsibilities. At the end of 2010, across all shared services functions, the Corporate Center had approximately 19,400 employees.
UBS business divisions and Corporate Center
Wealth Management & Swiss Bank is
Business division reporting | ||||||||||||||||
As of or for the year ended | % change from | |||||||||||||||
CHF million, except where indicated | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | ||||||||||||
Income | 11,291 | 11,523 | 15,413 | (2 | ) | |||||||||||
Credit loss (expense) / recovery | (64 | ) | (133 | ) | (392 | ) | (52 | ) | ||||||||
Total operating income | 11,226 | 11,390 | 15,021 | (1 | ) | |||||||||||
Personnel expenses | 4,778 | 5,197 | 5,430 | (8 | ) | |||||||||||
General and administrative expenses | 2,101 | 2,017 | 3,295 | 4 | ||||||||||||
of which: impact from US cross-border case | 917 | |||||||||||||||
Services (to) / from other business divisions | (61 | ) | (90 | ) | (73 | ) | 32 | |||||||||
Depreciation of property and equipment | 309 | 289 | 323 | 7 | ||||||||||||
Amortization of intangible assets | 19 | 67 | 33 | (72 | ) | |||||||||||
Total operating expenses | 7,147 | 7,480 | 9,008 | (4 | ) | |||||||||||
Business division performance before tax | 4,080 | 3,910 | 6,013 | 4 | ||||||||||||
of which: impact from US cross-border case | (917 | ) | ||||||||||||||
of which: business division performance before tax excluding US cross-border case | 4,080 | 3,910 | 6,930 | 4 | ||||||||||||
Key performance indicators1 | ||||||||||||||||
Pre-tax profit growth (%) | 4.3 | (35.0 | ) | (29.6 | ) | |||||||||||
Cost / income ratio (%) | 63.3 | 64.9 | 58.4 | |||||||||||||
Net new money (CHF billion)2 | (10.0 | ) | (89.8 | ) | (107.1 | ) | ||||||||||
Additional information | ||||||||||||||||
Average attributed equity (CHF billion)3 | 9.0 | 9.0 | 9.5 | 0 | ||||||||||||
Return on attributed equity (RoaE) (%) | 45.3 | 43.4 | 63.3 | |||||||||||||
BIS risk-weighted assets (CHF billion) | 43.4 | 48.6 | 62.3 | (11 | ) | |||||||||||
Return on BIS risk-weighted assets, gross (%) | 24.3 | 21.7 | 22.3 | |||||||||||||
Goodwill and intangible assets (CHF billion) | 1.5 | 1.6 | 1.7 | (6 | ) | |||||||||||
Invested assets (CHF billion) | 904 | 960 | 955 | (6 | ) | |||||||||||
Client assets (CHF billion) | 1,799 | 1,844 | 1,711 | (2 | ) | |||||||||||
Personnel (full-time equivalents) | 27,752 | 27,548 | 31,016 | 1 | ||||||||||||
74
UBS business divisions and Corporate Center |
Wealth Management
Business description
With a presence in over 40 countries and headquartered in Switzerland, Wealth Management provides clients with financial advice, products and employs more than 27,500 personnel in 44 countries. We delivertools to fit their individual needs.
Business
Wealth Management delivers comprehensive financial services to wealthy private clients around the world – except to those served by Wealth Management Americas – as well asAmericas. Our clients benefit from the entire spectrum of UBS resources, ranging from asset management to retailestate planning and corporate clientsfinance advice, in Switzerland. Clients are provided with advice and financialaddition to the specific wealth management products and services outlined below. An open product platform provides clients with access to fit their individual needs.
Strategy and includesclients
Our goal is to be the former Wealth Management US business unit, the domestic Canadian business and the international business booked in the United States. Formed from the reorganizationbank of the Global Wealth Management & Business Banking business division in 2009, Wealth Management Americas is headquartered in Weehawken, New Jersey, where most corporate and operational functions are located. The client-facing organization consists of the branch network in the US, Puerto Rico and Canada, with 7,084 financial advisors.
For the year ended | % change from | ||||||||||||||||||||||||||||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.08 | |||||||||||||||||||||||||||||||||||||||||||||
Wealth Management & Swiss Bank | 3,910 | 6,013 | 8,543 | (35 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Wealth Management Americas | 32 | (823 | ) | 621 | |||||||||||||||||||||||||||||||||||||||||||||
Global Asset Management | 438 | 1,333 | 1,454 | (67 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Investment Bank | (6,081 | ) | (34,300 | ) | (16,669 | ) | 82 | ||||||||||||||||||||||||||||||||||||||||||
Corporate Center | (860 | ) | 19 | 2,310 | |||||||||||||||||||||||||||||||||||||||||||||
UBS | (2,561 | ) | (27,758 | ) | (3,742 | ) | 91 | ||||||||||||||||||||||||||||||||||||||||||
Invested assets by client domicile
Invested assets by client wealth management
75
UBS business steadily gains importance. divisions and Corporate Center
Wealth Management & Swiss Bank
Organizational structure
Wealth Management is headquartered in Switzerland with a presence in 44 countries and approximately 200 wealth management and representative offices, half of which are outside Switzerland, mostly in Europe, Asia Pacific, Latin America and the Middle East. As of the end of 2010, Wealth Management employed more than 300 branches has set us on15,500 personnel worldwide, including approximately 4,200 client advisors. The Wealth Management business unit is governed by an executive committee, and is primarily organized along regional lines with the right path towards achieving this goal. To best serve our clients, we have developedbusiness areas Asia Pacific, Europe, Global Emerging Markets, Global Established Markets, Switzerland and Global Ultra High Net Worth Clients – supported by a life-cycle based offering where with each life-cycle stage, our clients receive dedicated productsglobal Investment Products and services to meet their specific needs. In order to maximize the quality of serviceServices unit and level of convenience we offer our clients, we will continue to upgrade our multi-channel offerings including local branches, e-banking capabilities and automated teller machines. To fully leverage our presence in the marketplace, we will continue investing in our branch network.central functions.
Corporate & Institutional Clients (CIC)Competitors, our goal is to differentiate ourselves by leveraging our capabilities as an integrated bank. We serve almost one out of every two Swiss companies by offering strategic advisory and execution services for multinationals, corporations, institutional clients and financial institutions, which makes us a leading CIC business. In addition, we are able to provide our clients with local and international banking services across all business divisions. Within CIC, we also serve the small and medium-sized enterprises (SMEs) with local market expertise across all regions by delivering tailored products and services.
Our major global competitors within wealth management include Credit Suisse, Julius Baer, HSBC, BNP/Fortis, Barclays and Citigroup. In domestic markets, we compete primarily with the private banking operations of large local banks such as Coutts in the UK, Deutsche Bank AG in Germany and Unicredit in Italy.
Products and services
As a global integrated firm, UBS has the necessary expertise to identify appropriate investment opportunities for clients and the local presence to provide them. We have brought together experts from our Investment Bank, Global Asset Management and Wealth Management & Swiss retail banking business our major competitors are Credit Suisse, Raiffeisen, the cantonal banks, and Postfinance as well as other regional or local Swiss banks.
74
Invested assets by asset class
Invested assets by currency
76
UBS business divisions and Corporate Center |
investment spectrum from execution only to discretionary and non-discretionary mandates are offered.mandates. Clients who opt for a discretionary mandate delegate the management of their assets including investment decisions, to a team of professional portfolio managers who work according to an agreed investment strategy.managers. Clients who prefer to be actively involved in the management of their assets can choose a non-discretionaryan advisory mandate, wherein which investment professionals provide analysis and monitoring of portfolios, together with tailor-made proposals to support investment decisions. ClientsOur clients can also trade athe full range of financial instruments from single securities, such as equities and bonds, to various investment funds, structured products and alternative investments. WeAdditionally, we offer structured lending, corporate finance and wealth planning advice on topicsclient needs such as funding for education, gift giving, inheritance and succession,succession. For our ultra high net worth clients, we are able to offer institutional-like servicing with special access to our Investment Bank and also offer corporate finance adviceGlobal Asset Management offerings.
The foundations of our Investment Bank, we can provide strategic advice in the field of mergers and acquisitions. Additionally, we advise company owners with regard to succession planning and provide professional support in liquidity and cash management. For clients with a high share of euro-denominated transactions, we are the only bank in Switzerland to offer so called Eurogateway accounts, which concentrate euro payment streams in Switzerland, thereby optimizing costs. In Switzerland, we are a leading provider for financing solutions as we offer access to capital markets (equity and debt capital), syndicated and structured credits, private placements, factoring, leasing and traditional financing solutions. Finally, we offer global custody services for institutional clients who want to consolidate multiple-agent bank custodies into a single, cost-efficient global custodial relationship.
7577
UBS business divisions and Corporate Center
Wealth Management & Swiss Bank
Business performance
Business unit reporting | ||||||||||||||||
As of or for the year ended | % change from | |||||||||||||||
CHF million, except where indicated | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | ||||||||||||
Recurring income | 5,411 | 5,696 | 8,061 | (5 | ) | |||||||||||
Non-recurring income | 1,934 | 1,731 | 2,440 | 12 | ||||||||||||
Income | 7,345 | 7,427 | 10,502 | (1 | ) | |||||||||||
Credit loss (expense) / recovery | 11 | 45 | (388 | ) | (76 | ) | ||||||||||
Total operating income | 7,356 | 7,471 | 10,114 | (2 | ) | |||||||||||
Personnel expenses | 3,153 | 3,360 | 3,503 | (6 | ) | |||||||||||
General and administrative expenses | 1,264 | 1,182 | 2,357 | 7 | ||||||||||||
of which: impact from US cross-border case | 917 | |||||||||||||||
Services (to) / from other business divisions | 449 | 428 | 409 | 5 | ||||||||||||
Depreciation of property and equipment | 163 | 154 | 181 | 6 | ||||||||||||
Amortization of intangible assets | 19 | 67 | 33 | (72 | ) | |||||||||||
Total operating expenses | 5,049 | 5,191 | 6,483 | (3 | ) | |||||||||||
Business unit performance before tax | 2,308 | 2,280 | 3,631 | 1 | ||||||||||||
of which: impact from US cross-border case | (917 | ) | ||||||||||||||
of which: business unit performance before tax excluding US cross-border case | 2,308 | 2,280 | 4,548 | 1 | ||||||||||||
Key performance indicators1 | ||||||||||||||||
Pre-tax profit growth (%) | 1.2 | (37.2 | ) | (40.5 | ) | |||||||||||
Cost / income ratio (%) | 68.7 | 69.9 | 61.7 | |||||||||||||
Net new money (CHF billion)2 | (12.1 | ) | (87.1 | ) | (96.0 | ) | ||||||||||
Gross margin on invested assets (bps)3 | 92 | 91 | 99 | 1 | ||||||||||||
Swiss wealth management | ||||||||||||||||
Income | 1,543 | 1,488 | 2,081 | 4 | ||||||||||||
Net new money (CHF billion)2 | 0.8 | (7.2 | ) | (23.0 | ) | |||||||||||
Invested assets (CHF billion) | 137 | 140 | 137 | (2 | ) | |||||||||||
Gross margin on invested assets (bps) | 112 | 110 | 120 | 2 | ||||||||||||
International wealth management | ||||||||||||||||
Income | 5,802 | 5,939 | 8,420 | (2 | ) | |||||||||||
Net new money (CHF billion)2 | (12.9 | ) | (79.9 | ) | (73.0 | ) | ||||||||||
Invested assets (CHF billion) | 631 | 685 | 697 | (8 | ) | |||||||||||
Gross margin on invested assets (bps)3 | 88 | 88 | 95 | 0 | ||||||||||||
Additional information | ||||||||||||||||
Average attributed equity (CHF billion)4 | 4.4 | 4.4 | 5.1 | 0 | ||||||||||||
Return on attributed equity (RoaE) (%) | 52.5 | 51.8 | 71.5 | |||||||||||||
BIS risk-weighted assets (CHF billion) | 16.9 | 17.9 | 25.1 | (6 | ) | |||||||||||
Return on BIS risk-weighted assets, gross (%) | 41.4 | 37.4 | 35.0 | |||||||||||||
Goodwill and intangible assets (CHF billion) | 1.5 | 1.6 | 1.7 | (6 | ) | |||||||||||
Invested assets (CHF billion) | 768 | 825 | 833 | (7 | ) | |||||||||||
Client assets (CHF billion) | 920 | 1,005 | 1,010 | (8 | ) | |||||||||||
Client advisors (full-time equivalents) | 4,172 | 4,286 | 5,435 | (3 | ) | |||||||||||
Personnel (full-time equivalents) | 15,663 | 15,408 | 17,910 | 2 | ||||||||||||
7678
UBS business divisions and Corporate Center |
2010
Results
In 2010, pre-tax profit increased 1% to CHF 2,308 million from CHF 2,280 million in 2009, mainly due to a 3% decrease in operating expenses. Operating income was down 2% as the result was negatively affected by low market interest rates and the strengthening of the Swiss franc against major currencies.
Operating income
Operating expenses
As of or for the year ended | % change from | ||||||||||||||||||||||||||||||||||||||||||||||||
CHF million, except where indicated | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.08 | |||||||||||||||||||||||||||||||||||||||||||||
Swiss clients income | 6,228 | 7,714 | 8,493 | (19 | ) | ||||||||||||||||||||||||||||||||||||||||||||
International clients income | 5,295 | 7,698 | 9,195 | (31 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Income | 11,523 | 15,413 | 17,689 | (25 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Credit loss (expense) / recovery | (133 | ) | (392 | ) | 30 | (66 | ) | ||||||||||||||||||||||||||||||||||||||||||
Total operating income | 11,390 | 15,021 | 17,718 | (24 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Personnel expenses | 5,197 | 5,430 | 6,356 | (4 | ) | ||||||||||||||||||||||||||||||||||||||||||||
General and administrative expenses | 2,017 | 3,295 | 2,514 | (39 | ) | ||||||||||||||||||||||||||||||||||||||||||||
of which: impact from US cross-border case | 917 | ||||||||||||||||||||||||||||||||||||||||||||||||
Services (to) / from other business divisions | (90 | ) | (73 | ) | (43 | ) | (23 | ) | |||||||||||||||||||||||||||||||||||||||||
Depreciation of property and equipment | 289 | 323 | 334 | (11 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets | 67 | 33 | 15 | 103 | |||||||||||||||||||||||||||||||||||||||||||||
Total operating expenses | 7,480 | 9,008 | 9,176 | (17 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Business division performance before tax | 3,910 | 6,013 | 8,543 | (35 | ) | ||||||||||||||||||||||||||||||||||||||||||||
of which: impact from US cross-border case | (917 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
of which: business division performance before tax excluding US cross-border case | 3,910 | 6,930 | 8,543 | (44 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Key performance indicators1 | |||||||||||||||||||||||||||||||||||||||||||||||||
Pre-tax profit growth (%) | (35.0 | ) | (29.6 | ) | 15.7 | ||||||||||||||||||||||||||||||||||||||||||||
Cost / income ratio (%) | 64.9 | 58.4 | 51.9 | ||||||||||||||||||||||||||||||||||||||||||||||
Net new money (CHF billion)2 | (89.8 | ) | (107.1 | ) | 120.4 | ||||||||||||||||||||||||||||||||||||||||||||
Impaired lending portfolio as a % of total lending portfolio, gross (Swiss clients) | 1.0 | 1.0 | 1.0 | ||||||||||||||||||||||||||||||||||||||||||||||
Gross margin on invested assets (bps) (international clients)3 | 86 | 96 | 103 | (10 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Additional information | |||||||||||||||||||||||||||||||||||||||||||||||||
Average attributed equity (CHF billion) | 9.0 | 9.5 | (5 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Return on attributed equity (RoaE) (%) | 43.4 | 63.3 | |||||||||||||||||||||||||||||||||||||||||||||||
BIS risk-weighted assets (CHF billion)4 | 48.6 | 62.3 | (22 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Return on BIS risk-weighted assets, gross (%) | 21.7 | 22.3 | |||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and intangible assets (CHF billion) | 1.6 | 1.7 | 1.8 | (6 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Recurring income | 8,830 | 11,613 | 13,194 | (24 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Invested assets (CHF billion) | 960 | 955 | 1,392 | 1 | |||||||||||||||||||||||||||||||||||||||||||||
Client assets (CHF billion) | 1,844 | 1,711 | 2,535 | 8 | |||||||||||||||||||||||||||||||||||||||||||||
Personnel (full-time equivalents) | 27,548 | 31,016 | 32,378 | (11 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Swiss clients | |||||||||||||||||||||||||||||||||||||||||||||||||
Net new money (CHF billion)2 | (20.1 | ) | (41.9 | ) | 15.2 | ||||||||||||||||||||||||||||||||||||||||||||
Invested assets (CHF billion) | 337 | 325 | 455 | 4 | |||||||||||||||||||||||||||||||||||||||||||||
International clients | |||||||||||||||||||||||||||||||||||||||||||||||||
Net new money (CHF billion)2 | (69.7 | ) | (65.2 | ) | 105.2 | ||||||||||||||||||||||||||||||||||||||||||||
Invested assets (CHF billion) | 624 | 631 | 937 | (1 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Client advisors (full-time equivalents) | 3,182 | 4,236 | 4,253 | (25 | ) | ||||||||||||||||||||||||||||||||||||||||||||
ment of intangible assets related to invested asset outflows in UBS (Bahamas) Ltd. in 2009.
è | ||
Refer to “Note 1 the business divisions in 2010 |
77Development of invested assets
Net new money
Invested assets
Gross margin on invested assets
79
UBS business divisions and Corporate Center
Wealth Management & Swiss Bank
2009
Results
In 2009, pre-tax profit fell 35%37% to CHF 3,9102,280 million, compared with CHF 6,0133,631 million in 2008. The decline in profit was driven bydue to a 24% drop26% reduction in operating income, resulting from lower asset-based fees, reduced interest income due to margin pressure and decreased transaction income, partly offsetwhich was only partially compensated by a 17% decline20% cut in operating expenses resulting from our cost-savingcost-cutting measures. A provision of CHF 917 million in connection withrelation to the US cross-border case was included in the results of the previous year.
Operating income
Operating expenses
the US cross-border case as well as a result of cost-saving measures. Net charges tocase. Charges for services from other business divisions, at
Development of invested assets
Net new money
Invested assets
Gross margin on invested assets (international clients only)
7880
UBS business divisions and Corporate Center |
Retail & Corporate
Business description
Through our network of 300 branches in Switzerland, we deliver comprehensive financial services to retail, corporate and institutional clients.
Business
Retail & Corporate delivers comprehensive financial services to retail, corporate and institutional clients in Switzerland. With CHF 879 billion in client assets at the end of 2010, we are the leading bank in Switzerland for retail, corporate and institutional clients. We are market leaders in the retail and corporate loan market in Switzerland, with a highly collateralized loan book of CHF 135 billion on 31 December 2010 as shown in the “Loan portfolio, gross” chart.
è | Refer to the “Strategy and structure” section of this report for more information on UBS Switzerland |
Strategy and clients
Our goal is to be the bank of choice for retail clients in Switzerland by delivering value-added services. We serve one out of three households in Switzerland with over 300 branches, 1,250 automated teller machines and self-service terminals, e-banking services and customer service centers. We are continuously refining our suite of life-cycle based offerings, which offer our clients dedicated products and services to fulfill their evolving requirements. We will continue to invest in our physical and electronic channels in order to improve the client experience – we use technology to complement, rather than replace, the traditional physi-
cal branch network. We are refurbishing our branches by introducing new concepts to welcome and serve customers as well as to reflect our new brand identity.
Organizational structure
Retail & Corporate is a core element of UBS Switzerland’s integrated bank delivery model which allows us to extend the expertise of the entire bank to our Swiss retail, corporate and institutional clients.
Loan portfolio, gross
81
UBS business divisions and Corporate Center
Wealth Management & Swiss Bank
Competitors
In the Swiss retail banking business, our competitors are Credit Suisse, Raiffeisen, the cantonal banks, PostFinance, as well as other regional and local Swiss banks.
Products and services
Our retail clients have access to services such as a comprehensive selection of cash accounts, payments, savings and retirement products, investment fund solutions, residential mortgages, life insurance and advisory services. These services can be
tailored to clients’ individual life-cycle solutions in combination with financial advice. We offer our Swiss corporate and institutional clients a comprehensive set of products and services. In Switzerland, we are a leading provider of financing solutions, as we offer access to capital markets (equity and debt capital), syndicated and structured credit, private placements, trade finance, factoring, leasing and traditional financing solutions. By providing access to global sector specialists within the Investment Bank, we can provide strategic advice in the field of mergers and acquisitions. Additionally, we advise company owners on succession planning, and provide professional support in liquidity and cash management. Finally, we offer global custody services for institutional clients who want to consolidate multiple-agent bank custodies into a single, cost-efficient global custodial relationship.
82
UBS business divisions and Corporate Center |
Business performance
Business unit reporting | ||||||||||||||||
As of or for the year ended | % change from | |||||||||||||||
CHF million, except where indicated | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | ||||||||||||
Net interest income | 2,422 | 2,681 | 3,207 | (10 | ) | |||||||||||
Non-interest income | 1,524 | 1,415 | 1,704 | 8 | ||||||||||||
Income | 3,946 | 4,096 | 4,911 | (4 | ) | |||||||||||
Credit loss (expense) / recovery | (76 | ) | (178 | ) | (4 | ) | (57 | ) | ||||||||
Total operating income | 3,870 | 3,918 | 4,907 | (1 | ) | |||||||||||
Personnel expenses | 1,625 | 1,836 | 1,927 | (11 | ) | |||||||||||
General and administrative expenses | 836 | 835 | 938 | 0 | ||||||||||||
Services (to) / from other business divisions | (509 | ) | (518 | ) | (482 | ) | 2 | |||||||||
Depreciation of property and equipment | 146 | 136 | 142 | 7 | ||||||||||||
Amortization of intangible assets | 0 | 0 | 0 | |||||||||||||
Total operating expenses | 2,098 | 2,289 | 2,524 | (8 | ) | |||||||||||
Business unit performance before tax | 1,772 | 1,629 | 2,382 | 9 | ||||||||||||
Key performance indicators1 | ||||||||||||||||
Pre-tax profit growth (%) | 8.8 | (31.6 | ) | (2.5 | ) | |||||||||||
Cost / income ratio (%) | 53.2 | 55.9 | 51.4 | |||||||||||||
Impaired lending portfolio as a % of total lending portfolio, gross (%) | 0.9 | 1.1 | 1.2 | |||||||||||||
Additional information | ||||||||||||||||
Average attributed equity (CHF billion)2 | 4.6 | 4.6 | 4.4 | 0 | ||||||||||||
Return on attributed equity (RoaE) (%) | 38.5 | 35.4 | 53.8 | |||||||||||||
BIS risk-weighted assets (CHF billion) | 26.5 | 30.8 | 37.1 | (14 | ) | |||||||||||
Return on BIS risk-weighted assets, gross (%) | 13.7 | 12.3 | 12.5 | |||||||||||||
Goodwill and intangible assets (CHF billion) | 0.0 | 0.0 | 0.0 | |||||||||||||
Net new money (CHF billion)3 | 2.0 | (2.7 | ) | (11.1 | ) | |||||||||||
Invested assets (CHF billion) | 136 | 135 | 122 | 1 | ||||||||||||
Client assets (CHF billion) | 879 | 840 | 701 | 5 | ||||||||||||
Personnel (full-time equivalents) | 12,089 | 12,140 | 13,105 | 0 | ||||||||||||
83
UBS business divisions and Corporate Center
Wealth Management & Swiss Bank
2010
Results
In 2008,2010, pre-tax profit fell 30%increased 9% to CHF 6,0131,772 million compared with CHF 8,5431,629 million in 2007. This was partially2009, mainly due to an 8% decrease in operating expenses. Operating income was slightly lower compared with the abovementioned provision related to the US cross-border case. Excluding the impact of this provision, the pre-tax result would have fallen 19%, mainly reflecting theprevious year as reduced interest income was only partly offset by lower asset base and client transaction activity as well as higher credit loss expenses in line with the turbulence of the financial market.
Operating income
Operating expenses
è | Refer to “Note 1 Summary of significant accounting policies” in the “Financial information” section of this report for more information on allocation of additional Corporate Center costs to the business divisions in 2010 |
Development of invested assets
Invested assets
2009
Results
In 2009, pre-tax profit fell 32% to CHF 1,629 million compared with CHF 2,382 million in 2008. The decline in profit was due to a 17% decline in revenues and higher credit loss expenses. This was only partly compensated by a 9% reduction in operating expenses from cost-cutting measures.
Operating income
Operating expenses
Development of invested assets
Invested assets
7984
UBS business divisions and Corporate Center |
UBS business divisions and Corporate Center
Wealth Management Americas
Wealth Management Americas
Wealth Management Americas provides advice-based relationships through its financial advisors, who deliver a fully-integrated set of wealth management solutions designed to address the needs of core affluent, high net worth and ultra high net worth individuals and families. It includes the former Wealth Management US business unit, as well as the domestic Canadian business and the international business booked in the United States.
Business
Wealth Management Americas is among the leading wealth managers in the regionAmericas based on invested assets, and includes the former Wealth Management US business, unit, the domestic Canadian business and the international business booked in the United States. On 31 December 2009,2010, the business division had CHF 690689 billion in invested assets.
Strategy and clients
Our vision is to be the best wealth management business in the Americas. In order to achieve this goal, we must be both client-focused and advisor-centric. Due to our competitive positioning, we believe we are large enough to be relevant and small enough
to be nimble, enabling us to combine the advantages of both large and boutique players. By partnering with financial advisors serving high net worth and ultra high net worth clients, our goal is to become a trusted, differentiated and superior provider of financial solutions.
Geographical presence in key markets
8085
UBS business divisions and Corporate Center
Organizational structure
Wealth Management Americas is headquartered in Weehawken, New Jersey, where most corporate and operational functions are located. The client-facing organization consists of the branch networknetworks in the US, Puerto Rico and Canada, with 7,0846,796 financial advisors as of 31 December 2009.
– | March 2009: agreement to sell 56 branches to Stifel, Nicolaus | |
& Company, Incorporated. The sale was completed in four separate closings in the second half of 2009. | ||
– | September 2009: completed the sale of UBS’s Brazilian financial services business, UBS Pactual, to BTG Investments, LP. | |
– | October 2010: transfer of investment management responsibility for the US hedge funds business from Wealth Management Americas to Global Asset Management’s alternative and quantitative investments business. This formed part of a new joint venture between the two business divisions, which aims to deliver attractive hedge fund and fund of hedge funds solutions to Wealth Management Americas’ clients. |
Competitors
Wealth Management Americas competes with national full-service brokerage firms, domestic and global private banks, regional broker-dealers, independent broker-dealers, registered investment advisors, trust companies and other financial services firms offering wealth management services to US and Canadian private clients, as well as foreign non-resident clients seeking wealth management services within the US. In 2008 and 2009,Our main competitors include the financial crisis triggered consolidation within the industry that directly impacted our major competitors including Citi Global Wealth Management, Merrill Lynch Global Wealth Management, Morgan Stanley Global Wealth Management Group and Wachovia Securi-
81
Products and services
Wealth Management Americas offers clients a full array of wealth management servicessolutions that focus on the individual investmentfinancial needs of each client. Comprehensive planning supports clients through the various stages of their lives, including education funding, charitable giving, tax management strategies, estate strategies, insurance, retirement, and trusts and foundations with corresponding product offerings for each stage. Our advisors work closely with internal consultants in areas such as wealth planning, portfolio strategy, retirement and annuities, alternative investments, managed accounts, structured products, banking and lending, equities, and fixed income. Clients also benefit from our dedicated Wealth Management Research team, whowhich provides research guidance to help support the clients’ investment decisions.
Invested assets by asset class
Invested assets by client wealth
86
UBS business divisions and Corporate Center |
source Management Account (RMA) product, credit cards,, FDIC-insured deposits, securities-backed lending, mortgages and mortgages. credit cards.
8287
As of or for the year ended | % change from | ||||||||||||||||
CHF million, except where indicated | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.08 | |||||||||||||
Income | 5,546 | 6,278 | 7,153 | (12 | ) | ||||||||||||
of which: ARS settlement impact | (172 | ) | |||||||||||||||
Credit loss (expense) /recovery | 3 | (29 | ) | (2 | ) | ||||||||||||
Total operating income | 5,550 | 6,249 | 7,151 | (11 | ) | ||||||||||||
Personnel expenses | 4,231 | 4,271 | 5,060 | (1 | ) | ||||||||||||
General and administrative expenses | 1,017 | 2,558 | 1,209 | (60 | ) | ||||||||||||
of which: ARS settlement impact | 1,464 | ||||||||||||||||
Services (to)/from other business divisions | 4 | 16 | 28 | (75 | ) | ||||||||||||
Depreciation of property and equipment | 170 | 162 | 163 | 5 | |||||||||||||
Impairment of goodwill | 34 | 0 | 0 | ||||||||||||||
Amortization of intangible assets | 62 | 65 | 70 | (5 | ) | ||||||||||||
Total operating expenses | 5,518 | 7,072 | 6,530 | (22 | ) | ||||||||||||
Business division performance before tax | 32 | (823 | ) | 621 | |||||||||||||
of which: ARS settlement impact | (1,636 | ) | |||||||||||||||
of which: business division performance before tax excluding ARS settlement impact | 32 | 813 | 621 | (96 | ) | ||||||||||||
Key performance indicators1 | |||||||||||||||||
Pre-tax profit growth (%)2 | N/A | N/A | 12.1 | ||||||||||||||
Cost /income ratio (%) | 99.5 | 112.6 | 91.3 | ||||||||||||||
Net new money (CHF billion)3 | (11.6 | ) | (15.9 | ) | 35.9 | ||||||||||||
Gross margin on invested assets (bps) | 81 | 82 | 77 | (1 | ) | ||||||||||||
Additional information | |||||||||||||||||
Average attributed equity (CHF billion) | 8.8 | 7.8 | 13 | ||||||||||||||
Return on attributed equity (RoaE) (%) | 0.4 | (10.6 | ) | ||||||||||||||
BIS risk-weighted assets (CHF billion)4 | 22.8 | 26.9 | (15 | ) | |||||||||||||
Return on BIS risk-weighted assets, gross (%) | 23.5 | 28.9 | |||||||||||||||
Goodwill and intangible assets (CHF billion) | 4.2 | 4.5 | 4.8 | (7 | ) | ||||||||||||
Recurring income | 3,256 | 4,076 | 4,455 | (20 | ) | ||||||||||||
Invested assets (CHF billion) | 690 | 644 | 906 | 7 | |||||||||||||
Client assets (CHF billion) | 737 | 682 | 1,018 | 8 | |||||||||||||
Personnel (full-time equivalents) | 16,925 | 20,623 | 21,180 | (18 | ) | ||||||||||||
Financial advisors (full-time equivalents) | 7,084 | 8,607 | 8,693 | (18 | ) | ||||||||||||
Additional information (only Wealth Management US) | |||||||||||||||||
Net new money (CHF billion)3 | (7.6 | ) | (10.6 | ) | 26.6 | ||||||||||||
Net new money including interest and dividend income (CHF billion)5 | 11.5 | 11.7 | 51.5 | ||||||||||||||
Business division reporting excluding PaineWebber acquisition costs6 | |||||||||||||||||
Business division performance before tax | 155 | (689 | ) | 841 | |||||||||||||
Cost/ income ratio (%) | 97.3 | 110.4 | 88.5 | ||||||||||||||
Average attributed equity (CHF billion) | 5.2 | 4.2 | 24 | ||||||||||||||
83
Business performance
Business division reporting | ||||||||||||||||
As of or for the year ended | % change from | |||||||||||||||
CHF million, except where indicated | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | ||||||||||||
Recurring income | 3,472 | 3,256 | 4,076 | 7 | ||||||||||||
Non-recurring income | 2,093 | 2,290 | 2,201 | (9 | ) | |||||||||||
Income | 5,565 | 5,546 | 6,278 | 0 | ||||||||||||
of which: ARS settlement impact | (172 | ) | ||||||||||||||
Credit loss (expense) / recovery | (1 | ) | 3 | (29 | ) | |||||||||||
Total operating income | 5,564 | 5,550 | 6,249 | 0 | ||||||||||||
Personnel expenses | 4,225 | 4,231 | 4,271 | 0 | ||||||||||||
Financial advisor compensation1 | 2,068 | 1,828 | 2,130 | 13 | ||||||||||||
Compensation commitments and advances related to recruited FAs2 | 599 | 599 | 305 | 0 | ||||||||||||
Salaries and other personnel costs | 1,558 | 1,804 | 1,836 | (14 | ) | |||||||||||
General and administrative expenses | 1,223 | 1,017 | 2,558 | 20 | ||||||||||||
of which: ARS settlement impact | 1,464 | |||||||||||||||
Services (to) / from other business divisions | (6 | ) | 4 | 16 | ||||||||||||
Depreciation of property and equipment | 198 | 170 | 162 | 16 | ||||||||||||
Impairment of goodwill | 0 | 34 | 0 | (100 | ) | |||||||||||
Amortization of intangible assets | 55 | 62 | 65 | (11 | ) | |||||||||||
Total operating expenses | 5,694 | 5,518 | 7,072 | 3 | ||||||||||||
Business division performance before tax | (130 | ) | 32 | (823 | ) | |||||||||||
of which: ARS settlement impact | (1,636 | ) | ||||||||||||||
of which: business division performance before tax excluding ARS settlement impact | (130 | ) | 32 | 813 | ||||||||||||
Key performance indicators3 | ||||||||||||||||
Pre-tax profit growth (%)4 | N/A | N/A | N/A | |||||||||||||
Cost / income ratio (%) | 102.3 | 99.5 | 112.6 | |||||||||||||
Net new money (CHF billion)5 | (6.1 | ) | (11.6 | ) | (15.9 | ) | ||||||||||
Gross margin on invested assets (bps) | 80 | 81 | 82 | (1 | ) | |||||||||||
Additional information | ||||||||||||||||
Average attributed equity (CHF billion)6 | 8.0 | 8.8 | 7.8 | (9 | ) | |||||||||||
Return on attributed equity (RoaE) (%) | (1.6 | ) | 0.4 | (10.6 | ) | |||||||||||
BIS risk-weighted assets (CHF billion) | 23.8 | 22.8 | 26.9 | 4 | ||||||||||||
Return on BIS risk-weighted assets, gross (%) | 23.8 | 23.5 | 28.9 | |||||||||||||
Goodwill and intangible assets (CHF billion) | 3.7 | 4.2 | 4.5 | (12 | ) | |||||||||||
Invested assets (CHF billion) | 689 | 690 | 644 | 0 | ||||||||||||
Client assets (CHF billion) | 738 | 737 | 682 | 0 | ||||||||||||
Personnel (full-time equivalents) | 16,330 | 16,925 | 20,623 | (4 | ) | |||||||||||
Financial advisors (full-time equivalents) | 6,796 | 7,084 | 8,607 | (4 | ) | |||||||||||
Additional information (only Wealth Management US) | ||||||||||||||||
Net new money (CHF billion)5 | (5.5 | ) | (9.8 | ) | (11.4 | ) | ||||||||||
Net new money including interest and dividend income (CHF billion)7 | 13.1 | 10.0 | 11.9 | |||||||||||||
Business division reporting excluding PaineWebber acquisition costs8 | ||||||||||||||||
Business division performance before tax | (21 | ) | 155 | (689 | ) | |||||||||||
Cost / income ratio (%) | 100.4 | 97.3 | 110.4 | |||||||||||||
Average attributed equity (CHF billion) | 4.6 | 5.2 | 4.2 | (12 | ) | |||||||||||
88
UBS business divisions and Corporate Center |
2010
Results
Wealth Management Americas reported a pre-tax loss of CHF 130 million in 2010 compared with a pre-tax profit of CHF 32 million in 2009. In 2010, Wealth Management Americas incurred restructuring charges of CHF 162 million, while 2009 included restructuring charges of CHF 152 million and net goodwill impairment charges of CHF 19 million related to the sale of UBS Pactual. Excluding these items, pre-tax performance would have declined to a profit of CHF 32 million in 2010 from CHF 203 million in 2009, primarily resulting from a significant increase in litigation provisions in 2010 to CHF 320 million from CHF 54 million in 2009.
Operating income
Operating expenses
sonnel costs, resulting from restructuring initiatives in 2010 and 2009. Expenses for compensation commitments and advances related to recruited financial advisors were flat from 2009, but increased 4% in US dollar terms. Compensation advance balances were CHF 3,112 million as of 31 December 2010, down 4% from 31 December 2009, but increased 7% in US dollar terms.
è | Refer to “Note 1 Summary of significant accounting policies” in the “Financial information” section of this report for more information on allocation of additional Corporate Center costs to the business divisions in 2010 |
Development of invested assets
Net new money
89
UBS business divisions and Corporate Center
Wealth Management Americas
Invested assets
Gross margin on invested assets
90
UBS business divisions and Corporate Center |
2009
Results
Wealth Management Americas reported a pre-tax profit of CHF 32 million in 2009 compared with a pre-tax loss of CHF 823 million in 2008. The 2009 results were negatively impacted byincluded restructuring charges of CHF 152 million and a net goodwill impairment charge of CHF 19 million related to the sale of UBS Pactual. Our performance in 2008 was negatively impacted byincluded CHF 1,636 million in charges and trading losses related to auction rate securities (ARS). Excluding these items, pre-tax performance would have been a profit of CHF 203 million in 2009 compared with a profit of CHF 813 million in 2008.
Operating income
Operating expenses
cember 2009 from 31 December 2008. Non-personnel expenses declined 54% to CHF 1,287 million from CHF 2,801 million in 2008, but would have decreased 11% excluding CHF 82 million in restructuring costs that were mainly related to real estate writedowns, the abovementioned goodwill impairment charges and ARS-related charges in 2008. The decline was also due to cost-cutting measures in general, including reduced general and administrative expenses.
Development of invested assets
Net new money
Invested assets
Gross margin on invested assets
8491
85
Global Asset Management
Global Asset Management is a large-scale asset manager with well diversified businesses well-diversified across regions, capabilities and distribution channels. It offersWe offer investment capabilities and investment styles across all major traditional and alternative asset classes. These include equities, fixed income, currency, hedge fund, real estate infrastructure and private equityinfrastructure investment capabilities thatwhich can also be combined ininto multi-asset strategies.
Business
Global Asset Management offers a diverse range of investment capabilities and services from a boutique-like structure, encompassing all major asset classes, including equities, fixed income, asset allocation, currency, risk management, hedge funds, real estate and infrastructure private equityas well as asset allocation, risk management and fund administration.administration services. Invested assets totaled CHF 583559 billion on 31 December 2009,2010, making Global Asset Management one of the larger institutionalglobal asset managers andmanagers. We are among the largest hedge fund of funds and real estate investment managers in the world. It is alsoworld, one of the largestbiggest mutual fund managers in Europe and the largest in Switzerland. The “Key focus areas”“Business structure” chart shows the investment, distribution and support structure of the business division.
Strategy
Global Asset Management is focused on seizingdelivering consistent long-term investment performance and capitalizing on the expected growth opportunities that growth within the asset management industry. The industry outlook remains strong with three main drivers: the financial crisis has reduced the assets of both the retired and the working population, creating a pressing need for increased savings rates; emerging markets will bring. continue to drive the growth of the mutual funds industry and retirement schemes in these markets; and as governments focus on reducing deficits, they will need to reduce support for benefits and pensions and will face increased pressure for privatizing infrastructure assets.
Business structure
92
UBS business divisions and Corporate Center |
initiatives in the Americas and in Europe. Through increased collaboration with theUBS’s wealth management businesses, andwe expect to leveragebenefit from their return to growth. We continue to capitalize on our existing strongestablished positions in emerging markets, notably in China, South Korea and the Middle East.
Key focus areas
86
Our business division has main offices in London, Chicago, Frankfurt, Hartford, Hong Kong, New York, Paris, Singapore, Sydney, Tokyo Toronto and Zurich, and employs around 3,500 personnel in 2524 countries.
Significant recent acquisitions and business transfers
– | In February 2008, UBS acquired 100% of the Caisse Centrale de Réescompte (CCR) Group in France from Commerzbank. The asset management business of CCR currently operates as CCR Asset Management. | |
– | In August 2008, UBS sold its 24.9% stake in Adams Street Partners to its remaining shareholders. | |
– | In September 2009, UBS completed the sale of its Brazilian financial services business, UBS Pactual, including its asset management business, UBS Pactual Asset Management. | |
– | In December 2009, the real estate investment management business of Wealth Management & Swiss Bank was transferred to Global Asset Management. | |
– | In April 2010, UBS announced that it had agreed to acquire Link Investimentos, one of the largest independent broker-dealers in Brazil. | |
– | In October 2010, UBS increased its holding from 51.0% to 94.9% in UBS Real Estate Kapitalanlagegesellschaft mbH (KAG), a Global Asset Management | |
– | In October 2010, investment management responsibility for the US hedge fund business was transferred from Wealth Management Americas to |
Invested assets by region1
Competitors
Our competitors range frominclude global firms with wide-ranging capabilities, (suchsuch as Fidelity Investments, AllianceBernstein Investments, BlackRock, JP Morgan Asset Management, Deutsche Asset Management and Goldman Sachs Asset Management), toManagement. Many of our other competitors are regional or local firms specializing in particular asset classes. Many of our competitors are specialist niche players who focus mainly on one asset class, particularly in the real estate, hedge fund or infrastructure and regional private equity investment areas.
Products and services
The “Investment capabilities and services” chart illustrates our offering, which can be delivered in the form of segregated, pooled and advisory mandates, along with a range of more than 500 registered investment funds, exchange-traded funds and other investment vehicles across all major asset classes.
93
UBS business divisions and Corporate Center
Global Asset Management
Investment capabilities and services | ||||||||||||
Alternative and | Global | Global investment | ||||||||||
Equities | Fixed income | quantitative investments | real estate | solutions | Infrastructure | Fund services | ||||||
Core/value | Global | Single-manager hedge funds | Global | Global | Direct investment | Alternative funds | ||||||
Global | Country and regional | Country and regional | Country and regional | Investment funds | ||||||||
Country and regional | Sector specific | Multi-manager hedge funds | Income, core, value-added and opportunistic strategies | Asset allocation | ||||||||
Emerging markets | Emerging markets | Currency management | ||||||||||
Specialist | High yield | Quantitative | Multi-manager funds | Return and risk targeted | ||||||||
Long / short | Structured credit | Infrastructure fund of funds | Listed securities | Structured portfolios | ||||||||
HALO | Liquidity / short duration | Farmland | Risk management and advisory services | |||||||||
Growth | Indexed | Private equity fund of funds | ||||||||||
Global | ||||||||||||
Country and regional | Active commodities, multi-manager | |||||||||||
Structured | ||||||||||||
Structured alpha | ||||||||||||
Structured beta and indexing | ||||||||||||
– | Equitiesoffers a full spectrum of investment styles with varying risk and return objectives. It has three investment pillars with distinct strategies, including | |
– | Fixed incomeoffers a diverse range of global, regional and local market-based investment strategies that cover a wide range of benchmarks. Its capabilities include “core” government and corporate bond strategies, complemented by extended strategies such as high-yield and emerging market debt. |
Invested assets by region1
Institutional/wholesale intermediary revenues
87
– | Alternative and quantitative investmentshas two primary business lines – multi-manager (or fund of funds) and single manager. The former constructs portfolios of hedge funds and other alternative investments operated by third-party managers, allowing clients to have diversified exposure to a range of hedge funds, private equity and infrastructure strategies. O’Connor is a key provider of | |
– | Global real estateactively manages real estate investments in Asia, Europe and the US, | |
securities strategies. | ||
– | Global investment solutionsoffers asset allocation, currency, manager research and risk management services. It manages a wide array of domestic, regional and global balanced portfolios, currency mandates, structured portfolios, multi-manager and absolute return strategies. Through its strategic investment advisory services, it supports clients in a wide range of investment-related functions, including investment policy setting, integrated asset liability solutions, multi-manager approaches, investment outsourcing and | |
fiduciary management. | ||
– | Infrastructureoriginates and | |
– | Fund services,the global fund administration business, provides professional services, including legal |
94
UBS business divisions and Corporate Center |
Clients
Global Asset Management has a client base located throughout the world. As of 31 December 2010, approximately 60% of invested assets originated from institutional clients (for example, corporate and public pension plans, governments and their central banks), with the remainder from wholesale clients (financial intermediaries, including UBS’s wealth management businesses, and third parties).
Investment performance 2009
Investment markets were volatile in most financial markets, with some volatility along the way. Many2010 yet two-thirds of our key actively-managed traditional strategies delivered strong results, further improving their long-term records. By contrast, some of our actively managed equity strategies faced the greatest head-winds as many equity markets, notably the US, became highly sentiment-driven. This created a difficult environment for our active managers focusing on fundamental analysis to seek to generate outperformance.
pany fundamentals than to broad economic factors. As a result, core / value large cap strategies such as US, pan-European, emerging markets, Asia (ex-Japan) and Australia underperformed their benchmarks and peers, although the margin of underperformance was much smaller than the margin of outperformance in 2009. Both UK value and Canadian large cap equity strategies also underperformed in 2010. Some large cap core / value strategies did extend their favorable performance into 2010, including global, global ex-US, a high alpha emerging markets strategy and global and European concentrated alpha strategies. Swiss large cap equities performed positively as well. Small cap strategies in the core / value pillar tended to perform extremely well, especially European, US and Swiss small cap strategies. Still, on a three-year basis, well over half of key core / value strategies were well positioned to benefit from the recovery, and the initial performance improvementahead of 2008 grew into a substantial and sustained improvement in 2009 across many strategies.
88
Invested assets by business line
Invested assets by channel
95
89
9096
UBS business divisions and Corporate Center |
Business performance
Business division reporting | ||||||||||||||||
As of or for the year ended | % change from | |||||||||||||||
CHF million, except where indicated | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | ||||||||||||
Net management fees1 | 1,918 | 1,904 | 2,756 | 1 | ||||||||||||
Performance fees | 141 | 233 | 149 | (39 | ) | |||||||||||
Total operating income2 | 2,058 | 2,137 | 2,904 | (4 | ) | |||||||||||
Personnel expenses | 1,096 | 996 | 946 | 10 | ||||||||||||
General and administrative expenses | 400 | 387 | 462 | 3 | ||||||||||||
Services (to) / from other business divisions | (5 | ) | (74 | ) | 88 | 93 | ||||||||||
Depreciation of property and equipment | 43 | 36 | 44 | 19 | ||||||||||||
Impairment of goodwill | 0 | 340 | 0 | (100 | ) | |||||||||||
Amortization of intangible assets | 8 | 13 | 33 | (38 | ) | |||||||||||
Total operating expenses | 1,542 | 1,698 | 1,572 | (9 | ) | |||||||||||
Business division performance before tax | 516 | 438 | 1,333 | 18 | ||||||||||||
Key performance indicators3 | ||||||||||||||||
Pre-tax profit growth (%) | 17.8 | (67.1 | ) | (8.3 | ) | |||||||||||
Cost / income ratio (%) | 74.9 | 79.5 | 54.1 | |||||||||||||
Information by business line | ||||||||||||||||
Income | ||||||||||||||||
Traditional investments | 1,259 | �� | 1,319 | 1,859 | (5 | ) | ||||||||||
Alternative and quantitative investments | 325 | 405 | 430 | (20 | ) | |||||||||||
Global real estate | 258 | 185 | 277 | 39 | ||||||||||||
Infrastructure | 14 | 13 | 15 | 8 | ||||||||||||
Fund services | 202 | 214 | 322 | (6 | ) | |||||||||||
Total operating income | 2,058 | 2,137 | 2,904 | (4 | ) | |||||||||||
Gross margin on invested assets (bps) | ||||||||||||||||
Traditional investments | 25 | 26 | 29 | (4 | ) | |||||||||||
Alternative and quantitative investments | 88 | 102 | 69 | (14 | ) | |||||||||||
Global real estate | 68 | 47 | 63 | 45 | ||||||||||||
Infrastructure | 130 | 114 | 218 | 14 | ||||||||||||
Total gross margin | 36 | 37 | 39 | (3 | ) | |||||||||||
Net new money (CHF billion)4 | ||||||||||||||||
Traditional investments | 4.2 | (40.6 | ) | (88.9 | ) | |||||||||||
Alternative and quantitative investments | (3.2 | ) | (6.7 | ) | (14.8 | ) | ||||||||||
Global real estate | 0.6 | 1.4 | (0.3 | ) | ||||||||||||
Infrastructure | 0.1 | 0.1 | 1.0 | |||||||||||||
Total net new money | 1.8 | (45.8 | ) | (103.0 | ) | |||||||||||
Invested assets (CHF billion) | ||||||||||||||||
Traditional investments | 487 | 502 | 493 | (3 | ) | |||||||||||
Alternative and quantitative investments | 34 | 41 | 41 | (17 | ) | |||||||||||
Global real estate | 36 | 39 | 40 | (8 | ) | |||||||||||
Infrastructure | 1 | 1 | 1 | 0 | ||||||||||||
Total invested assets | 559 | 583 | 575 | (4 | ) | |||||||||||
As of or for the year ended | % change from | ||||||||||||||||||||||||||||||||||||||||||||||||
CHF million, except where indicated | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.08 | |||||||||||||||||||||||||||||||||||||||||||||
Institutional fees | 1,273 | 1,659 | 1 | 2,370 | (23 | ) | |||||||||||||||||||||||||||||||||||||||||||
Wholesale intermediary fees | 863 | 1,246 | 1,724 | (31 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Total operating income | 2,137 | 2,904 | 4,094 | (26 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Personnel expenses | 996 | 946 | 1,883 | 5 | |||||||||||||||||||||||||||||||||||||||||||||
General and administrative expenses | 387 | 462 | 593 | (16 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Services (to) / from other business divisions | (74 | ) | 88 | 73 | |||||||||||||||||||||||||||||||||||||||||||||
Depreciation of property and equipment | 36 | 44 | 72 | (18 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Impairment of goodwill | 340 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets | 13 | 33 | 19 | (61 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Total operating expenses | 1,698 | 1,572 | 2,640 | 8 | |||||||||||||||||||||||||||||||||||||||||||||
Business division performance before tax | 438 | 1,333 | 1,454 | (67 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Key performance indicators2 | |||||||||||||||||||||||||||||||||||||||||||||||||
Pre-tax profit growth (%) | (67.1 | ) | (8.3 | ) | 10.2 | ||||||||||||||||||||||||||||||||||||||||||||
Cost/income ratio (%) | 79.5 | 54.1 | 64.5 | ||||||||||||||||||||||||||||||||||||||||||||||
Net new money (CHF billion)3 | (45.8 | ) | (103.0 | ) | (15.7 | ) | |||||||||||||||||||||||||||||||||||||||||||
Gross margin on invested assets (bps) (institutional) | 37 | 38 | 44 | (3 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Gross margin on invested assets (bps) (wholesale intermediary) | 36 | 41 | 47 | (12 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Additional information | |||||||||||||||||||||||||||||||||||||||||||||||||
Average attributed equity (CHF billion) | 2.8 | 3.0 | (7 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Return on attributed equity (RoaE) (%) | 15.9 | 44.4 | |||||||||||||||||||||||||||||||||||||||||||||||
BIS risk-weighted assets (CHF billion)4 | 4.1 | 8.5 | (52 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Return on BIS risk-weighted assets, gross (%) | 37.7 | 41.2 | |||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and intangible assets (CHF billion) | 1.7 | 2.2 | 2.3 | (23 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Invested assets (CHF billion) | 583 | 575 | 891 | 1 | |||||||||||||||||||||||||||||||||||||||||||||
Personnel (full-time equivalents) | 3,471 | 3,914 | 3,785 | (11 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Institutional | |||||||||||||||||||||||||||||||||||||||||||||||||
Net new money (CHF billion)3 | (12.7 | ) | (55.6 | ) | (16.3 | ) | |||||||||||||||||||||||||||||||||||||||||||
of which: money market funds | 2.1 | 6.0 | 6.7 | ||||||||||||||||||||||||||||||||||||||||||||||
Invested assets (CHF billion) | 346 | 335 | 522 | 3 | |||||||||||||||||||||||||||||||||||||||||||||
of which: money market funds | 45 | 42 | 32 | 7 | |||||||||||||||||||||||||||||||||||||||||||||
Wholesale intermediary | |||||||||||||||||||||||||||||||||||||||||||||||||
Net new money (CHF billion)3 | (33.1 | ) | (47.4 | ) | 0.6 | ||||||||||||||||||||||||||||||||||||||||||||
of which: money market funds | (14.3 | ) | 15.2 | 4.8 | |||||||||||||||||||||||||||||||||||||||||||||
Invested assets (CHF billion) | 237 | 240 | 369 | (1 | ) | ||||||||||||||||||||||||||||||||||||||||||||
of which: money market funds | 67 | 80 | 70 | (16 | ) | ||||||||||||||||||||||||||||||||||||||||||||
9197
UBS business divisions and Corporate Center
Global Asset Management
Business division reporting (continued) | ||||||||||||||||
As of or for the year ended | % change from | |||||||||||||||
CHF million, except where indicated | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | ||||||||||||
Assets under administration by fund services | ||||||||||||||||
Assets under administration (CHF billion)1 | 390 | 406 | 425 | (4 | ) | |||||||||||
Net new assets under administration (CHF billion)2 | (0.8 | ) | (59.7 | ) | (61.1 | ) | ||||||||||
Gross margin on assets under administration (bps) | 5 | 5 | 6 | 0 | ||||||||||||
Additional information | ||||||||||||||||
Average attributed equity (CHF billion)3 | 2.5 | 2.8 | 3.0 | (11 | ) | |||||||||||
Return on attributed equity (RoaE) (%) | 20.6 | 15.9 | 44.4 | |||||||||||||
BIS risk-weighted assets (CHF billion) | 3.5 | 4.1 | 8.5 | (15 | ) | |||||||||||
Return on BIS risk-weighted assets, gross (%) | 56.8 | 37.7 | 41.2 | |||||||||||||
Goodwill and intangible assets (CHF billion) | 1.5 | 1.7 | 2.2 | (12 | ) | |||||||||||
Personnel (full-time equivalents) | 3,481 | 3,471 | 3,914 | 0 | ||||||||||||
2010
Results
Pre-tax profit for 2010 was CHF 516 million compared with CHF 438 million in 2009. Excluding a net goodwill impairment charge of CHF 191 million related to the sale of UBS Pactual in 2009, the pre-tax profit for 2010 would have decreased by CHF 113 million compared with 2009.
Operating income
Operating expenses
è | Refer to “Note 1 Summary of significant accounting policies” in the “Financial information” section of this report for more information on allocation of additional Corporate Center costs to the business divisions in 2010 |
Development of invested assets
Net new money
98
UBS business divisions and Corporate Center |
Invested assets
Gross margin on invested assets
Results by business line
Traditional investments
Alternative and quantitative investments
Global real estate
Infrastructure
Fund services
99
UBS business divisions and Corporate Center
Global Asset Management
2009
Results
Pre-tax profit for full year 2009 was CHF 438 million compared with CHF 1,333 million in 2008. Excluding a net goodwill impairment charge in 2009 of CHF 191 million related to the sale of UBS Pactual, restructuring costs in 2009 of CHF 48 million and a gain of CHF 168 million from the sale of our minority stakenon-controlling interest in Adams Street Partners in 2008, pre-tax profit would have decreased 42% to CHF 677 million.
Operating income
Wholesale intermediary revenues were CHF 863 million in 2009 compared with CHF 1,246 million in 2008, due to lower management fees associated with a lower average invested assets base, lower performance fees from some funds and reduced income following the sale of UBS Pactual in 2009.
Development of invested assets
Net new money
Institutional net new money outflows were CHF 12.7 billion in 2009 compared with CHF 55.6 billion in 2008. Excluding money market flows, outflows were CHF 14.8 billion in 2009 compared with CHF 61.6 billion in 2008. Net outflows were reported in alternative and quantitative investments, multi-asset, equities, fixed income and real estate.
92
Results by business line
Traditional investments
93
100
UBS business divisions and Corporate Center |
billion in 2008 compared with net outflows of CHF 4.2110.1 billion in 2007, and were mainly reported in multi-asset, equities and fixed income.
Alternative and quantitative investments
Global real estate
Infrastructure
Fund services
94101
UBS business divisions and Corporate Center
Investment Bank
Investment Bank
The Investment Bank provides a broad range of products and services to corporate and institutional clients, governments,sovereign and governmental bodies, financial intermediaries, alternative asset managers and private investors. The productsProducts and services offered include advice, research, market accesssecurities sales, trading and execution, capital raising, advisory services and investment research across all major capital markets.
Business
The Investment Bank has three distinct butand aligned business areas:
– | ||
equities | ||
– | ||
– | the |
Strategy
Our strategy is centered on an aligned and integrated client-centric business model built around flow and advice, and is supported by a result of the losses suffered in 2007disciplined risk control framework. Our business involves risk-taking to facilitate and 2008, we have taken significant steps to reposition and rebuild the business. As part of this process, the balance sheet, risk-weighted assets, operating expenses and headcount have all been reduced. In addition we have established new leadership roles in some key areas to implement the new client-centric strategy, which focuses on flowintermediate client transactions. However, our trading and advice. Client service and operational excellence are key to its success, and a flexible and scalable infrastructure is being developed in order to deliver this. Trading strategies are now focused on high volume client flow businesses, and are subject to tight balance sheet and risk limits.
Organizational structure
The Investment Bank is headquartered in London and employs approximately 15,700 personnel in over 30 countries. It is comprised of the three business areas which are functionally run on a global basis: equities, FICC and IBD. IBD’sdescribed above. Additionally, the global capital markets business is a joint venture between securities and IBD, which consists of two separate joint ventures:areas: equity capital markets with equities, and debt capital markets with FICC.markets. Global leveraged finance is anothera joint venture between IBD and FICC whichand includes the global syndicated finance business.
Significant recent acquisitions, disposals and business transfers
– | the sale of our Brazilian financial services business, UBS Pactual in 2009; and | |
– | the agreement to acquire Link Investimentos, a Brazilian financial services firm, announced in 2010. |
Competitors
Our main competitors continue to be the major global investment banks, including Bank of America/America / Merrill Lynch, Barclays Capital, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan Chase and Morgan Stanley.
Products and services
Securities
95102
UBS business divisions and Corporate Center |
Equities
– | Cash equities provides clients with investment advisory, trade execution offerings and related analytical tools. | |
– | ||
– | Prime | |
Fixed income, currencies and commodities
– | Macro consists of the foreign exchange, money market and interest rate sales and trading | |
– | Credit sales and trading encompasses the origination, are focused on providing tailored solutions for our clients. In partnership with IBD, we also provide capital markets debt financing and liability risk management solutions to corporates and institutions. | |
– | The |
Investment banking department
– | Theadvisory groupassists in acquisitions and sale processes, and also advises on strategic reviews and corporate restructuring solutions. |
– | Global capital markets is a joint venture with the securities business. It offers financing and advisory services that cover all forms of capital raising aligned with FICC, whose products include commercial paper, medium-term notes, senior debt, high-yield debt, subordinated debt and hybrid capital. All our financing products are provided alongside risk management solutions, which include derivatives, structured finance, ratings advisory services and liability management. |
96
– | Global leveraged finance provides event-driven (acquisition, leveraged |
97103
UBS business divisions and Corporate Center
Investment Bank
Business performance
Business division reporting | Business division reporting | |||||||||||||||||||||||||||||||
As of or for the year ended | % change from | As of or for the year ended | % change from | |||||||||||||||||||||||||||||
CHF million, except where indicated | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.08 | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | ||||||||||||||||||||||||
Investment banking | 2,466 | 2,880 | 6,637 | (14 | ) | 2,414 | 2,466 | 2,880 | (2 | ) | ||||||||||||||||||||||
Advisory | 858 | 1,609 | 2,696 | (47 | ) | |||||||||||||||||||||||||||
Advisory revenues | 846 | 858 | 1,609 | (1 | ) | |||||||||||||||||||||||||||
Capital market revenues | 2,514 | 1,844 | 4,262 | 36 | 1,994 | 2,514 | 1,844 | (21 | ) | |||||||||||||||||||||||
Equities | 1,609 | 977 | 2,784 | 65 | 1,020 | 1,609 | 977 | (37 | ) | |||||||||||||||||||||||
Fixed income, currencies and commodities | 904 | 866 | 1,478 | 4 | 974 | 904 | 866 | 8 | ||||||||||||||||||||||||
Other fee income and risk management | (906 | ) | (573 | ) | (321 | ) | (58 | ) | (426 | ) | (906 | ) | (573 | ) | 53 | |||||||||||||||||
Sales and trading | 4,390 | (26,712 | ) | (7,833 | ) | |||||||||||||||||||||||||||
Securities | 10,144 | 4,390 | (26,712 | ) | 131 | |||||||||||||||||||||||||||
Equities | 4,937 | 5,184 | 9,002 | (5 | ) | 4,469 | 4,937 | 5,184 | (9 | ) | ||||||||||||||||||||||
Fixed income, currencies and commodities | (547 | ) | (31,895 | ) | (16,835 | ) | 98 | 5,675 | (547 | ) | (31,895 | ) | ||||||||||||||||||||
Total Investment Bank income | 6,856 | (23,832 | ) | (1,197 | ) | |||||||||||||||||||||||||||
Total income | 12,558 | 6,856 | (23,832 | ) | 83 | |||||||||||||||||||||||||||
Credit loss (expense)/recovery1 | (1,698 | ) | (2,575 | ) | (266 | ) | (34 | ) | ||||||||||||||||||||||||
Credit loss (expense) / recovery1 | 0 | (1,698 | ) | (2,575 | ) | (100 | ) | |||||||||||||||||||||||||
Total Investment Bank operating income excluding own credit | 5,158 | (26,407 | ) | (1,463 | ) | |||||||||||||||||||||||||||
Total operating income excluding own credit | 12,558 | 5,158 | (26,407 | ) | 143 | |||||||||||||||||||||||||||
Own credit2 | (2,023 | ) | 2,032 | 659 | (548 | ) | (2,023 | ) | 2,032 | 73 | ||||||||||||||||||||||
Total Investment Bank operating income as reported | 3,135 | (24,375 | ) | (804 | ) | |||||||||||||||||||||||||||
Total operating income as reported | 12,010 | 3,135 | (24,375 | ) | 283 | |||||||||||||||||||||||||||
Personnel expenses | 5,568 | 5,182 | 11,633 | 7 | 6,743 | 5,568 | 5,182 | 21 | ||||||||||||||||||||||||
General and administrative expenses | 2,628 | 3,830 | 3,800 | (31 | ) | 2,693 | 2,628 | 3,830 | 2 | |||||||||||||||||||||||
Services (to) / from other business divisions | (147 | ) | 41 | (171 | ) | 64 | (147 | ) | 41 | |||||||||||||||||||||||
Depreciation of property and equipment | 360 | 447 | 431 | (19 | ) | 278 | 360 | 447 | (23 | ) | ||||||||||||||||||||||
Impairment of goodwill | 749 | 341 | 0 | 120 | 0 | 749 | 341 | (100 | ) | |||||||||||||||||||||||
Amortization of intangible assets | 59 | 83 | 172 | (29 | ) | 34 | 59 | 83 | (42 | ) | ||||||||||||||||||||||
Total operating expenses | 9,216 | 9,925 | 15,865 | (7 | ) | 9,813 | 9,216 | 9,925 | 6 | |||||||||||||||||||||||
Business division performance before tax | (6,081 | ) | (34,300 | ) | (16,669 | ) | 82 | 2,197 | (6,081 | ) | (34,300 | ) | ||||||||||||||||||||
Key performance indicators3 | ||||||||||||||||||||||||||||||||
Pre-tax profit growth (%)4 | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||
Cost / income ratio (%)5 | 190.7 | N/A | N/A | 81.7 | 190.7 | N/A | ||||||||||||||||||||||||||
Return on attributed equity (RoaE) (%) | (24.1 | ) | (128.2 | ) | 8.7 | (24.1 | ) | (128.2 | ) | |||||||||||||||||||||||
Return on assets, gross (%) | 0.4 | (1.2 | ) | (0.2 | ) | 1.2 | 0.4 | (1.2 | ) | |||||||||||||||||||||||
Average VaR (1-day, 95% confidence, 5 years of historical data)6 | 55 | 79 | (30 | ) | ||||||||||||||||||||||||||||
Average VaR (1-day, 95% confidence, 5 years of historical data) | 56 | 55 | 79 | 2 | ||||||||||||||||||||||||||||
Additional information | ||||||||||||||||||||||||||||||||
Total assets (CHF billion) | 992.0 | 1,680.3 | 1,922.8 | (41 | ) | |||||||||||||||||||||||||||
Total assets (CHF billion)6 | 966.9 | 992.0 | 1 680.3 | (3 | ) | |||||||||||||||||||||||||||
Average attributed equity (CHF billion) | 25.3 | 26.8 | (6 | ) | ||||||||||||||||||||||||||||
Average attributed equity (CHF billion)7 | 25.3 | 25.3 | 26.8 | 0 | ||||||||||||||||||||||||||||
BIS risk-weighted assets, gross (CHF billion)7 | 122.4 | 195.8 | (37 | ) | ||||||||||||||||||||||||||||
BIS risk-weighted assets, gross (CHF billion) | 119.3 | 122.4 | 195.8 | (3 | ) | |||||||||||||||||||||||||||
Return on BIS risk-weighted assets, gross (%) | 3.1 | (10.0 | ) | 9.7 | 3.1 | (10.0 | ) | |||||||||||||||||||||||||
Goodwill and intangible assets (CHF billion) | 3.5 | 4.6 | 5.6 | (24 | ) | 3.2 | 3.5 | 4.6 | (9 | ) | ||||||||||||||||||||||
Compensation ratio (%)5 | 115.2 | N/A | N/A | 56.1 | 115.2 | N/A | ||||||||||||||||||||||||||
Impaired lending portfolio as a % of total lending portfolio, gross | 3.8 | 2.6 | 0.4 | |||||||||||||||||||||||||||||
Impaired lending portfolio as a % of total lending portfolio, gross (%) | 5.5 | 8.0 | 6.0 | |||||||||||||||||||||||||||||
Personnel (full-time equivalents) | 15,666 | 19,132 | 23,739 | (18 | ) | 16,860 | 15,666 | 19,132 | 8 |
98104
UBS business divisions and Corporate Center |
2010
Results
In 2010, we recorded a pre-tax profit of CHF 2,197 million compared with a pre-tax loss of CHF 6,081 million in 2009, primarily as a result of increased revenues in FICC, a significant reduction in net credit loss expenses and lower own credit losses on financial liabilities designated at fair value.
Operating income
Credit loss expense / recovery
è | Refer to the “Risk management and control” section of this report for more information on our risk management approach, method of credit risk measurement and the development of credit risk exposures |
Own credit
è | Refer to “Note 27 Fair value of financial instruments” in the “Financial information” section of this report for more information on own credit |
Operating income by business segment
Investment banking
974 million, up 8% from CHF 904 million, mainly due to a strong leverage capital market fees pool and market share gain.
Securities
Equities
Fixed income, currencies and commodities
105
UBS business divisions and Corporate Center
Investment Bank
sion experienced across foreign exchange and credit markets, and uncertainties over European sovereign debt impacted liquidity and overall client volumes.
Operating expenses
brand. These costs were partially offset by a reduction in professional fees.
è | Refer to “Note 1 Summary of significant accounting policies” in the “Financial information” section of this report for more information on allocation of additional Corporate Center costs to the business divisions in 2010 |
106
UBS business divisions and Corporate Center |
2009
Results
In 2009, we recorded a pre-tax loss of CHF 6,081 million compared with a pre-tax loss of CHF 34,300 million in 2008, primarily due to a reduction in losses on residual risk positions. The 2009 result was also affected by a loss of CHF 2,023 million on own credit from financial liabilities designated at fair value as our credit spreads narrowed
Operating income
Credit loss expense / recovery
è | Refer to the “Risk management and control” section of this report for more information on our risk management approach, method of credit risk measurement and the development of credit risk exposures |
Own credit
è | Refer to “Note 27 Fair value of financial instruments” in the “Financial information” section of this report for more information on own credit |
Operating income by CHF 709 million compared with 2008, mainly reflecting lower non-personnel costs.
Fixed income, currencies and commoditiesRevenues were negative CHF 547 million in 2009, up from negative CHF 31,895 million a year earlier. The FICC result continued to be affected by losses on residual risk positions
Securities
Equities
Fixed income, currencies and commodities
107
UBS business divisions and Corporate Center
Investment Bank
trades in the second and third quarters. Other areas which incurred losses in first quarter 2009 had a less material impact on the remainder of the year.
Operating expenses
99
100108
UBS business divisions and Corporate Center |
101
102
Corporate Center
The Corporate Center seeks to ensure that we operateUBS operates as a coherent and effective whole, by providing and managing support and control functions for the business divisions and the Group, in suchthe areas asof risk, finance (including funding, capital and balance sheet management and management of foreign currencies)non-trading risk), legal and compliance, information technology, human resources, real estate, procurement, communication and branding, human resources, information technology, real estate, procurementcorporate development, security and service centres.
Aims and objectives
The Corporate Center assists our business divisions and regions through provision of Group-level control in the areas of finance, risk and legal and compliance, as well as through a global corporate shared services organization comprising support and logistics functions. We strive to maintain an appropriate balance between risk and return, in our businesses, while establishing and controllingcontrol our corporate governance processes, including compliance with relevant regulations. Each functional head in the Corporate Center has authority acrossover all businesses forin their area of responsibility, including the authority to issue Group-wide policies for that area.
109
UBS business divisions and Corporate Center
|
The Corporate Center consists of the control functions Group Finance, Group Risk, and Group General Counsel, andin addition to the shared services functions human resources, information technology, premises, supply and demand management, communication and branding, corporate development and Group offshoring.
Group Chief Financial Officer
103
UBS. TheIn addition, the Group COO supports the Group CEO in strategy development and key strategic issues, and assumes responsibility for managingissues. The Group COO also acts as the operations in ways consistent with the strategic goals and performance targetsCEO of the UBS Group.
Group Chief Risk Officer
Group General Counsel
104
The Corporate Center allocates operating expenses to the business divisions according to service consumption.
In 2010, the Corporate Center had a cost base excluding variable compensation of just below CHF 7.5 billion which includes personnel costs of CHF 3.2 billion. The retained total operating expenses relate to Group governance functions and
Group items which cannot be allocated to specific business divisions.
As mentioned in the text describing the Corporate Center, the integration of the control and support functions has created a superior foundation for Group-wide efficiencies. In 2010, the Corporate Center was able to reduce its cost base excluding variable compensation before
allocation by CHF 605 million from the previous year, primarily as a result of lower personnel costs in IT and lower real estate-related costs.
The business divisions fully benefited from the reduced cost base through lower allocations.
110
Results
Treasury activities and other corporate items reporting
From 2010 onwards, almost all costs incurred by the Corporate Center related to shared services and control functions are allocated to the reportable segments, which directly and indirectly receive the value of the services, either based on a full cost recovery or on a periodically agreed flat fee.
è | Refer to “Note 1a 33) Segment reporting” and “Note 1b Allocation of additional Corporate Center costs to reportable segments” in the “Financial information” section of this report for more information |
As of or for the year ended | % change from | ||||||||||||||||||||||||||||||||||||||||||||||||
CHF million, except where indicated | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.08 | |||||||||||||||||||||||||||||||||||||||||||||
Income | 394 | 998 | 3,562 | (61 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Credit loss (expense) / recovery | (5 | ) | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||
Total operating income | 389 | 998 | 3,562 | (61 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Personnel expenses | 551 | 433 | 583 | 27 | |||||||||||||||||||||||||||||||||||||||||||||
General and administrative expenses | 199 | 353 | 312 | (44 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Services (to) / from other business divisions | 306 | (73 | ) | 114 | |||||||||||||||||||||||||||||||||||||||||||||
Depreciation of property and equipment | 193 | 265 | 243 | (27 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||
Total operating expenses1 | 1,250 | 979 | 1,252 | 28 | |||||||||||||||||||||||||||||||||||||||||||||
Performance from continuing operations before tax | (860 | ) | 19 | 2,310 | |||||||||||||||||||||||||||||||||||||||||||||
Performance from discontinued operations before tax | (7 | ) | 198 | 145 | |||||||||||||||||||||||||||||||||||||||||||||
Performance before tax | (867 | ) | 217 | 2,455 | |||||||||||||||||||||||||||||||||||||||||||||
Additional information | |||||||||||||||||||||||||||||||||||||||||||||||||
BIS risk-weighted assets (CHF billion)2 | 8.5 | 8.8 | (3 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Personnel (full-time equivalents)3 | 1,624 | 3,097 | 2,479 | (48 | ) | ||||||||||||||||||||||||||||||||||||||||||||
in presentation of the Corporate Center information. It predominantly includes the results of treasury activities, e.g. from the management of structural foreign exchange risks and interest rate risks, residual operating expenses forsuch as those associated with the Company Secretary,functioning of the Group Executive Board and the Board of Directors, and Group Internal Audit. 2 BIS risk-weighted assets (RWA) are according to Basel II. 3 Personnel numbers exclude full-time equivalents from private equity (part of Corporate Center): 0 for 2009, 1 for 2008, 3,843 for 2007.
105
106
è | Refer to the discussion of “Net income from treasury activities and other” in the “UBS results” section of this report for more information on significant items and treasury-related income |
As of or for the year ended | % change from | |||||||||||||||
CHF million, except where indicated | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | ||||||||||||
Income | 1,135 | 394 | 998 | 188 | ||||||||||||
Credit loss (expense) / recovery | 0 | (5 | ) | 0 | (100 | ) | ||||||||||
Total operating income | 1,135 | 389 | 998 | 192 | ||||||||||||
Personnel expenses | 78 | 551 | 433 | (86 | ) | |||||||||||
General and administrative expenses | 168 | 199 | 353 | (16 | ) | |||||||||||
Services (to) / from other business divisions | 8 | 306 | (73 | ) | (97 | ) | ||||||||||
Depreciation of property and equipment | 89 | 193 | 265 | (54 | ) | |||||||||||
Amortization of intangible assets | 0 | 0 | 0 | |||||||||||||
Total operating expenses | 343 | 1,250 | 979 | (73 | ) | |||||||||||
Performance from continuing operations before tax | 793 | (860 | ) | 19 | ||||||||||||
Performance from discontinued operations before tax | 2 | (7 | ) | 198 | ||||||||||||
Performance before tax | 795 | (867 | ) | 217 | ||||||||||||
Additional information | ||||||||||||||||
BIS risk-weighted assets (CHF billion) | 8.9 | 8.5 | 8.8 | 5 | ||||||||||||
Personnel (full-time equivalents) | 194 | 1,624 | 3,097 | (88 | ) | |||||||||||
107111
Risk and treasury
management
Risk disclosures provided in line with the requirements of theInternational Financial Reporting Standard 7 (IFRS 7) Financial Instruments: Disclosures,and disclosures on capital required by theInternational Accounting Standard 1 (IAS 1) Financial Statements: Presentation form part of the financial statements audited by UBS’sour independent registered public accounting firm Ernst & Young Ltd., Basel. This information (the audited texts, tables and graphs) is marked by a bar on the left-hand side throughout this report and is incorporated by cross-reference into the financial statements of this report.
Risk management and control
– | Disciplined risk management and control are essential to our success. In 2010, we continued to make significant investments in our infrastructure, processes, methodologies and people to ensure that our risk frameworks are sufficiently robust to support our risk appetite and business aspirations. | |||
– | Our risk appetite is established within our risk capacity as determined by a complementary set of firm-wide risk metrics, and is approved under Board of Directors (BoD) authority. It is administered and enforced by a detailed limit framework of portfolio and position limits at both UBS Group (Group) and business division levels. |
In 2010, increased risk taking was authorized for incremental trading activity, particularly to support client flow activity, and also for loan underwriting. Outside of these two areas, the core risk profile of the firm remained largely unchanged.
Reduction of our residual risk positions remained a priority in 2010. We further reduced our exposures to monoline insurers, student loan auction rate securities and certain restructured legacy leveraged finance positions, thereby decreasing our impaired loan portfolio.
Treasury management
– | We continued to maintain focus on asset quality and building up capital by increasing our tier 1 capital by CHF 3.5 billion and to further strengthen and safeguard our liquidity position by raising over CHF 15 billion equivalent of public benchmark bonds. | |||
– | We have re-defined treasury interactions between business divisions and desks, improved tools and reporting, and introduced a new Group-wide funds transfer pricing process. |
Our total assets stood at CHF 1,317 billion on 31 December 2010, down CHF 23 billion (2%) from CHF 1,341 billion on 31 December 2009. The reduction occurred mainly in replacement values as market and currency movements drove down positive replacement values by CHF 21 billion (to CHF 401 billion). Our funded asset volume, which excludes positive replacement values, remained relatively unchanged, declining by CHF 3 billion in 2010.
In 2010, we continued to maintain a sound liquidity position and a diversified portfolio of funding sources, despite the potential uncertain impact of developments in financial regulatory reforms and the significant market volatility caused by uncertainties regarding the global macroeconomic environment, including certain European fiscal and sovereign debt concerns.
Over the course of 2010, as investors became gradually more risk tolerant, credit spreads and incremental funding costs for most global financial Institutions, including UBS, generally narrowed throughout the yield curve. We raised over CHF 15 billion equivalent of public benchmark bonds with an average maturity of 5.5 years. This exceeded the combined amount of public benchmark bonds and other long-term straight debt which matured, or was redeemed, during 2010. Our customer cash deposits in our wealth and asset management business divisions at year-end 2010 were stable compared with the prior year-end when adjusted for currency effects.
In response to the prolonged low yields, treasury supported and implemented measures to improve Wealth Management & Swiss Bank’s margin income through income-generating fixed receiver swap and bond portfolios.
Group Treasury continued to earn interest income on equity through its portfolio of interest rate products and managed the currency effects on equity and key ratios. Profits and losses in foreign currencies were hedged to protect shareholder value.
At year-end 2010, our BIS tier 1 ratio was 17.8%, and the BIS total capital ratio was 20.4%. While overall BIS risk-weighted assets declined by CHF 7.7 billion to CHF 198.9 billion, our BIS tier 1 capital increased by CHF 3.5 billion to CHF 35.3 billion. Our financial stability allowed us to call and redeem tier 1 and tier 2 instruments in 2010. Nevertheless, the BoD has decided to further bolster capital and has therefore not proposed any dividend for the financial year 2010.
We continued to use the equity attribution framework to guide our businesses in the allocation of resources to opportunities that are expected to provide the best risk-adjusted profitability contributions.
As of 31 December 2010, we had a total of 3.8 billion shares issued, an increase of 273 million shares compared with 31 December 2009. The conversion of CHF 13 billion in mandatory convertible notes on 5 March 2010 led to an issuance of 273 million shares from conditional capital.
Risk and treasury management
Risk management and control
Risk reduction remained a priority in 2009. As a result of our risk reduction initiatives, we ended the year with risk exposures commensurate with our risk capacity, although legacy risks remain significantmanagement and are targeted for continued reduction. Effectivecontrol
Disciplined risk management and control are essential to our successsuccess. In 2010 we continued to make significant investments in our infrastructure, processes, methodologies and we have made further progresspeople to ensure that our risk frameworks are sufficiently robust to support our risk appetite and business aspirations. Our risk appetite is established within our risk capacity as determined by a complementary set of firm-wide risk metrics, and is approved under Board of Directors authority. It is administered and enforced by a detailed limit framework of portfolio and position limits at both Group and business division levels. Each element of our risk control framework plays a key role in implementing the decision-making processes within the firm. All material risks are reported to the respective authority holders at least monthly. In 2010, increased risk-taking was authorized for incremental trading activity, particularly to support client flow activity, and also for loan underwriting. Outside of these two areas, the core risk renewal program we initiated in 2008. In addition, the implementationprofile of the settlement agreements relating to the US cross-border investigation remains a focus of management attention. Regulatory and tax authorities in a number of countries are focusing on cross-border banking activities, and we have launched a number of initiatives to improve the effectiveness of the policy and control frameworkfirm remained largely unchanged. Reduction of our cross-border wealth management business globally.
Summary of key developments in 20092010
The most important developments that took place in 20092010 with regard to risk management and control include:
– | ||
– | Our impaired loan portfolio decreased by CHF 2.7 billion, primarily due to sales of certain restructured legacy leveraged finance positions, without the incurrence of any meaningful incremental costs to the firm. | |
– | During the second half of the year, our market risk | |
– | After repurchasing USD 7.6 billion at par value of outstanding client holdings of student loan auction rate securities (ARS) in 2010, our remaining purchase commitment at the end of the year was | |
– | We commuted several trades with | |
– | Our | |
In addition, we do not have material sovereign risk exposures in the Middle East and North African region. | ||
– | We |
macroeconomic developments. | ||
– | ||
stress events tested.” | ||
– | In | |
– | Over the last two years, we took comprehensive steps to |
112116
Risk and treasury management |
– | ||||||
– | ||||||
è | Refer to the “Credit risk”, “Market risk”, “Operational risk”, “Risk | |||||
è | Refer to the | |||||
Risk management and control principles |
We have five key principles | ||||||
– | Protection of financial strengthby controlling our overall risk exposures and assessing potential risk concentrations at | |||||
– | Reputation protection,which depends a priority. | |||||
– | ||||||
– | Independent control functions oversee the risk-taking activities of the mitigation of operational risks. | |||||
– | Disclosure of riskto provide comprehensive |
Our risk management and control principles are implemented | ||||||
In addition, the framework is dynamic and continuously adapted as our businesses and the market environment evolve. It includes clearly defined processes to deal with new business initiatives as well as large and complex transactions. |
Key roles and responsibilities | ||||||
– | The BoD is responsible for determining the firm’s risk principles, risk appetite and major portfolio limits, including | |||||
– | The Group Executive Board (GEB) | |||||
– | The Group | |||||
– | The | |||||
– | The Group Chief Risk Officer |
113
Risk and treasury managementRisk management and control
– | The Group Chief Financial Officer | |||||
– | The Group General Counsel |
Risk categories | ||||||
The risks faced by our businesses can be broken down into three different categories: primary risks, consequential risks and business risks. | ||||||
Primary and consequential risks result from our business activities and are subject to independent risk control. Primary risks consist of credit risk, country risk, market risk (including issuer risk) and investment risk. Consequential risks consist of operational risk, which includes legal, compliance and tax risks, and liquidity and funding |
117
Risk and treasury management
Risk management and control
– | Credit | |||||
– | Country | |||||
– | Market risk and investment | |||||
– | Operational | |||||
– | Liquidity and funding |
| ||||||
è | Refer to the “Credit risk”, “Market risk”, “Operational risk” and “Liquidity and funding management” sections of this report for a description of the control frameworks for these risk categories |
Risk measurement |
A variety of methodologies and |
Statistical loss and stress loss | ||||||
We assess potential future losses using two complementary types of risk measures: statistical loss and stress loss. | ||||||
Statistical loss | ||||||
Statistical loss measures include VaR, |
è | Refer to the “Credit risk”, “Market risk” and “Operational risk” sections of this report for a description of | |||||
114
Stress loss
118
Risk and treasury management |
defining stress scenarios or the way they are applied to a firm’s positions. Consequently, comparisons of stress results between firms can be misleading and, therefore, we, like most of our peers, we do not publish quantitative stress test results.
è | Refer to the “Credit risk” and “Market risk” sections of this report for a description of our key stress loss measures |
Group risk appetite framework
Our risk appetite framework was enhanced in 2009. We have establishedestablishes risk appetite objectives in respect of earnings and capital levels that we seek to maintain, even after experiencing severe losses over a defined time horizon. In order to monitor
– | EaR is measured as the potential shortfall in earnings at a 95% confidence level and is evaluated over both | |
– | CaR extends EaR to consider the impact on BIS tier 1 capital of a more severe earnings shortfall and is measured at confidence levels | |
– | CST |
Our risk appetite is establishedapproved by the BoD. Risk appetite is based on our risk capacity, which is in turn based on our capital and budgetedforecasted earnings resources. Our overall risk appetite is set as an upper limit covering the aggregate risk exposure for each risk appetite objective, (takingtaking into account inherent limitations in the precision of risk exposure measures that focus on extreme market and economic events).events. Comparison of the firm’s risk exposure with our risk capacity under prevailing operating conditions as well as prospective business plans serves as an input to the risk limit framework. This comparison is also a key tool to support management decisions on potential adjustments to the risk profile of our firm.
è | Refer to the “Credit risk”, “Market risk” and “Risk concentration” sections of this report for more information on our risk exposures |
Risk disclosures
The measures of risk exposure that we use may differ depending on the purposes for which exposures are calculated: financial accounting under IFRS,International Financial Reporting Standards (IFRS), determination of our required regulatory capital or our internal management of the firm.management. The exposures detailed in the “Credit risk” and “Market risk” sections below are typically based on our internal management view of risk exposure.
è | Refer to the “Basel II Pillar 3” section of this report for further information on the exposures we use in the determination of our required regulatory capital |
115119
Risk and treasury management
Credit risk
Credit risk is the risk of loss resulting from the failure of a client or counterparty to meet its contractual obligations to UBS. This can be caused by factors directly related to the counterparty, such as business or management problems, |
Sources of credit risk |
Credit risk arises from traditional banking products such as loans, loan commitments | ||||
Debt securities not held in connection with a trading activity are reported as debt investments at the end of this section. Many of the business activities of Wealth Management & Swiss Bank and the Investment Bank expose us to credit risk, while credit risk exposures from Wealth Management Americas and Global Asset Management are less material. |
Credit risk control | ||||||
Limits and controls |
Limits are established for individual counterparties and their counterparty groups covering banking and traded products, as |
well as settlement amounts. These limits |
In the Investment Bank, a distinction is made between exposures intended to be held to maturity | ||||
Credit risk concentrations can arise if clients are engaged in similar activities, are located in the same geographical region or have comparable economic characteristics, | ||||
Risk mitigation | ||||
We actively manage the credit risk in our portfolios by taking collateral against exposures and utilizing credit hedging. In Wealth Management & Swiss Bank, the majority of loans are extended on a secured basis. For real estate financing, a mortgage over the property is taken to secure the claim. Commercial loans may also be secured by mortgages on business premises or other real estate. We apply measures to evaluate collateral and determine maximum loan-to-value ratios including an assessment of income cover. | ||||
Lombard loans are made against the pledge of eligible marketable securities or cash. The Investment Bank also takes collateral in the form of marketable securities and cash in its OTC derivatives and securities financing businesses. Discounts | ||||
Our OTC derivatives trading is generally conducted under bilateral International Swaps and Derivatives Association (ISDA), or ISDA-equivalent, master trading agreements, which allow for the close-out and netting of all transactions in the event of default. We also have two-way collateral agreements with major market participants under which either party can be required to provide collateral in the form of |
116
cash or marketable securities when the exposure exceeds a predefined level. Our OTC derivatives activity with lower-rated counterparties is typically conducted under one-way collateral agreements where only the counterparty is required to provide us with collateral. For certain counterparties, like hedge funds, we may also use two-way collateral agreements. We have clearly defined processes for entering into netting and collateral |
120
Risk and treasury management |
agreements, including the requirement to have a legal opinion | ||||||||
è | Refer to the “Basel II Pillar 3” section of this report for more information on credit derivatives | |||||||
Credit risk measurement | ||||||||
We have developed tools and models to measure credit risk. Exposures to individual counterparties are measured based on three generally accepted parameters: probability of default, exposure at default and loss given default. These parameters are the basis for the majority of our internal measures of credit risk, and are key inputs | ||||||||
Probability of default | ||||||||
The probability of default (PD) is an estimate of the likelihood of a counterparty defaulting on its contractual obligations. This probability is assessed using rating tools tailored to the various categories of counterparties. These categories are also calibrated to our |
model parameters as necessary. In addition to using ratings for credit risk measurement, we use them as an important input to determine credit risk approval authorities. | ||||||||
In the Investment Bank, rating tools are applied |
qualitative | ||||||||||||||
Within our retail and corporate banking business in Switzerland, we rate our business and corporate clients in the small-to-medium enterprise (SME) segment | ||||||||||||||
Our | ||||||||||||||
The ratings of the major credit rating agencies, and their | ||||||||||||||
UBS internal rating scale and mapping of external ratings | ||||||||||||||
UBS | ||||||||||||||
internal | Moody's Investor | Standard & | ||||||||||||
Description | Services equivalent | equivalent | ||||||||||||
0 and 1 | Investment grade | Aaa | AAA | |||||||||||
2 | Aa1 to Aa3 | AA+ to AA– | ||||||||||||
3 | A1 to A3 | A+ to A– | ||||||||||||
4 | Baa1 to Baa2 | BBB+ to BBB | ||||||||||||
5 | Baa3 | BBB– | ||||||||||||
6 | Sub-investment grade | Ba1 | BB+ | |||||||||||
7 | Ba2 | BB | ||||||||||||
8 | Ba2 | BB | ||||||||||||
9 | Ba3 | BB– | ||||||||||||
10 | B1 | B+ | ||||||||||||
11 | B2 | B | ||||||||||||
12 | B3 | B– | ||||||||||||
13 | Caa to C | CCC to C | ||||||||||||
14 | Defaulted | D | ||||||||||||
117121
Risk and treasury management
Risk management and control
Exposure at default
Loss given default
Expected loss
è | Refer to the discussion on “Impairment and default – distressed claims” below for more information |
Statistical and stress loss
118
è | Refer to the discussion on stress loss in this section for more information |
Composition of credit risk – UBS Group
The exposures detailed in the tables in this section are based on our management view of credit risk.
122
Risk and treasury management |
è | Refer to “Note 1b Changes in accounting policies, comparability and other adjustments” for more information on the reclassification of cash collateral from derivative transactions and prime brokerage receivables and payables | |
è | Refer to the “Basel II Pillar 3” section of this report for more information on the credit exposures used in the determination of our required regulatory capital and additional information on credit derivatives | |
è | Refer to “Note 23 Derivative instruments and hedge |
crease of CHF 123 billion since the end of 2008. This decrease reflects the measures we took in 2009 to actively reduce our risk exposures in addition to market movements which drove down the positive replacement values of our derivatives. Our banking product exposures decreased by CHF 40 billion to CHF 355 billion at 31 December 2009 mainly driven by reductions in loans and balances with central banks. Our traded products exposures, which arise largely in our Investment Bank, reduced by CHF 82 billion to CHF 96 billion at 31 December 2009 due to the significant decrease of CHF 68 billion in the replacement values of OTC derivatives. The largest component of our credit exposure before deductions at 31 December 2009 was our lending portfolio (due from banks and loans) at CHF 262 billion or 58% of our total credit exposure. Of this, CHF 200 billion was attributable to Wealth Management & Swiss Bank.
Credit exposure by business division | ||||||||||||||||||||||||||||||||||||||||||
Wealth Management & | Wealth Management | |||||||||||||||||||||||||||||||||||||||||
Swiss Bank | Americas | Investment Bank | Other1 | UBS | ||||||||||||||||||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.09 | 31.12.08 | 31.12.09 | 31.12.08 | 31.12.09 | 31.12.08 | 31.12.09 | 31.12.08 | ||||||||||||||||||||||||||||||||
Balances with central banks | 8,589 | 17,629 | 0 | 0 | 9,525 | 11,528 | 0 | 0 | 18,114 | 29,157 | ||||||||||||||||||||||||||||||||
Due from banks | 2,683 | 5,510 | 1,074 | 1,096 | 13,959 | 12,044 | 282 | 382 | 17,998 | 19,032 | ||||||||||||||||||||||||||||||||
Loans | 197,178 | 206,704 | 21,496 | 19,479 | 25,351 | 43,806 | 101 | 730 | 244,126 | 270,719 | ||||||||||||||||||||||||||||||||
Contingent claims | 11,908 | 14,282 | 385 | 405 | 4,881 | 4,056 | 141 | 149 | 17,315 | 18,892 | ||||||||||||||||||||||||||||||||
Undrawn irrevocable credit facilities | 7,236 | 2,775 | 498 | 13 | 49,356 | 54,201 | 0 | 0 | 57,090 | 56,990 | ||||||||||||||||||||||||||||||||
Banking products | 227,594 | 246,899 | 23,453 | 20,994 | 103,072 | 2 | 125,636 | 2 | 524 | 1,261 | 3 | 354,643 | 394,789 | 3 | ||||||||||||||||||||||||||||
OTC Derivatives | 3,583 | 5,637 | 44 | 63 | 58,121 | 124,393 | 947 | 817 | 62,695 | 130,910 | ||||||||||||||||||||||||||||||||
Exchange traded derivatives | 1,059 | 1,281 | 611 | 948 | 14,933 | 21,560 | 0 | 0 | 16,603 | 23,789 | ||||||||||||||||||||||||||||||||
Securities financing transactions | 0 | 2,942 | 185 | 91 | 16,939 | 20,203 | 0 | 844 | 17,124 | 24,080 | ||||||||||||||||||||||||||||||||
Traded products | 4,642 | 9,860 | 840 | 1,102 | 89,993 | 166,157 | 947 | 1,661 | 96,422 | 178,780 | ||||||||||||||||||||||||||||||||
Total credit exposure | 232,236 | 256,759 | 24,293 | 22,096 | 193,065 | 291,793 | 1,471 | 2,922 | 451,065 | 573,569 | ||||||||||||||||||||||||||||||||
Total credit exposure, net4 | 230,173 | 255,565 | 24,289 | 22,071 | 141,838 | 229,597 | 1,466 | 2,922 | 397,766 | 510,155 | ||||||||||||||||||||||||||||||||
1 Includes Global Asset Management and Corporate Center. 2 IB banking products excluding money market and nostro accounts amount to CHF 82,084 million (31.12.2008: CHF 105,595 million). 3 Does not include financial assets designated at fair value for an amount of CHF 961 million. 4 Net of allowances, provisions, credit valuation adjustments, hedges. |
Credit exposure by business division | ||||||||||||||||||||||||||||||||
Wealth Management & | Wealth Management | |||||||||||||||||||||||||||||||
Swiss Bank | Americas | Investment Bank | Other1 | UBS | ||||||||||||||||||||||||||||
CHF million | 31.12.10 | 31.12.09 | 31.12.10 | 31.12.09 | 31.12.10 | 31.12.09 | 31.12.10 | 31.12.09 | 31.12.10 | 31.12.09 | ||||||||||||||||||||||
Balances with central banks | 10,727 | 8,589 | 13,732 | 9,525 | 24,459 | 18,114 | ||||||||||||||||||||||||||
Due from banks | 2,678 | 2,679 | 2,157 | 1,074 | 13,924 | 13,959 | 315 | 282 | 19,075 | 17,993 | ||||||||||||||||||||||
Loans | 201,942 | 197,178 | 22,472 | 21,496 | 17,679 | 2 | 25,351 | 2 | 158 | 86 | 242,250 | 2 | 244,111 | 2 | ||||||||||||||||||
Guarantees | 10,505 | 11,908 | 370 | 385 | 4,820 | 4,881 | 123 | 141 | 15,819 | 17,315 | ||||||||||||||||||||||
Loan commitments | 7,276 | 7,236 | 1,066 | 498 | 46,216 | 49,356 | 54,558 | 57,090 | ||||||||||||||||||||||||
Banking products3 | 233,128 | 227,590 | 26,065 | 23,453 | 96,371 | 4 | 103,072 | 4 | 596 | 509 | 356,161 | 354,624 | ||||||||||||||||||||
OTC derivatives | 4,048 | 3,583 | 56 | 44 | 47,452 | 58,121 | 284 | 947 | 51,840 | 62,695 | ||||||||||||||||||||||
Exchange-traded derivatives | 978 | 1,059 | 1,114 | 611 | 14,599 | 14,933 | 16,691 | 16,603 | ||||||||||||||||||||||||
Securities financing transactions | 156 | 185 | 20,279 | 16,939 | 20,435 | 17,124 | ||||||||||||||||||||||||||
Traded products | 5,026 | 4,642 | 1,326 | 840 | 82,330 | 89,993 | 284 | 947 | 88,966 | 96,422 | ||||||||||||||||||||||
�� | ||||||||||||||||||||||||||||||||
Total credit exposure | 238,155 | 232,232 | 27,391 | 24,293 | 178,701 | 193,065 | 880 | 1,456 | 445,127 | 451,046 | ||||||||||||||||||||||
Total credit exposure, net5 | 236,488 | 230,169 | 27,389 | 24,289 | 143,364 | 141,838 | 876 | 1,451 | 408,117 | 397,747 | ||||||||||||||||||||||
1Includes Global Asset Management, treasury activities and other corporate items. 2 Does not include reclassified and acquired securities. 3 Excludes loans designated at fair value. 4 IFRS Banking products including securities and internal risk adjustments were CHF 119,177 million (31.12.09: CHF 128,919 million). 5 Net of allowances, provisions, CVA and hedges. |
119123
Risk and treasury management
Risk management and control
Composition of credit risk – business divisions
Wealth Management & Swiss Bank
compared with CHF 212197 billion aton 31 December 2008. The decrease resulted largely from lower lombard lending due to continued deleveraging2009, mainly in our Asia Pacific region, with exposure increases in local currencies cushioned by our clients. Over 90%the strengthening of the Swiss franc. Of Wealth Management & Swiss Bank’s lendingloan portfolio, 92% was secured by collateral, of which CHF 142144 billion was secured by real estate and CHF 3943 billion by marketable securities. The majority of the real estate exposure is secured by a diversified portfolio of Swiss residential property (single and multi-family homes), which have typically exhibited a low risk profile.
Wealth Management & Swiss Bank:
distribution of grossnet banking products exposure across UBS internal rating and loss given default (LGD) buckets
CHF million | 31.12.09 | 31.12.08 | |||||||||||||||||||||||||||||||||||||||||||||||
Loss given default (LGD) buckets | Weighted | Weighted | |||||||||||||||||||||||||||||||||||||||||||||||
Gross | average | Gross | average LGD | ||||||||||||||||||||||||||||||||||||||||||||||
UBS internal rating | exposure | 0–25% | 26–50% | 51–75% | 76–100% | LGD (%) | exposure | (%) | |||||||||||||||||||||||||||||||||||||||||
0 | 3,713 | 5 | 3,708 | 38 | 13,625 | 39 | |||||||||||||||||||||||||||||||||||||||||||
1 | 6,024 | 28 | 5,987 | 9 | 39 | 5,232 | 39 | ||||||||||||||||||||||||||||||||||||||||||
2 | 29,084 | 25,523 | 3,432 | 129 | 22 | 27,750 | 21 | ||||||||||||||||||||||||||||||||||||||||||
3 | 23,351 | 18,503 | 4,367 | 481 | 22 | 29,938 | 22 | ||||||||||||||||||||||||||||||||||||||||||
4 | 24,978 | 21,502 | 3,261 | 214 | 12 | 24,830 | 14 | ||||||||||||||||||||||||||||||||||||||||||
5 | 48,491 | 43,013 | 5,017 | 460 | 12 | 50,657 | 13 | ||||||||||||||||||||||||||||||||||||||||||
6 | 41,797 | 38,265 | 2,540 | 991 | 1 | 13 | 44,346 | 13 | |||||||||||||||||||||||||||||||||||||||||
7 | 18,160 | 15,577 | 2,348 | 233 | 1 | 15 | 18,735 | 15 | |||||||||||||||||||||||||||||||||||||||||
8 | 15,256 | 12,738 | 2,078 | 439 | 1 | 16 | 14,810 | 17 | |||||||||||||||||||||||||||||||||||||||||
9 | 10,651 | 7,652 | 1,993 | 7 | 999 | 22 | 9,447 | 23 | |||||||||||||||||||||||||||||||||||||||||
10 | 2,092 | 1,478 | 613 | 21 | 1,875 | 20 | |||||||||||||||||||||||||||||||||||||||||||
11 | 1,179 | 897 | 281 | 20 | 1,990 | 19 | |||||||||||||||||||||||||||||||||||||||||||
12 | 224 | 167 | 56 | 1 | 21 | 155 | 19 | ||||||||||||||||||||||||||||||||||||||||||
13 | 76 | 48 | 28 | 21 | 93 | 30 | |||||||||||||||||||||||||||||||||||||||||||
Total non-defaulted | 225,076 | 185,398 | 35,710 | 2,965 | 1,003 | 17 | 243,483 | 18 | |||||||||||||||||||||||||||||||||||||||||
Investment grade | 135,641 | 108,575 | 25,773 | 1,294 | 152,032 | ||||||||||||||||||||||||||||||||||||||||||||
Sub-investment grade | 89,434 | 76,823 | 9,937 | 1,671 | 1,003 | 91,451 | |||||||||||||||||||||||||||||||||||||||||||
Defaulted1 | 2,518 | 3,416 | |||||||||||||||||||||||||||||||||||||||||||||||
Gross banking products exposure | 227,594 | 185,398 | 35,710 | 2,965 | 1,003 | 246,899 | |||||||||||||||||||||||||||||||||||||||||||
Net banking products exposure2 | 225,531 | N/A | N/A | N/A | N/A | 245,705 | |||||||||||||||||||||||||||||||||||||||||||
CHF million, except where indicated | 31.12.10 | 31.12.09 | ||||||||||||||||||||||||||||||||||||||
Moody’s | LGD buckets | |||||||||||||||||||||||||||||||||||||||
Investor | Standard & | Weighted | Weighted | |||||||||||||||||||||||||||||||||||||
Services | Poor’s | average | average | |||||||||||||||||||||||||||||||||||||
UBS internal rating | equivalent | equivalent | Exposure | 0–25% | 26–50% | 51–75% | 76–100% | LGD (%) | Exposure | LGD (%) | ||||||||||||||||||||||||||||||
Aaa to | AAA to | |||||||||||||||||||||||||||||||||||||||
Investment grade | Baa3 | BBB− | 140,194 | 113,509 | 25,961 | 712 | 11 | 16 | 134,626 | 18 | ||||||||||||||||||||||||||||||
Sub-investment grade | 89,888 | 80,398 | 7,378 | 1,118 | 995 | 12 | 89,434 | 15 | ||||||||||||||||||||||||||||||||
of which: 6–9 | Ba1 to Ba3 | BB+ to BB− | 86,867 | 78,027 | 6,761 | 1,084 | 995 | 11 | 85,864 | 15 | ||||||||||||||||||||||||||||||
of which: 10–12 | B1 to B3 | B+ to B− | 2,967 | 2,333 | 601 | 33 | 17 | 3,494 | 20 | |||||||||||||||||||||||||||||||
of which: 13 | Caa & lower | CCC & lower | 55 | 38 | 16 | 1 | 20 | 76 | 21 | |||||||||||||||||||||||||||||||
Total non-defaulted | 230,082 | 193,907 | 33,339 | 1,830 | 1,006 | 14 | 224,061 | 17 | ||||||||||||||||||||||||||||||||
Defaulted1 | 1,379 | 1,465 | ||||||||||||||||||||||||||||||||||||||
Net banking products exposure2 | 231,461 | 225,526 | ||||||||||||||||||||||||||||||||||||||
Wealth Management & Swiss Bank: composition of loan portfolio, gross | ||||||||||||||||
CHF million | 31.12.10 | 31.12.09 | ||||||||||||||
Secured by residential property | 122,815 | 60.8 | % | 122,106 | 61.9 | % | ||||||||||
Secured by commercial / industrial property | 20,766 | 10.3 | % | 20,378 | 10.3 | % | ||||||||||
Secured by securities | 42,993 | 21.3 | % | 39,136 | 19.8 | % | ||||||||||
Unsecured loans | 15,367 | 7.6 | % | 15,558 | 7.9 | % | ||||||||||
Total loans, gross | 201,942 | 100.0 | % | 197,178 | 100.0 | % | ||||||||||
Total loans, net of allowances and credit hedges | 201,012 | 196,064 | ||||||||||||||
120124
Risk and treasury management |
Wealth Management Americas
CHF million | 31.12.09 | 31.12.08 | |||||||||||||||||||||||||||||||||||||||||||||||
Secured by residential property | 122,106 | 121,551 | |||||||||||||||||||||||||||||||||||||||||||||||
Secured by commercial/industrial property | 20,378 | 20,181 | |||||||||||||||||||||||||||||||||||||||||||||||
Secured by securities | 39,136 | 46,743 | |||||||||||||||||||||||||||||||||||||||||||||||
Lending to banks | 2,683 | 5,510 | |||||||||||||||||||||||||||||||||||||||||||||||
Unsecured loans | 15,558 | 18,228 | |||||||||||||||||||||||||||||||||||||||||||||||
Total lending portfolio, gross | 199,861 | 212,214 | |||||||||||||||||||||||||||||||||||||||||||||||
Total lending portfolio, net1 | 198,714 | 211,044 | |||||||||||||||||||||||||||||||||||||||||||||||
Wealth Management & Swiss Bank: unsecured loans (excluding mortgages) by industry sector
CHF million | 31.12.09 | 31.12.08 | 31.12.10 | 31.12.09 | ||||||||||
Construction | 263 | 302 | 252 | 263 | ||||||||||
Financial institutions | 895 | 2,045 | 642 | 895 | ||||||||||
Hotels and restaurants | 74 | 61 | 59 | 74 | ||||||||||
Manufacturing | 2,599 | 2,700 | 2,172 | 2,599 | ||||||||||
Private households | 1,984 | 2,941 | 1,842 | 1,984 | ||||||||||
Public authorities | 4,176 | 4,533 | 4,895 | 4,176 | ||||||||||
Real estate and rentals | 778 | 878 | 889 | 778 | ||||||||||
Retail and wholesale | 1,778 | 2,249 | 1,551 | 1,778 | ||||||||||
Services | 2,768 | 2,287 | 2,776 | 2,768 | ||||||||||
Other | 243 | 232 | 288 | 243 | ||||||||||
Total | 15,558 | 18,228 | 15,367 | 15,558 |
121125
Risk and treasury management
Risk management and control
Investment Bank
Banking products | OTC derivatives | |||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.09 | 31.12.08 | ||||||||||||
Total exposure1 | 82,084 | 105,595 | 58,121 | 124,393 | ||||||||||||
less: allowances / credit valuations adjustment (CVA) | (1,520 | ) | (1,526 | ) | (4,475 | ) | (9,907 | ) | ||||||||
less: credit protection bought (credit default swaps, notional) | (39,314 | ) | (45,106 | ) | (5,741 | ) | (5,506 | ) | ||||||||
Net exposure after allowances and after application of credit hedges | 41,250 | 58,963 | 47,905 | 108,980 | ||||||||||||
of which: banks and regulated financial institutions | 4,283 | 4,447 | 20,373 | 45,131 | ||||||||||||
of which: sovereigns and supranationals | 1,053 | 1,043 | 7,435 | 16,820 | ||||||||||||
of which: corporates | 20,825 | 28,727 | 3,119 | 9,554 | ||||||||||||
of which: monoline insurers | 2,730 | 6,153 | ||||||||||||||
of which: others | 15,088 | 24,746 | 14,248 | 31,322 | ||||||||||||
of which: investment grade | 26,273 | 39,659 | 42,883 | 100,345 | ||||||||||||
of which: sub-investment grade | 14,977 | 19,304 | 5,022 | 8,635 | ||||||||||||
1 Banking products: risk view; OTC derivatives: net replacement value, includes the impact of netting agreements (including cash collateral) in accordance with Swiss Federal Banking law, based on the IFRS scope of consolidation. | ||||||||||||||||
Investment Bank: net banking products exposure to corporates and other non-banks | ||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | ||||||||||||||
Loans | 90,700 | 111,798 | ||||||||||||||
Contingent claims and undrawn irrevocable credit facilities | 56,228 | 62,391 | ||||||||||||||
Total (IFRS view) | 146,928 | 174,189 | ||||||||||||||
less: internal risk adjustments margin accounts, cash collateral posted, other1 | (36,455 | ) | (40,129 | ) | ||||||||||||
less: internal risk adjustments reclassified securities2 | (19,255 | ) | (21,840 | ) | ||||||||||||
less: internal risk adjustments acquired auction rate securities | (7,982 | ) | (4,500 | ) | ||||||||||||
less: internal risk adjustments traded loan commitments and funded risk participations | (1,152 | ) | (2,125 | ) | ||||||||||||
Gross banking products exposure3 | 82,084 | 105,595 | ||||||||||||||
less: specific allowances for credit losses and loan loss provisions4 | (1,520 | ) | (1,526 | ) | ||||||||||||
Net banking products exposure | 80,564 | 104,069 | ||||||||||||||
less: credit protection bought (credit default swaps) | (39,314 | ) | (45,106 | ) | ||||||||||||
Net banking products exposure to corporates and other non-banks, after application of credit hedges | 41,250 | 58,963 | ||||||||||||||
122
Investment Bank: banking products and OTC derivatives exposure1
Banking products | OTC derivatives | |||||||||||
CHF million | 31.12.10 | 31.12.09 | 31.12.10 | 31.12.09 | ||||||||
Total exposure, before deduction of allowances and provisions, CVA and hedges | 70,885 | 2 | 82,084 | 2 | 47,452 | 58,121 | ||||||
less: allowances, provisions and CVA | (124 | ) | (1,520 | ) | (2,224 | ) | (4,475 | ) | ||||
less: credit protection bought (credit default swaps, notional) | (29,154 | ) | (39,314 | ) | (3,683 | ) | (5,741 | ) | ||||
Net exposure after allowances and provisions, CVA and hedges | 41,608 | 41,250 | 41,546 | 47,905 | ||||||||
Investment Bank: distribution of net banking products exposure to corporates and other
non-banks, across UBS internal rating and loss given default buckets
CHF million, except where indicated | 31.12.10 | 31.12.09 | ||||||||||||||||||||||
LGD buckets | Weighted | Weighted | ||||||||||||||||||||||
Moody's Investor | Standard & Poor’s | average | average | |||||||||||||||||||||
UBS internal rating | Services equivalent | equivalent | Exposure | 0 – 25% | 26 – 50% | 51 – 75% | 76 – 100% | LGD (%) | Exposure | LGD (%) | ||||||||||||||
Investment grade | Aaa to Baa3 | AAA to BBB– | 25,603 | 7,755 | 11,417 | 2,636 | 3,795 | 43 | 26,273 | 39 | ||||||||||||||
Sub-investment grade | 16,005 | 6,690 | 6,619 | 2,181 | 515 | 33 | 14,977 | 34 | ||||||||||||||||
of which: 6 – 9 | Ba1 to Ba3 | BB+ to BB– | 6,812 | 2,322 | 3,555 | 824 | 111 | 36 | 6,896 | 36 | ||||||||||||||
of which: 10 – 12 | B1 to B3 | B+ to B– | 8,285 | 3,880 | 2,826 | 1,258 | 321 | 31 | 5,338 | 27 | ||||||||||||||
of which: 13 & defaulted | Caa & lower | CCC & lower | 908 | 488 | 238 | 100 | 83 | 35 | 2,743 | 42 | ||||||||||||||
Net banking products exposure to corporates and other non-banks, after application of credit hedges | 41,608 | 14,444 | 18,036 | 4,817 | 4,310 | 39 | 41,250 | 37 | ||||||||||||||||
Investment Bank: distribution of net OTC derivatives exposure, across UBS internal rating and loss given default buckets | ||||||||||||||||||||||||
CHF million, except where indicated | 31.12.10 | 31.12.09 | ||||||||||||||||||||||
LGD buckets | Weighted | Weighted | ||||||||||||||||||||||
Moody's Investor | Standard & Poor’s | average | average | |||||||||||||||||||||
UBS internal rating | Services equivalent | equivalent | Exposure | 0 – 25% | 26 – 50% | 51 – 75% | 76 – 100% | LGD (%) | Exposure | LGD (%) | ||||||||||||||
Investment grade | Aaa to Baa3 | AAA to BBB– | 37,552 | 8,877 | 24,640 | 2,591 | 1,444 | 36 | 42,883 | 34 | ||||||||||||||
Sub-investment grade | 3,994 | 607 | 1,709 | 133 | 1,545 | 54 | 5,022 | 48 | ||||||||||||||||
of which: 6 – 9 | Ba1 to Ba3 | BB+ to BB– | 2,302 | 386 | 1,005 | 120 | 791 | 55 | 2,382 | 62 | ||||||||||||||
of which: 10 –12 | B1 to B3 | B+ to B– | 889 | 41 | 673 | 9 | 166 | 53 | 1,066 | 22 | ||||||||||||||
of which: 13 & defaulted | Caa & lower | CCC & lower | 803 | 180 | 31 | 4 | 588 | 70 | 1,574 | 60 | ||||||||||||||
Net OTC derivatives exposure, after application of credit hedges | 41,546 | 9,484 | 26,349 | 2,724 | 2,989 | 39 | 47,905 | 37 | ||||||||||||||||
126
Risk and treasury management |
industry sectors and basedsectors. Based on our assessment, the vast majority of the sub-investment grade exposures in this portfolio had a loss given defaultan LGD of 0–50% on 31 December 2009.
è | Refer to “Note 29b Reclassification of financial assets” in the “Financial information” section of this report for more information on reclassified securities including carrying values of student loan auction rate securities, monoline protected assets and US commercial real estate positions |
CHF million | 31.12.09 | 31.12.08 | |||||||||||||||||||||||||||||||||||||||||||||||
Weighted | Weighted | ||||||||||||||||||||||||||||||||||||||||||||||||
Loss given default (LGD) buckets | average | average | |||||||||||||||||||||||||||||||||||||||||||||||
UBS internal rating | Exposure | 0–25% | 26–50% | 51–75% | 76–100% | LGD (%) | Exposure | LGD (%) | |||||||||||||||||||||||||||||||||||||||||
Investment grade | 26,273 | 9,850 | 10,689 | 3,107 | 2,628 | 39 | 39,659 | 36 | |||||||||||||||||||||||||||||||||||||||||
Sub-investment grade | 14,977 | 6,492 | 5,571 | 2,330 | 583 | 34 | 19,304 | 31 | |||||||||||||||||||||||||||||||||||||||||
of which: 6 | 1,407 | 102 | 942 | 302 | 62 | 47 | 2,199 | 32 | |||||||||||||||||||||||||||||||||||||||||
of which: 7 | 2,044 | 1,210 | 339 | �� | 338 | 157 | 33 | 2,307 | 43 | ||||||||||||||||||||||||||||||||||||||||
of which: 8 | 1,293 | 342 | 705 | 228 | 18 | 37 | 1,370 | 45 | |||||||||||||||||||||||||||||||||||||||||
of which: 9 | 2,151 | 896 | 965 | 265 | 26 | 31 | 3,811 | 19 | |||||||||||||||||||||||||||||||||||||||||
of which: 10 | 1,486 | 525 | 720 | 139 | 102 | 32 | 1,674 | 36 | |||||||||||||||||||||||||||||||||||||||||
of which: 11 | 2,168 | 1,104 | 661 | 396 | 7 | 30 | 4,422 | 28 | |||||||||||||||||||||||||||||||||||||||||
of which: 12 | 1,684 | 1,287 | 277 | 65 | 55 | 18 | 687 | 23 | |||||||||||||||||||||||||||||||||||||||||
of which: 13 | 357 | 158 | 133 | 63 | 3 | 31 | 221 | 21 | |||||||||||||||||||||||||||||||||||||||||
of which: defaulted | 2,386 | 870 | 830 | 535 | 151 | 44 | 2,612 | 33 | |||||||||||||||||||||||||||||||||||||||||
Net banking products exposure to corporates and other non-banks, after application of credit hedges | 41,250 | 16,342 | 16,260 | 5,437 | 3,211 | 37 | 58,963 | 35 | |||||||||||||||||||||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | |||||||||||||||||||||||||||||||||||||||||||||||
Chemicals | 1,347 | 3,072 | |||||||||||||||||||||||||||||||||||||||||||||||
Electricity, gas, water supply | 2,120 | 3,685 | |||||||||||||||||||||||||||||||||||||||||||||||
Financial institutions | 16,316 | 25,716 | |||||||||||||||||||||||||||||||||||||||||||||||
Manufacturing | 6,695 | 7,978 | |||||||||||||||||||||||||||||||||||||||||||||||
Mining | 2,284 | 2,588 | |||||||||||||||||||||||||||||||||||||||||||||||
Public authorities | 2,657 | 3,246 | |||||||||||||||||||||||||||||||||||||||||||||||
Retail and wholesale | 1,530 | 1,855 | |||||||||||||||||||||||||||||||||||||||||||||||
Transport, storage and communication | 4,057 | 5,794 | |||||||||||||||||||||||||||||||||||||||||||||||
Other | 4,243 | 5,030 | |||||||||||||||||||||||||||||||||||||||||||||||
Total | 41,250 | 58,963 | |||||||||||||||||||||||||||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | |||||||||||||||||||||||||||||||||||||||||||||||
Switzerland | 543 | 1,437 | |||||||||||||||||||||||||||||||||||||||||||||||
Other Europe | 6,759 | 9,354 | |||||||||||||||||||||||||||||||||||||||||||||||
North America | 29,222 | 42,100 | |||||||||||||||||||||||||||||||||||||||||||||||
Latin America | 152 | 1,550 | |||||||||||||||||||||||||||||||||||||||||||||||
Asia/Pacific | 4,014 | 3,833 | |||||||||||||||||||||||||||||||||||||||||||||||
Africa/Middle East | 559 | 689 | |||||||||||||||||||||||||||||||||||||||||||||||
Total | 41,250 | 58,963 | |||||||||||||||||||||||||||||||||||||||||||||||
123
specified declines in the aggregate notional balance of the portfolio, and we may assume control of the underlying assets in the event of a specified further decline in the notional balance.
Investment Bank: net banking products and OTC derivatives exposure by industry sector1 | ||||||||||||||||
Banking products | OTC derivatives | |||||||||||||||
CHF million | 31.12.10 | 31.12.09 | 31.12.10 | 31.12.09 | ||||||||||||
Banks | 2,608 | 3,655 | 13,409 | 9,982 | ||||||||||||
Chemicals | 1,046 | 1,347 | 179 | 267 | ||||||||||||
Electricity, gas, water supply | 2,380 | 2,120 | 155 | 150 | ||||||||||||
Non-bank financial institutions | 13,054 | 12,661 | 20,778 | 29,171 | ||||||||||||
Manufacturing | 8,021 | 6,695 | 524 | 710 | ||||||||||||
Mining | 3,707 | 2,284 | 94 | 562 | ||||||||||||
Public authorities | 1,921 | 2,657 | 49 | 51 | ||||||||||||
Retail and wholesale | 2,722 | 1,530 | 861 | 982 | ||||||||||||
Transport, storage and communication | 4,537 | 4,057 | 581 | 642 | ||||||||||||
Other | 1,611 | 4,243 | 4,916 | 5,389 | ||||||||||||
Total | 41,608 | 41,250 | 41,546 | 47,905 | ||||||||||||
Investment Bank: net banking products and OTC derivatives exposure by geographical region | ||||||||||||||||
Banking products | OTC derivatives | |||||||||||||||
CHF million | 31.12.10 | 31.12.09 | 31.12.10 | 31.12.09 | ||||||||||||
Switzerland | 348 | 543 | 1,804 | 1,759 | ||||||||||||
Rest of Europe | 5,291 | 6,759 | 19,874 | 22,286 | ||||||||||||
North America | 32,721 | 29,222 | 15,764 | 19,907 | ||||||||||||
Latin America | 34 | 152 | 185 | 123 | ||||||||||||
Asia Pacific | 2,658 | 4,014 | 3,338 | 3,236 | ||||||||||||
Middle East and Africa | 556 | 559 | 580 | 594 | ||||||||||||
Total | 41,608 | 41,250 | 41,546 | 47,905 | ||||||||||||
124127
Risk and treasury management
Impairment and default – distressed claims | ||||||
With respect to distressed claims resulting from banking products, we distinguish between loans that are “past due” and those that are “impaired”. We consider a loan to be past due when a contractual payment has been missed. We consider a loan as impaired if it is probable that we will not fully recover all contractual payments due under the loan as a result of the borrower’s inability, or unwillingness, to meet its obligations after realization of available collateral. Past due but not impaired loans are those that have suffered missed payments, but are not considered impaired because we expect to collect all amounts due under the contractual terms of the loans or the equivalent value. | ||||||
We also assess | ||||||
We have established processes to ensure that the carrying values of impaired claims are determined in compliance with IFRS requirements. Our credit controls applied to valuation and | ||||||
None of the portfolios with collective loan loss provisions are included in the totals of impaired loans in the tables shown in the composition of credit risk for business divisions in the “Credit risk” section of this report. | ||||||
We also assess our portfolios of claims carried at amortized cost with similar credit risk characteristics for collective impairment in order to consider if these portfolios contain impaired obligations where the individual impaired items cannot yet be identified. |
Additionally, for all of our portfolios we assess whether there have been any unforeseen developments which might result in impairments but that | ||||||
The recognition of impairment in our financial statements depends on the accounting treatment of the claim. For products |
carried at amortized cost, impairment is recognized through the creation of an allowance or provision | ||||||
è | Refer to “Note 27a Valuation principles” in the “Financial information” section of this report for more information on CVA | |||||
Impaired loans, allowances and provisions | ||||||
The credit risk exposures reported in the table “Allowances and provisions for credit losses” | ||||||
The table shows that our allowances and provisions for credit losses, excluding collective loan loss provisions (CLLP) of CHF 47 million, decreased | ||||||
|
125
Allowances and provisions for credit losses | ||||||||||||||||||||||||||||||||
CHF million | Wealth Management & Swiss Bank | Wealth Management Americas | Investment Bank | Others1 | UBS | |||||||||||||||||||||||||||
As of | 31.12.09 | 31.12.08 | 31.12.09 | 31.12.08 | 31.12.09 | 31.12.08 | 31.12.09 | 31.12.08 | 31.12.09 | 31.12.08 | ||||||||||||||||||||||
Due from banks | 2,683 | 5,510 | 1,074 | 1,096 | 42,568 | 57,485 | 282 | 382 | 46,606 | 64,473 | ||||||||||||||||||||||
Loans | 197,178 | 206,704 | 21,496 | 23,981 | 90,700 | 111,798 | 101 | 730 | 309,475 | 343,213 | ||||||||||||||||||||||
of which: related to reclassified securities2 | 19,255 | 21,840 | 19,255 | 21,840 | ||||||||||||||||||||||||||||
Total lending portfolio, gross3 | 199,861 | 212,214 | 22,569 | 25,077 | 133,268 | 169,282 | 383 | 1,113 | 356,081 | 407,685 | ||||||||||||||||||||||
Allowances for credit losses | (1,034) | (1,169 | ) | (4) | (25 | ) | (1,642) | (1,733 | ) | 0 | 0 | (2,680) | (2,927 | ) | ||||||||||||||||||
of which: related to reclassified securities | (162) | (130 | ) | (162) | (130 | ) | ||||||||||||||||||||||||||
Total lending portfolio, net4 | 198,827 | 211,044 | 22,566 | 25,052 | 131,625 | 167,550 | 383 | 1,113 | 353,402 | 404,758 | ||||||||||||||||||||||
Impaired lending portfolio, gross5 | 1,805 | 2,959 | 4 | 39 | 5,056 | 4,436 | 0 | 0 | 6,865 | 7,434 | ||||||||||||||||||||||
of which: related to reclassified securities | 1,090 | 200 | 1,090 | 200 | ||||||||||||||||||||||||||||
Estimated liquidation proceeds of collateral for impaired loans | (530) | (1,576 | ) | 0 | (18 | ) | (1,670) | (945 | ) | 0 | 0 | (2,200) | (2,539 | ) | ||||||||||||||||||
of which: related to reclassified securities | (958) | (94 | ) | (958) | (94 | ) | ||||||||||||||||||||||||||
Impaired lending portfolio, net of collateral | 1,275 | 1,383 | 4 | 21 | 3,386 | 3,491 | 0 | 0 | 4,665 | 4,895 | ||||||||||||||||||||||
Allocated allowances for impaired lending portfolio | 984 | 1,146 | 4 | 25 | 1,642 | 1,733 | 0 | 0 | 2,630 | 2,904 | ||||||||||||||||||||||
Other allowances and provisions | 49 | 24 | 0 | 0 | 0 | 0 | 0 | 0 | 49 | 24 | ||||||||||||||||||||||
Total allowances and provisions for credit losses in lending portfolio | 1,034 | 1,169 | 4 | 25 | 1,642 | 1,733 | 0 | 0 | 2,680 | 2,927 | ||||||||||||||||||||||
Allowances and provisions for credit losses outside of lending portfolio | 19 | 24 | 0 | 0 | 117 | 119 | 5 | 0 | 141 | 143 | ||||||||||||||||||||||
Ratios | ||||||||||||||||||||||||||||||||
Allowances and provisions as a % of total lending portfolio, gross | 0.5 | 0.6 | 0.0 | 0.1 | 1.2 | 1.0 | 0.0 | 0.0 | 0.8 | 0.7 | ||||||||||||||||||||||
Impaired lending portfolio as a % of total lending portfolio, gross | 0.9 | 1.4 | 0.0 | 0.2 | 3.8 | 2.6 | 0.0 | 0.0 | 1.9 | 1.8 | ||||||||||||||||||||||
Impaired lending portfolio excluding reclassified securities as a % of total lending portfolio, gross excluding reclassified securities | 3.5 | 2.9 | 1.7 | 1.9 | ||||||||||||||||||||||||||||
Allocated allowances as a % of impaired lending portfolio, gross | 54.5 | 38.7 | 100.0 | 64.1 | 32.5 | 39.1 | 0.0 | 0.0 | 38.3 | 39.1 | ||||||||||||||||||||||
Allocated allowances as a % of impaired lending portfolio, net of collateral | 77.2 | 82.9 | 100.0 | 119.0 | 48.5 | 49.6 | 0.0 | 0.0 | 56.3 | 59.3 | ||||||||||||||||||||||
1 Includes Global Asset Management and the Corporate Center. 2 This excludes reclassified loan underwriting positions with a value of CHF 1,789 million as of 31.12.09(31.12.08: CHF 3,713 million), which are included in the risk view of loan exposures. 3 Excludes loans designated at fair value, but includes margin accounts for exchange-traded derivatives transactions, cash collateral delivered for OTC derivatives and cash current accounts from prime brokerage (cash leg) of total CHF 70,121 million (of whichDue from banks:CHF 29,770 million, of whichLoans:CHF 40,351 million) (31.12.08: CHF 95,610 million of which due from banks: CHF 46,757 million, of which loans: CHF 48,853 million). 4 Reconciles to the balance sheet carrying values ofDue from banksandLoans,which are reported net of allowances for credit losses. 5 Excludes reclassified securities with adverse cash flow estimate revisions cumulatively below 5% of the carrying value at reclassification date, adjusted for redemptions. 31.12.08 numbers have been adjusted to reflect this change. |
Impaired assets by type of financial instrument | ||||||||||||||||||
CHF million | Impaired exposure | Estimated liquidation proceeds of collateral | Specific allowances, provisions and credit valuation adjustments | Net impaired exposure | ||||||||||||||
Impaired loans | 6,865 | (2,200 | ) | (2,630 | ) | 2,035 | ||||||||||||
Impaired contingent claims | 350 | (90 | ) | 260 | ||||||||||||||
Defaulted derivatives contracts | 4,607 | (3,061 | ) | 1,546 | ||||||||||||||
Defaulted securities financing transactions | 98 | (47 | ) | (51 | ) | 0 | ||||||||||||
Total 31.12.09 | 11,920 | (2,247 | ) | (5,831 | ) | 3,841 | ||||||||||||
Total 31.12.081 | 13,947 | (2,539 | ) | (7,252 | ) | 4,156 | ||||||||||||
1 Impaired exposure was restated from CHF 15,658 million originally reported in our Annual Report for 2008, estimated liquidation proceeds of collateral was restated from CHF 3,930 million. In 2009, we implemented a threshold for designating a reclassified security as an “impaired loan”. Under this policy, a reclassified security is considered impaired if the carrying value at balance sheet date is on a cumulative basis 5% or more below the carrying value at reclassification date adjusted for redemptions. |
126
on a cumulative basis, 5% or more below the carrying value at the reclassification date adjusted for redemptions. | ||||
Our gross impaired | ||||
The ratio of the impaired | ||||
We reclassified loans and receivables with | ||||
Collateral held against our impaired | ||||
We seek to liquidate collateral held in the form of financial assets expeditiously and at prices considered fair. This may require us to purchase assets for our own account, where permitted by law, pending orderly liquidation. |
128
Risk and treasury management |
Allowances and provisions for credit losses | ||||||||||||||||||||||||||||||||||||||||
Allowances and provisions | Estimated liquidation | |||||||||||||||||||||||||||||||||||||||
CHF million, except where indicated | IFRS exposure, gross | Impaired exposure1 | for credit losses2 | proceeds of collateral | Impairment ratio (%) | |||||||||||||||||||||||||||||||||||
As of | 31.12.10 | 31.12.09 | 31.12.10 | 31.12.09 | 31.12.10 | 31.12.09 | 31.12.10 | 31.12.09 | 31.12.10 | 31.12.09 | ||||||||||||||||||||||||||||||
UBS Group | ||||||||||||||||||||||||||||||||||||||||
Balances with central banks | 24,459 | 18,114 | 0.0 | 0.0 | ||||||||||||||||||||||||||||||||||||
Due from banks | 17,158 | 16,836 | 21 | 36 | 24 | 32 | 0.1 | 0.2 | ||||||||||||||||||||||||||||||||
Loans | 263,964 | 269,124 | 4,172 | 6,829 | 1,039 | 2,598 | 2,286 | 2,200 | 1.6 | 2.5 | ||||||||||||||||||||||||||||||
of which: related to reclassified securities3 | 11,719 | 19,255 | 1,574 | 1,090 | 221 | 162 | 1,376 | 958 | 13.4 | 5.7 | ||||||||||||||||||||||||||||||
of which: related to acquired securities | 9,673 | 7,982 | 351 | 119 | 52 | 17 | 313 | 105 | 3.6 | 1.5 | ||||||||||||||||||||||||||||||
of which: related to other loans | 242,572 | 241,887 | 2,247 | 5,620 | 766 | 2,419 | 597 | 1,137 | 0.9 | 2.3 | ||||||||||||||||||||||||||||||
Guarantees | 16,535 | 17,070 | 160 | 141 | 96 | 78 | 7 | 1.0 | 0.8 | |||||||||||||||||||||||||||||||
Loan commitments | 56,851 | 59,328 | 142 | 209 | 34 | 12 | 5 | 0.2 | 0.4 | |||||||||||||||||||||||||||||||
Banking products | 378,967 | 380,472 | 4,495 | 7,215 | 1,193 | 2,720 | 2,298 | 2,200 | 1.2 | 1.9 | ||||||||||||||||||||||||||||||
Investment Bank | ||||||||||||||||||||||||||||||||||||||||
Balances with central banks | 13,732 | 9,525 | 0.0 | 0.0 | ||||||||||||||||||||||||||||||||||||
Due from banks | 12,007 | 12,802 | 0.0 | 0.0 | ||||||||||||||||||||||||||||||||||||
Loans | 39,392 | 50,364 | 2,838 | 5,056 | 348 | 1,642 | 1,926 | 1,670 | 7.2 | 10.0 | ||||||||||||||||||||||||||||||
of which: related to reclassified securities3 | 11,719 | 19,255 | 1,574 | 1,090 | 221 | 162 | 1,376 | 958 | 13.4 | 5.7 | ||||||||||||||||||||||||||||||
of which: related to acquired securities | 9,673 | 7,982 | 351 | 119 | 52 | 17 | 313 | 105 | 3.6 | 1.5 | ||||||||||||||||||||||||||||||
of which: related to other loans | 18,000 | 23,127 | 913 | 3,847 | 76 | 1,463 | 237 | 607 | 5.1 | 16.6 | ||||||||||||||||||||||||||||||
Guarantees | 5,536 | 4,635 | 67 | 117 | 43 | 66 | 1.2 | 2.5 | ||||||||||||||||||||||||||||||||
Loan commitments | 48,509 | 51,593 | 95 | 209 | 26 | 1 | 0.2 | 0.4 | ||||||||||||||||||||||||||||||||
Banking products | 119,177 | 128,919 | 3,000 | 5,382 | 417 | 1,708 | 1,926 | 1,670 | 2.5 | 4.2 | ||||||||||||||||||||||||||||||
Wealth Management & Swiss Bank | ||||||||||||||||||||||||||||||||||||||||
Balances with central banks | 10,727 | 8,589 | 0.0 | 0.0 | ||||||||||||||||||||||||||||||||||||
Due from banks | 2,678 | 2,678 | 21 | 36 | 24 | 32 | 0.8 | 1.3 | ||||||||||||||||||||||||||||||||
Loans | 201,942 | 197,178 | 1,333 | 1,769 | 689 | 952 | 360 | 530 | 0.7 | 0.9 | ||||||||||||||||||||||||||||||
Guarantees | 10,505 | 11,908 | 93 | 24 | 49 | 9 | 7 | 0.9 | 0.2 | |||||||||||||||||||||||||||||||
Loan commitments | 7,276 | 7,236 | 47 | 8 | 11 | 5 | 0.6 | 0.0 | ||||||||||||||||||||||||||||||||
Banking products | 233,128 | 227,589 | 1,494 | 1,829 | 770 | 1,004 | 372 | 530 | 0.6 | 0.8 | ||||||||||||||||||||||||||||||
�� | ||||||||||||||||||||||||||||||||||||||||
Wealth Management | ||||||||||||||||||||||||||||||||||||||||
Balances with central banks | 463 | 5,614 | 0.0 | 0.0 | ||||||||||||||||||||||||||||||||||||
Due from banks | 456 | 419 | 0.0 | 0.0 | ||||||||||||||||||||||||||||||||||||
Loans | 67,104 | 61,935 | 166 | 295 | 126 | 165 | 45 | 141 | 0.2 | 0.5 | ||||||||||||||||||||||||||||||
Guarantees | 2,391 | 3,554 | 0.0 | 0.0 | ||||||||||||||||||||||||||||||||||||
Loan commitments | 983 | 1,107 | 0.0 | 0.0 | ||||||||||||||||||||||||||||||||||||
Banking products | 71,397 | 72,629 | 166 | 295 | 126 | 165 | 45 | 141 | 0.2 | 0.4 | ||||||||||||||||||||||||||||||
Retail & Corporate | ||||||||||||||||||||||||||||||||||||||||
Balances with central banks | 10,265 | 2,975 | 0.0 | 0.0 | ||||||||||||||||||||||||||||||||||||
Due from banks | 2,222 | 2,260 | 21 | 36 | 24 | 32 | 0.9 | 1.6 | ||||||||||||||||||||||||||||||||
Loans | 134,838 | 135,244 | 1,167 | 1,474 | 563 | 788 | 315 | 390 | 0.9 | 1.1 | ||||||||||||||||||||||||||||||
Guarantees | 8,114 | 8,354 | 93 | 24 | 49 | 8 | 7 | 1.1 | 0.3 | |||||||||||||||||||||||||||||||
Loan commitments | 6,293 | 6,129 | 47 | 8 | 11 | 5 | 0.7 | 0.0 | ||||||||||||||||||||||||||||||||
Banking products | 161,732 | 154,961 | 1,328 | 1,534 | 644 | 839 | 327 | 390 | 0.8 | 1.0 | ||||||||||||||||||||||||||||||
129
Risk and treasury management
Risk management and control
Impaired assets by type of financial instrument1 | ||||||||||||||||||||||||||||||||||
Specific allowances, | Estimated liquidation | |||||||||||||||||||||||||||||||||
CHF million | Impaired exposure | provisions and CVA | proceeds of collateral | Net impaired exposure | ||||||||||||||||||||||||||||||
31.12.10 | 31.12.09 | 31.12.10 | 31.12.09 | 31.12.10 | 31.12.09 | 31.12.10 | 31.12.09 | |||||||||||||||||||||||||||
Impaired loans (incl. due from banks) | 4,193 | 6,865 | (1,064 | )2 | (2,630 | )2 | (2,286 | ) | (2,200 | ) | 844 | 2,035 | ||||||||||||||||||||||
Impaired guarantees and loan commitments | 301 | 350 | (130 | ) | (90 | ) | (12 | ) | 159 | 260 | ||||||||||||||||||||||||
Defaulted derivatives transactions | 1,915 | 4,607 | (1,130 | ) | (3,061 | ) | 785 | 1,546 | ||||||||||||||||||||||||||
Defaulted securities financing transactions | 59 | 98 | (46 | ) | (51 | ) | (13 | ) | (47 | ) | 0 | 0 | ||||||||||||||||||||||
Total | 6,468 | 11,920 | (2,370 | ) | (5,831 | ) | (2,310 | ) | (2,247 | ) | 1,788 | 3,841 | ||||||||||||||||||||||
1 Includes impaired Due from banks, Loans, Guarantees, Loan commitments, Securities financing transactions and OTC derivatives with specific CVA. 2 Excludes CHF 47 million collective loan loss allowances (31.12.09: CHF 49 million). |
The table “Impaired assets by type of financial instrument” includes impaired loans, impaired |
After deducting allocated specific allowances, provisions and | ||||||||
è | Refer to “Note 1 Summary of significant accounting policies” in the “Financial information” section of this report for more information on the reclassification of the cash collateral from derivative transactions as well as prime brokerage receivables and payables | |||||||
è | Refer to “Note 9b Due from banks and loans” in the “Financial information” section of this report for more information on the changes in allowances and provisions for credit losses | |||||||
Past due but not impaired loans
Past due but not impaired loans | ||||||||
CHF million | 31.12.09 | 31.12.08 | ||||||
1–10 days | 138 | 522 | ||||||
11–30 days | 62 | 89 | ||||||
31–60 days | 78 | 272 | ||||||
61–90 days | 17 | 331 | ||||||
> 90 days | 635 | 547 | ||||||
of which: past due but not impaired mortgage loans > 90 days | 511 | 425 | ||||||
Total | 930 | 1,761 | ||||||
Past due but not impaired loans | ||||||||||
CHF million | 31.12.10 | 31.12.09 | ||||||||
1 – 10 days | 62 | 138 | ||||||||
11 – 30 days | 59 | 62 | ||||||||
31 – 60 days | 30 | 78 | ||||||||
61 – 90 days | 20 | 17 | ||||||||
> 90 days | 678 | 635 | ||||||||
of which: mortgage loans | 468 | 511 | ||||||||
Total | 849 | 930 | ||||||||
Past due but not impaired mortgage loans | ||||||||||||||
CHF million | 31.12.09 | 31.12.08 | ||||||||||||
Total mortgage exposure | of which: past due but not impaired > 90 days | Total mortgage exposure | of which: past due but not impaired > 90 days | |||||||||||
Total | 130,348 | 511 | 128,441 | 425 | ||||||||||
Past due but not impaired mortgage loans | ||||||||||||||||
CHF million | 31.12.10 | 31.12.09 | ||||||||||||||
Total | of which: | Total | of which: | |||||||||||||
mortgage | past due > 90 days | mortgage | past due > 90 days | |||||||||||||
exposure | but not impaired | exposure | but not impaired | |||||||||||||
Total | 133,343 | 468 | 130,348 | 511 | ||||||||||||
127130
Risk and treasury management |
Settlement risk
Settlement risk arises in transactions involving exchange of value whenwhere we must honorfulfill our obligation to deliver without first being able to determine with certainty that we will receive the counter-value.countervalue. We use multilateral and bilateral agreements with counterparties to reduce our actual settlement volumes.
Country risk
Country risk is the risk of loss arising from country-specific events. We have ana well established country risk control framework to actively manage and limit, as necessary, our trading, risk, lending, risk, issuer risk and investment risk in a country.risk. This framework is intended to ensure that our exposure to a certain country is commensurate with the credit rating we as-
tries rated three3 and below, we set country risk ceilings approved either by the BoD or under delegated authority.authority by the Group CEO or Group CRO. A country risk ceiling applies to all our exposures to counterparties or issuers of securities and financial investments in the respective country. Our country risk measures cover cross-border transactions and investments as well as our local operations, branches and subsidiaries in countries where the risk is material. We may limit the extension of credit, transactions in traded products or positions in securities based on a country ceiling, even if our exposure to a counterparty is otherwise acceptable.
Country risk exposure
Exposures to sovereign of industrialized European countries
rated AA and below
Largest five exposures to sovereign1of industrialized European countries rated AA and below2 | ||||||||||||||||
CHF million | Gross exposure | Net exposure3 | ||||||||||||||
As of | 31.12.10 | 31.12.09 | 31.12.10 | 31.12.09 | ||||||||||||
Italy, sovereign | 2,812 | 7,872 | 395 | 3,534 | ||||||||||||
Belgium, sovereign | 473 | 2,889 | 473 | 2,863 | ||||||||||||
Iceland, sovereign | 123 | 0 | 123 | 0 | ||||||||||||
Greece, sovereign | 38 | 317 | 31 | 290 | ||||||||||||
Portugal, sovereign | 29 | 91 | 25 | 0 | ||||||||||||
131
Risk and treasury management
Risk management and control
Emerging market countries
Emerging markets net1 exposure by UBS internal country rating category2
CHF million | 31.12.10 | 31.12.09 | ||||
Investment grade | 17,567 | 14,659 | ||||
Sub-investment grade | 2,521 | 3,132 | ||||
Total | 20,088 | 17,791 | ||||
CHF million | 31.12.09 | 31.12.08 | |||||||||||||||||||||||||||||||||||||||||||||||
Investment grade | 18,847 | 24,616 | |||||||||||||||||||||||||||||||||||||||||||||||
Sub-investment grade | 3,568 | 8,095 | |||||||||||||||||||||||||||||||||||||||||||||||
Distressed | 3 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||
Total | 22,418 | 32,715 | |||||||||||||||||||||||||||||||||||||||||||||||
Emerging markets net1 exposure by major geographical area and product type2
CHF million | Total | Banking products | Traded products | Financial investments | Tradable assets | |||||||||||||||||||||||||
As of | 31.12.10 | 31.12.09 | 31.12.10 | 31.12.09 | 31.12.10 | 31.12.09 | 31.12.10 | 31.12.09 | 31.12.10 | 31.12.09 | ||||||||||||||||||||
Emerging Europe | 2,177 | 1,608 | 651 | 575 | 178 | 178 | 30 | 25 | 1,318 | 830 | ||||||||||||||||||||
Russia | 1,090 | 951 | 212 | 254 | 29 | 57 | 0 | 0 | 849 | 640 | ||||||||||||||||||||
Hungary | 318 | 45 | 20 | 17 | 39 | 14 | 0 | 0 | 259 | 14 | ||||||||||||||||||||
Turkey | 249 | 157 | 156 | 104 | 42 | 31 | 2 | 0 | 49 | 22 | ||||||||||||||||||||
Poland | 156 | 95 | 17 | 8 | 62 | 43 | 0 | 0 | 77 | 44 | ||||||||||||||||||||
Ukraine | 87 | 74 | 32 | 37 | 0 | 0 | 27 | 25 | 28 | 12 | ||||||||||||||||||||
Other | 277 | 286 | 214 | 155 | 6 | 33 | 1 | 0 | 56 | 98 | ||||||||||||||||||||
Emerging Asia | 11,937 | 10,969 | 4,784 | 4,119 | 2,443 | 2,652 | 121 | 166 | 4,589 | 4,032 | ||||||||||||||||||||
Hong Kong | 2,597 | 1,791 | 950 | 602 | 565 | 784 | 0 | 0 | 1,082 | 405 | ||||||||||||||||||||
India | 2,519 | 1,468 | 919 | 648 | 32 | 45 | 0 | 0 | 1,568 | 775 | ||||||||||||||||||||
China | 2,267 | 2,714 | 1,007 | 1,362 | 605 | 442 | 120 | 166 | 535 | 744 | ||||||||||||||||||||
South Korea | 1,495 | 2,111 | 592 | 452 | 588 | 1,021 | 0 | 0 | 315 | 638 | ||||||||||||||||||||
Taiwan | 1,433 | 1,399 | 451 | 659 | 343 | 202 | 0 | 0 | 639 | 538 | ||||||||||||||||||||
Other | 1,626 | 1,486 | 865 | 396 | 310 | 158 | 1 | 0 | 450 | 932 | ||||||||||||||||||||
Emerging America | 3,387 | 2,729 | 263 | 308 | 620 | 203 | 30 | 35 | 2,474 | 2,183 | ||||||||||||||||||||
Brazil | 1,699 | 1,142 | 119 | 150 | 471 | 117 | 0 | 0 | 1,109 | 875 | ||||||||||||||||||||
Mexico | 951 | 913 | 36 | 39 | 95 | 77 | 23 | 11 | 797 | 786 | ||||||||||||||||||||
Venezuela | 218 | 102 | 0 | 1 | 0 | 0 | 0 | 0 | 218 | 101 | ||||||||||||||||||||
Chile | 155 | 64 | 42 | 32 | 38 | 0 | 0 | 0 | 75 | 32 | ||||||||||||||||||||
Argentina | 134 | 55 | 24 | 20 | 0 | 0 | 7 | 23 | 103 | 12 | ||||||||||||||||||||
Other | 230 | 453 | 42 | 66 | 16 | 9 | 0 | 1 | 172 | 377 | ||||||||||||||||||||
Middle East and Africa | 2,587 | 2,485 | 969 | 1,129 | 819 | 826 | 0 | 1 | 799 | 529 | ||||||||||||||||||||
United Arab Emirates | 608 | 444 | 223 | 202 | 130 | 140 | 0 | 1 | 255 | 101 | ||||||||||||||||||||
Saudi Arabia | 606 | 576 | 110 | 168 | 488 | 395 | 0 | 0 | 8 | 13 | ||||||||||||||||||||
South Africa | 589 | 514 | 163 | 269 | 39 | 172 | 0 | 0 | 387 | 73 | ||||||||||||||||||||
Israel | 214 | 326 | 125 | 145 | 40 | 17 | 0 | 0 | 49 | 164 | ||||||||||||||||||||
Kuwait | 130 | 116 | 32 | 58 | 98 | 51 | 0 | 0 | 0 | 7 | ||||||||||||||||||||
Other | 440 | 509 | 316 | 287 | 24 | 51 | 0 | 0 | 100 | 171 | ||||||||||||||||||||
Total | 20,088 | 17,791 | 6,667 | 6,131 | 4,060 | 3,859 | 181 | 227 | 9,180 | 7,574 | ||||||||||||||||||||
CHF million | Total | Banking products | Traded products | Financial investments | Tradable assets | ||||||||||||||||||||||||||||||||||||||||||||
As of | 31.12.09 | 31.12.08 | 31.12.09 | 31.12.08 | 31.12.09 | 31.12.08 | 31.12.09 | 31.12.08 | 31.12.09 | 31.12.08 | |||||||||||||||||||||||||||||||||||||||
Emerging Europe | 2,117 | 3,706 | 664 | 1,454 | 542 | 1,177 | 136 | 211 | 775 | 864 | |||||||||||||||||||||||||||||||||||||||
Emerging Asia | 13,725 | 16,460 | 4,299 | 3,594 | 4,949 | 7,059 | 652 | 879 | 3,825 | 4,928 | |||||||||||||||||||||||||||||||||||||||
Emerging America | 3,077 | 6,802 | 309 | 1,491 | 485 | 2,157 | 100 | 167 | 2,183 | 2,987 | |||||||||||||||||||||||||||||||||||||||
Middle East/Africa | 3,499 | 5,747 | 1,131 | 1,338 | 1,894 | 3,980 | 23 | 451 | 429 | ||||||||||||||||||||||||||||||||||||||||
Total | 22,418 | 32,715 | 6,403 | 7,877 | 7,870 | 14,373 | 911 | 1,257 | 7,234 | 9,208 | |||||||||||||||||||||||||||||||||||||||
Temporary exposures1 | 340 | 738 | |||||||||||||||||||||||||||||||||||||||||||||||
128132
Risk and treasury management |
Debt investments | ||||||||
Debt investments classified | ||||||||
The risk control framework |
Composition of debt investments | ||||||
Debt financial instruments classified asFinancial investments available-for-sale | ||||||
è | Refer to “Note 13 Financial investments available-for-sale” in the “Financial information” section of this report for more information | |||||
è | Refer to the “Non-trading portfolios” section of this report for more information | |||||
è | Refer to the “Treasury management” section of this report for more information on Group Treasury’s risk management activities |
129133
Risk and treasury management
Risk management and control
Market risk
Market risk is the risk of loss resulting from changes in market variables. There are two broad categories of market variables: general market risk factors and specific components. General market risk factors include interest rates, equity index levels, exchange rates, commodity prices and general credit spreads. The volatility of these risk factors and the correlations between them are also general market risk factors. Specific components relate to the prices of debt and equity instruments, which result from factors and events particular to individual companies or entities. | ||
Sources of market risk | ||
We take general and specific market risks both in our trading activities and in some non-trading businesses. | ||
Trading portfolios | ||
Most of our market risk arises from our trading activities in the Investment Bank, | ||
Our trading businesses are subject to multiple market risk limits. Traders are required to manage their risks within these limits, which may involve utilizing hedging and risk mitigation strategies. These strategies can expose the firm to |
Our asset management and wealth management businesses carry small trading positions, principally to support client activity. The market risk from these positions is not material to UBS as a whole. | ||
Non-trading portfolios | ||
Non-trading books may arise in any business division of the firm. Market risk exposures – primarily general interest rate and foreign exchange risks – may arise from non-trading activities such as retail banking and lending in our wealth management businesses, | ||
Non-trading foreign exchange risks are managed under market risk limits, |
managed under market risk limits, or subject to specific |
130
è | Refer to the “Treasury management” section of this report for more information on Group Treasury’s risk management activities |
Market risk limits | ||||
We |
In the Investment Bank, these portfolio measures are complemented by concentration and other supplementary limits on portfolios, asset classes and products, and also cover exposures to general market risk factors and | ||||
Our exposures from security underwriting commitments are subject to the same concentration measures and controls as secondary market positions. Underwriting commitments are also generally reviewed by our Commitment Committee, which includes | ||||
Market risk limits are set for each of the business divisions and Group Treasury. The limit framework in the Investment Bank is more detailed than in the other business divisions, reflecting the nature and magnitude of the risks it takes. |
131
For the purposes of our disclosure, VaR is used to quantify market risk exposures in our trading portfolios. | ||||
Value-at-risk definition and limitations | ||||
As a statistical measure of market risk, |
134
Risk and treasury management |
single VaR model for both internal management purposes and for determining market risk regulatory capital requirements, although the confidence levels and time horizons differ. | ||||
Our VaR model is approved by FINMA and ongoing significant revisions | ||||
The |
directly to our current positions – a method known as historical simulation. | ||||
Actual realized losses may differ from those implied by our VaR. All VaR measures are subject to limitations and must be interpreted accordingly. The limitations of VaR include the following: | ||||
– | The five-year historical period used in creating our VaR measure will include fluctuations in market rates and prices that differ from those |
– | The VaR measure is calibrated to a specified level of confidence and may not indicate potential losses beyond this confidence level. | |||
– | The 1-day time horizon in the VaR measure, |
UBS: Value-at-Risk (1-day, 95% confidence, 5 years of historical data) | |||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 31.12.09 | Year ended 31.12.08 | ||||||||||||||||||||||||||||||||||||||||||||||||
CHF million | Min. | Max. | Average | 31.12.09 | Min. | Max. | Average | 31.12.08 | |||||||||||||||||||||||||||||||||||||||||
Business divisions | |||||||||||||||||||||||||||||||||||||||||||||||||
Investment Bank | 43 | 75 | 55 | 54 | 57 | 105 | 79 | 74 | |||||||||||||||||||||||||||||||||||||||||
Wealth Management & Swiss Bank1 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||
Wealth Management Americas1 | 2 | 3 | 3 | 3 | 0 | 3 | 1 | 3 | |||||||||||||||||||||||||||||||||||||||||
Global Asset Management | 0 | 1 | 0 | 0 | 0 | 2 | 1 | 1 | |||||||||||||||||||||||||||||||||||||||||
Corporate Center | 2 | 16 | 5 | 4 | 3 | 25 | 9 | 6 | |||||||||||||||||||||||||||||||||||||||||
Diversification effect | 2 | 2 | (8 | ) | (7 | ) | 2 | 2 | (11 | ) | (6 | ) | |||||||||||||||||||||||||||||||||||||
Total management VaR3 | 44 | 78 | 55 | 54 | 59 | 106 | 79 | 78 | |||||||||||||||||||||||||||||||||||||||||
Diversification effect (%) | (13 | ) | (11 | ) | (12 | ) | (7 | ) | |||||||||||||||||||||||||||||||||||||||||
1 Split of former Global Wealth Management & Business Banking into Wealth Management & Swiss Bank and WM Americas not available for 2008, therefore all 2008 Global Wealth Management & Business Banking figures are shown under WM Americas. 2 As the minimum and maximum occur on different days for different risk types, it is not meaningful to calculate a portfolio diversification effect. 3 Includes all positions subject to internal management VaR limits. |
Investment Bank: Value-at-Risk (1-day, 95% confidence, 5 years of historical data) | Year ended 31.12.09 | Year ended 31.12.08 | |||||||||||||||||||||||||||||||||||||||||||||||
CHF million | Min. | Max. | Average | 31.12.09 | Min. | Max. | Average | 31.12.08 | |||||||||||||||||||||||||||||||||||||||||
Risk type | |||||||||||||||||||||||||||||||||||||||||||||||||
Equities | 13 | 36 | 22 | 21 | 18 | 63 | 38 | 19 | |||||||||||||||||||||||||||||||||||||||||
Interest rates | 16 | 38 | 24 | 23 | 27 | 85 | 46 | 31 | |||||||||||||||||||||||||||||||||||||||||
Credit spreads | 33 | 65 | 46 | 50 | 35 | 88 | 56 | 61 | |||||||||||||||||||||||||||||||||||||||||
Foreign exchange | 2 | 12 | 6 | 4 | 5 | 15 | 8 | 9 | |||||||||||||||||||||||||||||||||||||||||
Energy, metals & commodities | 2 | 5 | 4 | 3 | 3 | 13 | 6 | 5 | |||||||||||||||||||||||||||||||||||||||||
Diversification effect | 1 | 1 | (47 | ) | (47 | ) | 1 | 1 | (75 | ) | (51 | ) | |||||||||||||||||||||||||||||||||||||
Total management VaR2 | 43 | 75 | 55 | 54 | 57 | 105 | 79 | 74 | |||||||||||||||||||||||||||||||||||||||||
Diversification effect (%) | (46 | ) | (47 | ) | (49 | ) | (41 | ) | |||||||||||||||||||||||||||||||||||||||||
1 As the minimum and maximum occur on different days for different risk types, it is not meaningful to calculate a portfolio diversification effect. 2 Includes all positions subject to internal management VaR limits. |
132
– | In certain cases, VaR calculations approximate the impact of changes in risk factors on the values of positions and portfolios. This may happen because the number of risk factors included in the VaR model is necessarily | |||
– | The effect of extreme market | |||
We continue to review the performance of our VaR implementation, |
Year ended 31.12.09 | Year ended 31.12.08 | ||||||||||||||||||||||||||||||||||||||||||||||||
CHF million | Min. | Max. | Average | 31.12.09 | Min. | Max. | Average | 31.12.08 | |||||||||||||||||||||||||||||||||||||||||
Business divisions | |||||||||||||||||||||||||||||||||||||||||||||||||
Investment Bank | 179 | 541 | 315 | 286 | 240 | 601 | 374 | 485 | |||||||||||||||||||||||||||||||||||||||||
Wealth Management & Swiss Bank1 | 0 | 1 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||
Wealth Management Americas1 | 15 | 32 | 21 | 30 | 1 | 17 | 4 | 16 | |||||||||||||||||||||||||||||||||||||||||
Global Asset Management | 0 | 7 | 2 | 1 | 1 | 7 | 2 | 6 | |||||||||||||||||||||||||||||||||||||||||
Corporate Center | 2 | 67 | 14 | 7 | 3 | 93 | 26 | 10 | |||||||||||||||||||||||||||||||||||||||||
Diversification effect | 2 | 2 | (37 | ) | (23 | ) | 2 | 2 | (34 | ) | (25 | ) | |||||||||||||||||||||||||||||||||||||
Total regulatory VaR | 187 | 545 | 315 | 301 | 246 | 609 | 373 | 492 | |||||||||||||||||||||||||||||||||||||||||
Diversification effect (%) | (11 | ) | (7 | ) | (8 | ) | (5 | ) | |||||||||||||||||||||||||||||||||||||||||
Year ended 31.12.09 | Year ended 31.12.08 | ||||||||||||||||||||||||||||||||||||||||||||||||
CHF million | Min. | Max. | Average | 31.12.09 | Min. | Max. | Average | 31.12.08 | |||||||||||||||||||||||||||||||||||||||||
Risk type | |||||||||||||||||||||||||||||||||||||||||||||||||
Equities | 55 | 115 | 71 | 57 | 82 | 185 | 131 | 117 | |||||||||||||||||||||||||||||||||||||||||
Interest rates | 64 | 149 | 98 | 116 | 112 | 364 | 198 | 131 | |||||||||||||||||||||||||||||||||||||||||
Credit spreads | 216 | 489 | 332 | 322 | 151 | 613 | 322 | 412 | |||||||||||||||||||||||||||||||||||||||||
Foreign exchange | 4 | 55 | 27 | 27 | 12 | 58 | 28 | 30 | |||||||||||||||||||||||||||||||||||||||||
Energy, metals & commodities | 9 | 25 | 16 | 12 | 14 | 60 | 30 | 22 | |||||||||||||||||||||||||||||||||||||||||
Diversification effect | 1 | 1 | (229 | ) | (248 | ) | 1 | 1 | (335 | ) | (226 | ) | |||||||||||||||||||||||||||||||||||||
Total regulatory VaR | 179 | 541 | 315 | 286 | 240 | 601 | 374 | 485 | |||||||||||||||||||||||||||||||||||||||||
Diversification effect (%) | (42 | ) | (46 | ) | (47 | ) | (32 | ) | |||||||||||||||||||||||||||||||||||||||||
133
Year ended 31.12.09 | Year ended 31.12.08 | ||||||||||||||||||||||||||||||||||||
CHF million | Min. | Max. | Average | 31.12.09 | Min. | Max. | Average | 31.12.08 | |||||||||||||||||||||||||||||
Investment Bank | Regulatory VaR2 | 63 | 167 | 103 | 78 | 96 | 210 | 132 | 162 | ||||||||||||||||||||||||||||
UBS | Regulatory VaR2 | 64 | 170 | 104 | 79 | 97 | 207 | 133 | 163 | ||||||||||||||||||||||||||||
Group: value-at-risk (1-day, 95% confidence, 5 years of | |||||||||||||||||||||||||||||||||||||||
| For the | For the | |||||||||||||||||||||||||||||||||||||
CHF million, except where indicated | Min. | | Max. | Average | 31.12.10 | Min. | Max. | Average | 31.12.09 | ||||||||||||||||||||||||||||||
Business divisions | |||||||||||||||||||||||||||||||||||||||
Investment | 42 | 78 | 56 | 68 | 43 | 75 | 55 | 54 | |||||||||||||||||||||||||||||||
Wealth Management & Swiss Bank | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||
Wealth Management Americas | 1 | 3 | 2 | 1 | 2 | 3 | 3 | 3 | |||||||||||||||||||||||||||||||
Global Asset Management | 0 | 0 | 0 | 0 | 0 | 1 | 0 | 0 | |||||||||||||||||||||||||||||||
Treasury activities and other corporate items | 2 | 22 | 8 | 5 | 2 | 16 | 5 | 4 | |||||||||||||||||||||||||||||||
Diversification effect | 1 | 1 | (10 | ) | (7 | ) | 1 | 1 | (8 | ) | (7 | ) | |||||||||||||||||||||||||||
Total management VaR, Group2 | 42 | 76 | 57 | 68 | 44 | 78 | 55 | 54 | |||||||||||||||||||||||||||||||
Diversification effect (%) | (15 | ) | (9 | ) | (13 | ) | (11 | ) | |||||||||||||||||||||||||||||||
1 As the minimum and maximum occur on different days for different business divisions, it is not meaningful to calculate a portfolio diversification effect. 2 Includes all positions subject to internal management VaR limits. | |||||||||||||||||||||||||||||||||||||||
Investment Bank: value-at-risk (1-day, 95% confidence, 5 years of historical data) | |||||||||||||||||||||||||||||||||||||||
For the year ended 31.12.10 | For the year ended 31.12.09 | ||||||||||||||||||||||||||||||||||||||
CHF million, except where indicated | Min. | Max. | Average | 31.12.10 | Min. | Max. | Average | 31.12.09 | |||||||||||||||||||||||||||||||
Risk type | |||||||||||||||||||||||||||||||||||||||
Equities | 11 | 37 | 19 | 17 | 13 | 36 | 22 | 21 | |||||||||||||||||||||||||||||||
Interest rates | 13 | 44 | 24 | 23 | 16 | 38 | 24 | 23 | |||||||||||||||||||||||||||||||
Credit spreads | 42 | 70 | 55 | 59 | 33 | 65 | 46 | 50 | |||||||||||||||||||||||||||||||
Foreign exchange | 2 | 15 | 7 | 6 | 2 | 12 | 6 | 4 | |||||||||||||||||||||||||||||||
Energy, metals & commodities | 2 | 8 | 3 | 7 | 2 | 5 | 4 | 3 | |||||||||||||||||||||||||||||||
Diversification effect | 1 | 1 | (51 | ) | (43 | ) | 1 | 1 | (47 | ) | (47 | ) | |||||||||||||||||||||||||||
Total management VaR, Investment Bank2 | 42 | 78 | 56 | 68 | 43 | 75 | 55 | 54 | |||||||||||||||||||||||||||||||
Diversification effect (%) | (48 | ) | (39 | ) | (46 | ) | (47 | ) | |||||||||||||||||||||||||||||||
1 As the minimum and maximum occur on different days for different risk types, it is not meaningful to |
135
Risk and treasury management
Risk management and control
Value-at-risk developments in 2010 | ||||||
The tables in this section show our 1-day 95% management VaR for the Group and the Investment Bank. | ||||||
The Investment Bank’s average management VaR (1-day 95%) increased slightly to CHF 56 million in 2010 compared with CHF 55 million in 2009. Period-end VaR was higher at CHF 68 million on 31 December 2010 compared with CHF 54 million on 31 December 2009. This | ||||||
VaR for the Group | ||||||
Backtesting | ||||||
Backtesting compares 1-day 99% regulatory VaR calculated for positions at the close of each business day with the revenues which actually arise on those positions on the following business day. Our backtesting revenues exclude non-trading revenues, such as fees and commissions and estimated revenues from intraday trading. A backtesting exception occurs when backtesting revenues are negative and the absolute value of those revenues is greater than the previous day’s VaR. | ||||||
We experienced one backtesting exception in 2010 compared with four backtesting exceptions in |
134
May 2010. | ||||||
The | ||||||
We investigate all backtesting exceptions and any exceptional revenues on the profit side of the VaR distribution. In addition, we report all backtesting results to senior business management, the Group | ||||||
Backtesting exceptions are also reported to internal and external auditors and to the relevant regulators. |
Investment Bank: development of backtesting revenues1 against value-at-risk | ||||||
1 Excludes non-trading revenues, such as commissions and fees, and revenues from intraday trading. | ||||||
Investment Bank: all revenue distribution1 | ||||||
1 Includes all revenues from business areas which have trading activities. |
135136
Risk and treasury management |
Non-trading portfolios | ||
For the purposes of our disclosure, the market risks associated with our non-trading portfolios are quantified using sensitivity analysis. This includes an aggregate measure of our exposures to interest rate risk in the banking book and specific sensitivity information for certain significant portfolios and positions that are not included in our management VaR. | ||
Interest rate risk in the banking book | ||
The banking book consists ofAvailable-for-sale instruments, Loans and receivables,certainInstruments designated at fair value through profit or loss,derivatives measured at fair value through profit or loss and derivatives employed for cash flow hedge accounting purposes, as well as related funding transactions. These positions may impact other comprehensive income or profit or loss, due to differences in accounting treatment. | ||
All interest rate risk is subject to independent risk control. When not included in our VaR measure, interest rate risk is subject to specific monitoring, which may include interest rate sensitivity analysis, EaR, CaR and CST metrics. Interest rate risk sensitivity figures are provided for the impact of a 1-basis-point parallel increase in yield curves on present values of future cash flows, irrespective of accounting treatment. | ||
Our largest banking book interest rate risk exposures arise primarily from activities such as retail banking and lending in our Wealth Management & Swiss Bank division, as well as our treasury activities, which are mainly hedged. | ||
The interest rate risks arising in the Wealth Management & Swiss Bank are transferred either by means of back-to-back transactions or, in the case of products with no contractual maturity date or direct market-linked rate, via “replicating” portfolios from the originating business into one of two centralized interest rate risk management units: Group Treasury or the Investment Bank’s fixed income, currencies and commodities (FICC) unit. These units manage the risks as part of their risk portfolios within their allocated market risk limits and controls, on an integrated basis, exploiting the netting potential across interest rate risks from different sources. | ||
The Investment Bank’s portfolio of assets that were reclassified toLoans and receivablesfromHeld-for-tradingin the fourth quarter of 2008 and the first quarter of 2009, and certain other debt |
securities held asLoans and receivables,also give rise to non-trading interest rate risk. | ||||
Interest rate risk within Wealth Management Americas arises from the business division’s investment portfolio in addition to its lending and deposit products offered to clients. | ||||
Interest rate risk is closely measured, monitored and managed within approved risk limits and controls. Interest rate risk management incorporates the effects of natural risk offsets inherent within the balance sheet of Wealth Management Americas. | ||||
The interest sensitivity of non-contractual maturity products is modeled using historical behavior patterns from a complete interest rate cycle. | ||||
Group Treasury manages two main types of interest rate risk positions. One type is the risk transferred from Wealth Management & Swiss Bank’s banking operations (mentioned above). The other type arises from investing or funding non-monetary corporate balance sheet items that have indefinite lives such as equity and goodwill. For these items we have defined specific target durations based on which we fund and invest as applicable. These targets are defined by replication portfolios, which establish rolling benchmarks to execute against. The table below captures any residual risk in the Group Treasury books against these benchmarks. This activity and associated sensitivities of these replication portfolios are further discussed in the Group Treasury section. | ||||
In addition to its regular risk management activities, Group Treasury has been executing transactions that aim to economically hedge negative effects on the firm’s net interest income stemming from the extraordinarily low yield environment. These positions are the cause of the significant increase of our interest rate risk in the banking book compared to 2009. | ||||
è | Refer to “Group Treasury” section for more information on investment of equity | |||
The impact of an adverse parallel shift in interest rates of 200 basis points on our banking book interest rate risk exposures is significantly below the threshold of 20% of eligible regulatory capital specified by regulators. This is designed to identify banks that may be required to hold additional regulatory capital against this risk. | ||||
Interest rate sensitivity of available-for-sale bond investments In addition to the above economic risk view which also considers off-setting positions, we provide below the accounting view of |
Impact of a 1-basis-point parallel increase in yield curves on present value of future cash flows1 | ||||||||||
CHF million | 31.12.10 | 31.12.09 | ||||||||
CHF | (0.7 | ) | (0.3 | ) | ||||||
EUR | (2.1 | ) | (0.2 | ) | ||||||
GBP | (2.9 | ) | (0.3 | ) | ||||||
USD | (10.7 | ) | (0.8 | ) | ||||||
Other | (0.3 | ) | (0.1 | ) | ||||||
Total impact on interest rate-sensitive banking book positions | (16.6 | ) | (1.8 | ) | ||||||
1 Does not include interest rate sensitivities in respect of our inventory of student loan ARS or our commitment to purchase client holdings of student loan ARS. From an economic perspective these exposures are not materially affected by parallel shifts in USD interest rates, holding other factors constant. |
137
Risk and treasury management
Risk management and control
debt investments classified according to IFRSas Financial investments available-for-sale,which are measured at fair value through other comprehensive income. Debt financial instruments classified asFinancial investments available-for-saleamounted to CHF 73.4 billion on 31 December 2010. A 1-basis-point increase in the respective yields of the IFRS debt instruments available-for-sale portfolio would have decreased equity by approximately CHF 15 million from fair value changes posted to OCI. This estimation excludes economic off-setting positions and is included in the above table on interest rate-sensitivities in the banking book, together with partially offsetting hedge and funding effects, or in disclosed VaR. | ||||||
è | Refer to “Note 13 Financial investments available-for-sale” in the “Financial information” section of this report for more information | |||||
è | Refer to “Debt investments” in the “Credit risk” section of this report for more information | |||||
Interest rate sensitivity of interest rate swaps designated in cash flow hedges | ||||||
To the extent effective, interest rate swaps designated in cash flow hedges are accounted for at fair value through equity under IFRS. Amounts deferred in equity are released to the income statement according to the occurrence of the underlying hedged interest cash flows. Interest rate swaps designated in cash flow hedges are denominated in USD, EUR, GBP, CHF and CAD. At 31 December 2010, fair values of interest rate swaps amounted to CHF 5.4 billion (positive replacement values) and CHF 3.4 billion (negative replacement values). The impact on other comprehensive income under IFRS of a 1-basis-point increase of underlying LIBOR curves would have decreased equity by approximately CHF 21 million. This estimation excludes economic offsetting positions and is included in the above table on interest rate sensitivities in the banking book, together with partially offsetting hedge and funding effects. | ||||||
Non-trading portfolios – valuation and sensitivity information by instrument category | ||||||
This section includes a description of the valuation of certain significant product categories and related valuation techniques and models. In addition, sensitivity information is provided for certain significant instrument categories that are excluded from management VaR as disclosed in the “Risk and treasury management” section of this report. | ||||||
Credit valuation adjustments on monoline credit protection | ||||||
UBS previously entered into negative basis trades with monolines, whereby they provided CDS protection against UBS-held underlyings, including residential and commercial mortgage-backed securities collateralized debt obligations (RMBS and CMBS CDO), trans- |
actions with CLO, and asset-backed securities collateralized debt obligations (ABS CDO). Since the start of the financial crisis, the CVA relating to these monoline exposures have been a source of valuation uncertainty, given market illiquidity and the contractual terms of these exposures relative to other monoline-related instruments. | ||||||
CVA amounts related to monoline credit protection are based on a methodology that uses CDS spreads on the monolines as a key input in determining an implied level of expected loss. Where a monoline has no observable CDS spread, a judgment is made on the most comparable monoline or combination of monolines, and the corresponding spreads are used instead. For RMBS CDO, CMBS CDO, and CLO asset categories, cash flow projections are used in conjunction with current fair values of the underlying assets to provide estimates of expected future exposure levels. For other asset categories, future exposure is derived from current exposure levels. | ||||||
To assess the sensitivity of the monoline CVA calculation to alternative assumptions, the impact of a 10% increase in monoline CDS spreads (e.g. from 1,000 basis points to 1,100 basis points for a specific monoline) was examined. On 31 December 2010, such an increase would have resulted in an increase in the monoline credit valuation adjustment of approximately USD 45 million (CHF 42 million) compared with USD 77 million or CHF 80 million on 31 December 2009. | ||||||
The sensitivity of the monoline CVA to a decrease of one percentage point in the monoline recovery rate assumptions (e.g. from 35% to 34% for a specific monoline, conditional on default occurring) is estimated to result in an increase of approximately USD 9 million (CHF 8 million) in the CVA, compared with USD 26 million or CHF 27 million on 31 December 2009. The sensitivity to credit spreads and recovery rates is substantially linear. | ||||||
US reference-linked notes | ||||||
The US reference-linked notes (RLN) consist of a series of transactions whereby UBS purchased credit protection, predominantly in note form, on a notional portfolio of fixed income assets. The referenced assets are comprised of USD asset-backed securities (ABS). These are primarily commercial mortgage-backed securities and subprime residential mortgage-backed securities and/or corporate bonds and loans across all rating categories. While the assets in the portfolio are marked-to-market, the credit protection embodied in the RLN is fairly valued using a market standard approach to the valuation of portfolio credit protection (Gaussian copula). This approach is intended to effectively simulate correlated defaults within the portfolio, where the expected losses and defaults of the individual assets are closely linked to the observed market prices (spread levels) of those assets. Key assumptions of the model include correlations and recovery rates. UBS applies fair value adjustments related to potential uncertainty in each of these |
138
Risk and treasury management |
parameters, which are only partly observable. In addition, UBS applies fair value adjustments for uncertainties associated with the use of observed spread levels as the primary inputs. These fair value adjustments are calculated by applying shocks to the relevant parameters and revaluing the credit protection. These shocks for correlation, recovery and spreads are set to various levels depending on the asset type and/or region and may vary over time depending on the best judgment of the relevant trading and control personnel. Correlation and recovery shocks are generally in the reasonably possible range of 5 to 15 percentage points. Spread shocks vary more widely and depend on whether the underlying protection is funded or unfunded to reflect cash or synthetic basis effects. | ||||||
On 31 December 2010, the fair value of the US RLN credit protection was approximately USD 629 million (CHF 588 million) compared with USD 1,431 million (CHF 1,481 million) on 31 December 2009. This fair value includes fair value adjustments which were calculated by applying the shocks described above of approximately USD 31 million (CHF 29 million). This compares with USD 71 million (CHF 74 million) on 31 December 2009. The fair value adjustments may also be considered a measurement of sensitivity. | ||||||
Non-US reference-linked notes | ||||||
The same valuation model and approach to the calculation of fair value adjustments are applied to the non-US RLN credit protection and the US RLN credit protection as described above, except that the spread is shocked by 10% for European corporate names. | ||||||
On 31 December 2010, the fair value of the non-US RLN credit protection was approximately USD 660 million (CHF 616 million) compared with USD 1,050 million (CHF 1,087 million) on 31 December 2009. This fair value includes fair value adjustments which were calculated by applying the shocks described above of approximately USD 72 million (CHF 67 million) compared with USD 105 million (CHF 109 million) on 31 December 2009. This adjustment may also be considered a measurement of sensitivity. | ||||||
Option to acquire equity of the SNB StabFund | ||||||
UBS’s option to purchase the SNB StabFund’s equity is recognized on the balance sheet as a derivative at fair value (positive replacement values) with changes to fair value recognized in profit or loss. On 31 December 2010, the fair value (after adjustments) of the call option held by UBS was approximately USD 1,906 million (CHF 1,781 million) compared with USD 1,174 million (CHF 1,216 million) on 31 December 2009. | ||||||
The model incorporates cash flow projections for all assets within the fund across various scenarios. It is calibrated to market levels by setting the spread above the one-month Libor rates used |
to discount future cash flows such that the model-generated price of the underlying asset pool equals UBS’s assessed fair value of the asset pool. The model incorporates a model reserve (fair value adjustment) to address potential uncertainty in this calibration. On 31 December 2010, this adjustment was USD 250 million (CHF 234 million) compared with USD 262 million (CHF 271 million) on 31 December 2009. | ||||||
On 31 December 2010, a 100-basis-point increase in the discount rate would have decreased the option value by approximately USD 167 million (CHF 156 million), and a 100-basis-point decrease would have increased the option value by approximately USD 188 million (CHF 176 million). | ||||||
Stress loss | ||||||
Our market risk stress testing framework | ||||||
è | Refer to the discussion on stress loss in | |||||
Equity investments | ||||||
Under IFRS, equity investments not in the trading book may be classified asFinancial investments available-for-sale, Financial assets designated at fair value through profit or lossorInvestments in associates. | ||||||
We make investments for a variety of purposes, including revenue generation or as part of strategic initiatives. Other investments, such as exchange and clearing house memberships, are held |
139
Risk and treasury management
Risk management and control
investors. We | ||
We |
to the individual stocks, and our equity investments are generally intended to be held for the | ||||
Investments made as part of an ongoing business are also subject to our standard controls, including portfolio and concentration limits. Seed money and co-investments in UBS-managed funds made by Global Asset Management are, for example, subject to a portfolio limit. All investments must be approved |
Composition of equity investments | ||||
As of 31 December 2009, we held equity investments totaling CHF 3.1 billion, of which CHF 1.4 billion were classified asFinancial investments available-for-sale, CHF 0.8 billion asFinancial assets designated at fair valueand CHF 0.9 billion asInvestments in | ||||
The vast majority of the CHF | ||||
è | Refer to “Note 12 Financial assets designated at fair value” in the “Financial information” section of this report for further information | |||
è | Refer to “Note 13 Financial investments available-for-sale” in the “Financial information” section of this report for further information | |||
è | Refer to “Note 14 |
136140
Risk and treasury management |
Operational risk framework
The operational risk framework sets general requirements for managing and perform independent oversightcontrolling operational risk, including implementation by divisional and functional management. The framework
– | theft, fraud and unauthorized activity | |
– | employment-related risks | |
– | business practices | |
– | operating and legal entity governance | |
– | client selection and monitoring | |
– | investment suitability, maintenance and servicing | |
– | data confidentiality and protection | |
– | product risks and business due diligence | |
– | transaction processing and operational reliability | |
– | technology risks | |
– | vendors and offshoring | |
– | valuation and reporting | |
– | primary risk management and control |
141
Risk and treasury management
Risk management and control
Operational risk measurement
We have developed a model for the quantification of our operational risk, which meets the regulatory capital standard specified by the Basel II Advanced Measurement Approachadvanced measurement approach (AMA). Our model has two main components:components. The expected loss component is a statistical measure based on our own historical loss experiences (collected since 2002), and is used primarily to determine the expected loss portion of our capital requirement. The unex-
pected loss component is based on a set |
è | Refer to the “Capital management” section of this report for more information on the development of RWA for operational risk |
137142
138
Risk and treasury management |
Risk concentrations
Risk concentrations | ||||||
A risk concentration exists where: (i) a position in financial instruments is affected by changes in a group of correlated factors, or a group of positions | ||||||
The identification of risk concentrations requires judgment, as potential future developments cannot be predicted and may vary from period to period. In determining whether we have a risk concentration, we consider a number of elements, both individually and collectively. These elements include: the shared characteristics of the instruments and counterparties; the size of the position or group of positions; the sensitivity of the position or group of positions to changes in risk factors; and the volatility and correlations of those factors. Also important in our assessment is the liquidity of the markets | ||||||
If we identify a risk concentration, we assess it to determine whether it should be reduced or mitigated, and we also evaluate the available means to do so. Our identified risk concentrations are subject to increased monitoring. | ||||||
Identified risk concentrations | ||||||
Based on our assessment of our portfolios and asset classes with potential for material loss in a stress scenario relevant to the current environment, we believe that our exposures to monoline insurers and student loan auction rate securities shown below can be considered as risk concentrations | ||||||
It is possible that material losses could occur on asset classes, positions and hedges other than those disclosed in this section of the report, particularly if the correlations that emerge in a stressed environment differ markedly from those we anticipated. We are exposed to price risk, basis risk, credit spread risk and default risk | ||||||
In addition, we have lending, counterparty and country risk exposures that could | ||||||
è | Refer to the discussion of credit risk, market risk and operational risk above for more information on the risks to which we are exposed |
Exposure to monoline insurers | ||||||
The vast majority of our direct exposures to monoline insurers arise from OTC derivative | ||||||
| Exposure under CDS contracts with monoline insurers is calculated as the sum of the fair values of individual | |||||
| UBS actively reduced |
139
Risk and treasury managementRisk management and control
collateralized loan obligations | ||||||
| On 31 December |
In addition to credit protection | ||||||
è | Refer to |
143
Risk and treasury management
Risk management and control
Exposure to monoline insurers, by rating1 | ||||||||||||||||||||||
31.12.10 | ||||||||||||||||||||||
Fair value of | Fair value of | |||||||||||||||||||||
Fair value | CDS prior to | Credit | CDS after | |||||||||||||||||||
Notional | of underlying | credit valuation | valuation | credit valuation | ||||||||||||||||||
amount3 | assets | adjustment | adjustment | adjustment | ||||||||||||||||||
Column 3 | Column 5 | |||||||||||||||||||||
USD million | Column 1 | Column 2 | (=1–2) | Column 4 | (=3–4) | |||||||||||||||||
Credit protection on US sub-prime residential mortgage- backed securities (RMBS) CDO, all from monolines rated sub-investment grade (BB and below)2 | 750 | 204 | 546 | 385 | 161 | |||||||||||||||||
Credit protection on other assets2 | 11,156 | 9,002 | 4 | 2,153 | 702 | 1,451 | ||||||||||||||||
of which: from monolines rated investment grade (BBB and above) | 2,288 | 1,935 | 353 | 68 | 285 | |||||||||||||||||
of which: from monolines rated sub-investment grade (BB and below) | 8,868 | 7,067 | 1,800 | 634 | 1,166 | |||||||||||||||||
Total 31.12.10 | 11,906 | 9,206 | 2,699 | 1,087 | 1,612 | |||||||||||||||||
Total 31.12.09 | 14,187 | 9,083 | 5,103 | 2,795 | 2,308 | |||||||||||||||||
1 Excludes the benefit of credit protection purchased from unrelated third parties. 2 Categorization based on the lowest insurance financial strength rating assigned by external rating agencies. 3 Represents gross notional amount of CDS purchased as credit protection. 4 Includes USD 5.8 billion (CHF 5.4 billion) at fair value / USD 5.6 billion (CHF 5.3 billion) at carrying value of assets that were reclassified to Loans and receivables from Held for trading in the fourth quarter of 2008. Refer to “Note 29b Reclassification of financial assets” in the “Financial information” section of this report. |
Exposure to student loan auction rate securities | ||||||||||
Approximately USD 2010. | ||||||||||
We have committed to restore liquidity to certain client holdings of ARS. This commitment is in line with previously announced agreements in principle with various US state agencies, as well as the final settlements entered into with the Massachusetts Securities Division, the US Securities and Exchange Commission and the New York State Attorney General. We repurchased USD required by the regulatory settlements (as shown in the table “Client holdings: student loan ARS”) compared with a reduction of USD 3,958 million in 2009. On 31 December 2010, |
our outstanding repurchase commitment was USD 63 million. This concerns institutional client holdings of student loan ARS, and the relevant buy-back window will close on 2 July 2012. | ||||||||||
Our inventory of student loan ARS | USD 145 million (CHF 148 million). Approximately | |||||||||
140144
Risk and treasury management
Risk and treasury management Treasury management Group Liquidity management In 2010, we continued to Funding management Over the course of 2010, as investors became gradually more risk tolerant, credit spreads and incremental funding costs for most global financial institutions, including UBS, generally narrowed throughout the Interest rate and currency management The interest rate risk management responsibility for Wealth Management & Swiss Bank transactions executed in Switzerland was transferred to Group Treasury. The interest rate risk arising from this is managed by Group Treasury to optimize risk capture, management and netting potential. In response to the protect shareholder value. Capital ratios, risk-weighted assets and eligible capital On 31 December 2010, our BIS tier 1 ratio spectively, on 31 December Equity attribution Group Treasury uses our equity attribution framework to guide our businesses in the best risk-adjusted profitability contributions. Shares As of 31 December Financial resource governance Our Group Asset and Liability Management Committee (Group ALCO) promotes the usage of our assets and liabilities in line with our overall UBS Group (Group) strategy as defined by the Board of Directors (BoD) and the Group Executive Board (GEB), our regulatory commitments and the interests of our shareholders and other stakeholders. The Group Treasury provides Group ALCO with monthly reporting of our financial resources (e.g. balance sheet, capital, liquidity and funding) in order for them to
Liquidity and funding management
147 Risk and treasury management
148
New Swiss regulatory liquidity regime During 2010, the Swiss Financial Market Supervisory Authority (FINMA) and the Swiss National Bank (SNB) introduced a revised liquidity regime for big banks which came into effect on 30 June 2010, designed to ensure stability within the Swiss financial industry. The new regime is broadly consistent with international proposals for liquidity regulations, particularly the principles written by the Basel Committee for Banking Supervision. The core element of the new liquidity regime is a severe stress scenario that combines a general financial market crisis with creditors’ loss of trust in the bank. The new liquidity regulations require the banks to hold liquid assets sufficient to offset the projected outflows under the stress scenario for a period of 30 days. Our established internal liquidity stress tests consider a stress scenario similar in nature to that used by the new FINMA liquidity regime. We believe this will enable us to sustain our business for a period substantially beyond the minimum regulatory horizon.
149 Risk and treasury management
funding needed to support ongoing business activities through periods of difficult market conditions.
We also regularly monitor our main funding portfolios for
1 As a percent of total funding sources defined as the CHF 782 billion on the balance sheet comprising Repurchase agreements, Securities lending against cash collateral received, Due to banks, Money market paper issued, Due to customers, Long-term debt (including financial liabilities at fair value) and Cash collateral on derivative transactions and Prime brokerage payables. 2 UBS has changed presentation of cash collateral for derivative transactions and prime brokerage receivables and payables. These positions are no longer included in interbank and demand deposits, but are shown on separate lines in the table above. 150
UBS: funding by product type1 1 Excluding trading portfolio liabilities, negative replacement values, other liabilities and equity. UBS: funding by currency1 1 Excluding trading portfolio liabilities, negative replacement values, other liabilities and equity. Funding position and diversification We The overall composition of our funding sources at the end of Credit Credit ratings generally affect the cost and availability of funding,
Maturity breakdown of long-term straight debt portfolio The “Long-term straight debt – contractual maturities” graph shows a contractual maturity breakdown of our long-term straight debt portfolio, and therefore excludes all structured debt, which is predominantly booked as financial liabilities designated at fair value. The long-term straight debt portfolio amounted to CHF 70 billion on 31 December 2010, up by Long-term straight debt – contractual maturities
Risk and treasury management
Interest rate and currency management
1 As the minimum and maximum occur on different days for different risk types, it is not meaningful to calculate a portfolio diversification effect. 153 Risk and treasury management
Capital management
155 Risk and treasury management
1 Includes securitization exposures and equity exposures not part of the trading book and capital requirements for settlement risk (failed trades).
Transfer of capital within UBS Group Under Swiss company law, UBS is organized as an “Aktiengesellschaft”, a corporation that has issued shares of common stock to investors. UBS AG is the parent company of the Group. The legal entity structure of the Group is designed to support our businesses within an efficient legal, tax, regulatory and
IFRS equity to BIS tier 1 capital The main differences between IFRS equity attributable to shareholders and tier 1 capital result from:
157 Risk and treasury management
1 Total assets are calculated as the average of the month-end values for the three months in the calculation period. 2 Includes the impact of netting agreements (including cash collateral) in accordance with Swiss Federal Banking law, based on the IFRS scope of consolidation. 3 Includes mortgage loans to international clients for properties located in Switzerland. 4 Refer to the “Capital components” table for more information on deductions of assets from BIS tier 1 capital.
The amount of equity attributed to each division is an important input into the calculation of economic profit for that division. As outlined in the table “Average attributed equity”, the amount of average equity attributed to the Investment Bank In addition, the increases in both the Investment Bank and in Treasury activities and other corporate items were due to We continue to use both internal assessments of risk (as reflected in the UBS Risk-Based Capital framework) and regulatory measures of risk as drivers, as we believe that both play a role in the amount of equity needed to strongly support each division and UBS as a whole. In addition, we believe it is useful for top management and the BoD to compare equity requirements derived from internal risk measures with equity requirements derived from regulatory capital requirements and standards. Further, the equity attribution framework continues to be forward-looking. Therefore, with regard to the RWA and asset drivers, we will be taking into account during 2011 the impacts of the enhanced Basel II framework and Basel III requirements.
Risk and treasury management Shares and capital instruments Shares UBS shares and tier 1 capital The majority of our tier 1 capital comprises share premium and retained earnings attributed to UBS shareholders. As of 31 December In 2010, the shares issued were increased by a total of 272,727,760 shares due to the conversion of CHF 13 billion mandatory convertible notes (MCN) on 5 March 2010, leading to an issuance of 272,651,005 shares from conditional capital. In addition, the exercise of employee options led to the issuance of 76,755 shares. Each share has a par value of CHF 0.10, and generally entitles the holder to one vote at the shareholders’ meeting and to a proportionate share of
Under Swiss company law, shareholders must approve in a shareholders’ meeting any increase in the total number of issued shares, which may arise from an ordinary share capital increase or the creation of conditional or authorized capital. The table below lists all shareholder-approved Holding of UBS shares UBS holds own shares for two main purposes: in Group Treasury to cover employee share and option programs and in the Investment Bank, to a limited extent, for trading purposes where The holding of treasury shares on 31 December
The presentation in the table Treasury shares held by the Investment Bank The Investment Bank, acting as liquidity provider to the equity index futures market and as a Shares
Shareholder-approved issuance of shares
160
Capital instruments In order to improve the quality of capital, regulators are proposing new requirements for capital instruments and creating a new category of capital instruments: contingent convertible bonds (CoCo). The changes proposed are designed to increase the resilience against a financial crisis and are expected to maintain the banks in crisis as going concerns. Regulators view these instruments as additional protection against systemic risks of large banks.
Mandatory convertible notes As part of the measures taken to strengthen our capital base in 2008, we issued two billion. The CHF 6 billion Hybrid tier 1 capital Hybrid tier 1 instruments represent innovative and non-innovative perpetual instruments. They are accounted for under Treasury share activities
1 This table excludes market-making and related hedging purchases by UBS. The table also excludes UBS shares purchased by investment funds managed by Conversion price and number of shares
1 Adjusted for dilution effects
Risk and treasury management Tier 2 capital The major element in tier 2 capital consists of subordinated long-term debt. Tier 2 instruments have been issued in various currencies and with a range of maturities across capital markets globally. They accounted for CHF Distributions to shareholders The decision whether to pay a dividend, and the level of the dividend, are dependent on our targeted capital ratios and
UBS shares in UBS share price chart vs Dow Jones Banks Titans 30 Index UBS shares are listed on the SIX Swiss Exchange (SIX) and the New York Stock Exchange (NYSE)
Over the course of Share liquidity During
During the hours in which both the SIX and the prevailing US dollar/Swiss franc exchange rate. When the SIX Ticker symbols
Security identification codes
163 Risk and treasury management UBS share data
UBS shares and market capitalization
1 Market capitalization is calculated based on the total UBS ordinary shares issued multiplied by the UBS share price at period end. The total UBS ordinary shares issued as of 31 December 2009 do not reflect the 272.7 million UBS shares issued through the conversion of MCN placed with two investors in March 2008, and converted in March 2010. In addition, the total UBS ordinary shares as of 31 December 2008 do not reflect the 332.2 million shares issued through the conversion of MCN issued in December 2008, and converted in August 2009. Refer to “Note 8 Earnings per share (EPS) and shares outstanding” in the “Financial information” section of this report for more information. Trading volumes
Stock exchange prices1
1 Historical share price adjusted for the rights issue and stock dividend 2008.
Risk and treasury management Basel II Pillar 3 Introduction The Basel II capital adequacy The Swiss Financial Market Supervisory Authority (FINMA) requires us to publish comprehensive quantitative and qualitative Pillar 3 disclosures at least annually, as well as an update of quantitative disclosures and any significant changes to qualitative information at least semi-annually. This section presents our Basel II Pillar 3 disclosures as of 31 December
Overview of disclosures This table provides an overview of our Basel II Pillar 3
166
Our Pillar 3 disclosures may differ from the way we manage our risks and how these risks are disclosed in our quarterly reports and in other sections of this annual report. Measures of risk exposure may differ depending on the purpose for which exposures are calculated: financial accounting under International Financial Reporting Standards (IFRS), determination of our required regulatory capital or our internal management of the firm. Our Basel II Pillar 3 disclosures are generally based on the measures of risk exposure that are used to calculate the regulatory capital that is required to underpin those risks. The table below provides a more detailed summary of the approaches we use for the main risk categories for the determination of required regulatory capital. The naming conventions for the “Exposure segments” used in the following tables are based on the Bank for International Settlements (BIS) rules and differ from those under Swiss and EU regulations. For example, “Sovereigns” under the BIS naming convention Although we determine published risk-weighted assets (RWA) according to the Basel II Capital Accord (BIS guidelines), our lation of the regulatory capital requirement is based on the regulations of FINMA, which are more conservative and therefore Generally, the scope of consolidation for
167 Risk and treasury management Capital The “Detailed segmentation of BIS risk-weighted assets” table
Credit risk The tables in this section provide details on the exposures used to determine the firm’s credit risk regulatory capital. The parameters applied under the advanced IRB approach are generally based on the same methodologies, data and systems used by the firm for internal credit risk quantification, except where certain treatments are specified by regulatory requirements. These include, for example, the application of regulatory prescribed floors and pliers, and differences with respect to eligibility criteria and exposure definitions. The exposure information presented in this section differs therefore from that disclosed in the “Risk management and control” section of this report. Similarly the regulatory capital prescribed measure of credit risk exposure also differs to that required under IFRS. With respect to the calculation of derivative exposures for determining our required regulatory capital, we The regulatory net credit exposure detailed in the tables in this section is shown as the Basel II
1 On 31 December 2010, approximately CHF 3 billion of the securitization exposures were deducted from capital and therefore do not generate RWA. 2 Simple risk weight method. 3 VaR approach. 4 Advanced measurement approach. 5 Reflects an additional charge of 10% on credit risk RWA for exposures treated under the standardized approach, a FINMA surcharge of 200% for RWA of non-counterparty-related assets and additional FINMA requirements for market risk. 6 As of 31 December 2010, the FINMA tier 1 ratio amounts to 16.4% and the FINMA total capital ratio to 18.9%. Taking into account the effects from the transitional provisions of the capital floor, which require 5% of the total FINMA RWA, FINMA RWA would increase by CHF 10.8 billion, resulting in a FINMA tier 1 ratio of 15.6% and a FINMA total capital ratio of 18.0%. 168
Credit risk exposures and risk-weighted assets This table shows the average exposure and the derivation of
1 Regulatory credit risk offsets and adjustments mainly include margin accounts for derivatives. 2 The derivation of
Regulatory gross credit exposure by geographical region This table provides a breakdown of our portfolio by major types of credit exposure according to classes of financial instruments and also by geographical regions. The latter distribution is based on the legal domicile of the customer.
1 169 Risk and treasury management Regulatory gross credit exposure by counterparty type This table provides a breakdown of our portfolio by major types of credit exposure according to classes of financial instruments and also by counterparty type. The classification of counterparty type applied here is also used for the grouping of the balance sheet.
1
Regulatory gross credit exposure by residual contractual maturity This table provides a breakdown of our portfolio by major types of credit exposure according to classes of financial instruments and also by maturity. The latter distribution is based on the residual contractual tenor.
1 Includes positions without an agreed residual contractual maturity, for example loans without a fixed term, on which notice of termination has not been given. 2 170
Derivation of regulatory net credit exposure This table provides a derivation of the regulatory net credit exposure from the regulatory gross credit exposure according to the advanced IRB approach and the
1
Risk and treasury management Basel II Pillar 3 Regulatory gross credit exposure covered by guarantees and credit derivatives
The collateral amounts in the table reflect the values used for determining regulatory capital. However, we utilize credit hedging to reduce concentrated exposure to individual names or sectors or in specific portfolios, which is not fully reflected in the regulatory numbers in this section.
1 Includes guarantees and
Advanced IRB This table provides a breakdown of the regulatory net credit exposure of our credit portfolio (including loan commitments) using the advanced IRB approach according to our internal rating classes.
1 Advanced IRB This table provides a breakdown of the net exposure-weighted average loss given default (LGD) for our credit portfolio exposures calculated using the advanced IRB approach, according to our internal rating classes.
Risk and treasury management Basel II Pillar 3 Advanced IRB This table provides a breakdown of the net exposure-weighted average
Standardized approach The standardized approach is generally applied where it is not possible to use the advanced IRB approach We use ECAI risk assessments
We selected three FINMA-recognized external credit assessment institutions for this 174
Regulatory gross and net credit exposure by risk weight under the standardized approach This table provides a breakdown of the regulatory gross and net credit exposure by
1
Eligible financial collateral recognized under standardized approach This table provides a breakdown of the financial collateral, which is eligible for recognition in the regulatory capital calculation under the standardized approach, according to Basel II defined exposure segments.
1 The eligible financial collateral reflects the impact of the application of regulatory haircuts. For traded products it is the difference between the IFRS reported values and the regulatory net credit exposure.
Risk and treasury management Impairment, default and credit loss As illustrated in the tables below, our impaired assets decreased 46% on 31 December 2010 compared with 31 December 2009, mainly due to sales of legacy loan positions and reductions in our impaired derivative exposures. Impaired assets by This table shows a breakdown of credit exposures arising from impaired assets and
1 Values of defaulted derivative Impaired assets by exposure segment This table provides a breakdown of movements in the specific and collective allowances and provisions for impaired assets, including changes in the credit valuation allowance for derivatives.
1 Values of defaulted derivative transactions (CHF 1,915 million) are based on replacement values and do not include “add-ons” used in the calculation of regulatory capital. 2 Collective credit valuation adjustments of CHF 723 million are partially included in the upper tier 2 capital and therefore not included in this table. 3 176
Changes in allowances, provisions and specific credit valuation adjustments for defaulted derivatives This table provides a breakdown of movements in the specific and collective allowances and provisions for impaired assets, including changes in the credit valuation allowance for defaulted derivatives.
1 Collective credit valuation adjustments of CHF
Risk and treasury management Other credit risk tables Our credit derivative trading is predominately on a collateralized basis. This means that our credit exposures arising from our derivatives activities with collateralized counterparties are typically closed out in full or reduced to nominal levels on a regular basis by the use of collateral. Derivatives trading with counterparties with higher credit ratings (for example a large bank or broker-dealer) is typically under an International Swaps and Derivatives Association (ISDA) master trading agreement (MTA) and credit exposures to those counter-parties from credit default swaps (CDS), together with exposures from other OTC derivatives, are netted and included in the calculation of the collateral required to be posted. Trading with lower rated counterparties (for example, hedge funds) would also generally require an initial margin to be posted by the counterparty. We therefore receive collateral from or post collateral to our counterparties based on our open net receivable or net payable from OTC derivative activities. Under the terms of the ISDA MTA and like forms, that collateral (which generally takes the form of cash or highly liquid fixed income securities) is available to cover any amounts due under those derivative transactions. Settlement risk (including payment risk) of CDS has been mitigated to some extent by the development of a market-wide credit event auction process which has resulted in a widespread shift to the cash settlement of CDS following a credit event on a reference entity. During 2009 and 2008, we participated in various industry-wide compression and “tear up” initiatives which reduced notional values and operational risks by terminating existing transactions and in certain cases replacing them with a smaller number of new transactions. We have not experienced any significant losses from failed settlements on CDS contracts in 2010 and 2009. The vast majority of our CDS trading activity is conducted by the Investment Bank. The “Credit derivatives portfolio (split by counterparty)” table provides further analysis of the Investment Bank’s CDS counterparties based on notional amount of CDS protection purchased and sold. The analysis shows that the vast majority of the Investment Bank’s CDS counterparties are market professionals. Based on the same notional measure, approximately 97% of these counterparties were rated investment grade and approximately 99% of the CDS activity was traded on a collateralized basis. Credit exposure of derivative instruments This table provides an overview of our credit exposures arising from derivatives. Exposures are provided based on the balance sheet carrying values of derivatives as well as regulatory net credit exposures. The net balance sheet credit exposure differs from the regulatory net credit exposures because of differences in valuation methods and the netting and collateral deductions used for accounting and regulatory capital purposes. Specifically, net current credit exposure is derived from gross positive replacement values, whereas regulatory net credit exposure is calculated using our internal credit valuation models.
1 Derivatives exposure based on accounting definition (consolidation scope for capital) measured as gross positive replacement values with netting benefits from negative replacement values with the same counterparty. 2 Derivatives exposure is defined as regulatory net credit risk exposure. 178
Credit derivatives1, 2 This table provides an overview of our credit derivative portfolio by product group using notional values. The table also provides a breakdown of credit derivative positions used to manage our own credit portfolio (banking book for regulatory purposes) risks and those arising through intermediation activities (trading book for regulatory capital purposes).
1 Notional amounts of credit derivatives are based on accounting definitions and do not include any netting benefits. For capital underpinning of the counterparty credit risk of derivative positions, the effective expected positive exposure (or exposure according to current exposure method) is taken.
1 Counterparty analysis based on notional CDS exposures of the Investment Bank sourced from credit risk systems.
Risk and treasury management Investment positions
The IFRS view differs from the regulatory capital view primarily due to: (i) differences in the basis of valuation in that IFRS is based on “fair value accounting” whereas “lower of cost or market value” (LOCOM) or “cost less impairment” are used for regulatory capital purposes; (ii) positions may be treated under a different framework to determine regulatory capital (for example tradable assets treated under consolidation for IFRS, for example special purpose entities consolidated for IFRS but not for regulatory capital purposes. Also shown in the table “Equities disclosure for banking book positions” are net realized Equities disclosure for banking book positions This table provides an overview of our equity investments held in the banking book for regulatory capital purposes. The calculation of equity investment exposure for financial accounting under IFRS differs from that required for regulatory capital purposes. The table illustrates these two measures of exposure as well as the key differences between them.
Market risk Risk-weighted assets attributable to market risk increased to CHF 20.8 billion as of 31 December 2010, compared with CHF 12.9 billion as of 31 December 2009. We increased our trading risk expo- sure, as we took on more trading risk in line with the execution of our already communicated growth plans in the second half of 2010. The market risk regulatory capital requirement is 8% of the respective RWA. Market risk regulatory capital and RWA are derived from our VaR model and subject to regulatory determined multipliers. Group: value-at-risk (10-day, 99% confidence, 5 years of historical data) This table provides a breakdown of the Group’s minimum, maximum, average and period-end regulatory VaR by business division.
1 As the minimum and maximum occur on different days for different business divisions, it is not meaningful to calculate a portfolio diversification effect. Investment Bank: value-at-risk (10-day, 99% confidence, 5 years of historical data) This table provides a breakdown of the Investment Bank’s minimum, maximum, average and period-end regulatory VaR by risk type.
1 As the minimum and maximum occur on different days for different risk types, it is not meaningful to calculate a portfolio diversification effect. Group: value-at-risk (1-day, 99% confidence, 5 years of historical data)1 This table provides a breakdown of the Group’s minimum, maximum, average and period-end regulatory backtesting VaR by business division.
1 10-day 99% regulatory VaR and 1-day 99% regulatory VaR results are calculated separately from underlying positions and historical market moves. They cannot be inferred from each other. 2 Backtesting is based on 1-day 99% regulatory VaR. 181 Risk and treasury management Basel II Pillar 3 Securitization Objectives, roles and The majority of our We intend to exit residual risk positions where appropriate. As part of our hedging strategy, in 2010 we completed the securitization of a portfolio of counterparty credit risk resulting from OTC derivatives.
We also held certain securitization positions (according to the regulatory definition of securitizations) that were managed under the market risk framework at 31 December Regulatory treatment of securitization structures The disclosures in this section mainly include exposures related to student loan ARS, programs and counterparty credit risk exposures resulting from OTC derivatives, as these exposures were treated under the securitization approach for determining regulatory capital We generally applied the UBS applied the supervisory formula to the securitization of a portfolio of counterparty credit risk resulting from OTC derivatives where an external rating was not sought. The counterparty risk of interest rate or foreign currency derivatives with securitization vehicles are treated under the advanced Accounting For IFRS purposes, we treat originated securitized exposures as sales, i.e. they are derecognized from our balance sheet provided that specific Securitization positions that are classified as trading assets for IFRS purposes are valued at fair value as described in “Note 27 Fair value of financial instruments” in the “Financial information” section of this report. Securitization positions that have been redesignated from Good practice guidelines On 18 December 2008, the European Banking Federation, the Association for Financial Markets in Europe, the European Savings Banks Group and the European Association of Public Banks and Funding Agencies published the “Industry good practice guidelines on Pillar 3 disclosure requirement for securitization”, which was slightly revised in 2009/2010. UBS is in compliance with all material aspects of these guidelines.
Securitization activity during the year
Total outstanding The table below provides a breakdown of the amounts referenced in the transaction.
183 Risk and treasury management Impaired or past due securitized exposures The table below provides a
Losses recognized
account the offsetting effects of any credit protection that is an eligible risk mitigation instrument for the retained or repurchased
184
Securitization positions retained or purchased The table below provides a breakdown of securitization positions we have purchased or retained, irrespective of our role in the
The table below provides a breakdown of securitization positions we have purchased or retained, irrespective of our role in the securitization transaction.
185 Risk and treasury management Deductions from eligible capital related to securitization positions retained or purchased The table below provides a breakdown of securitization positions we have purchased or retained, irrespective of our role in the securitization transaction, by securitization position type.
Early amortization treatment We do not have securitization structures that are subject to the early amortization treatment. 186 Corporate
Corporate governance
UBS operates under a strict dual board structure: the Board of Directors (BoD) and the Group Executive Board (GEB). This results in a clear separation of duties and responsibilities. The BoD is responsible for the UBS Group’s (Group) direction as well as monitoring and supervising the business. All BoD members The GEB, which members are appointed by the BoD, is responsible for the executive management and is accountable to the BoD for the overall financial results of the Group. The GEB is led by the Group Chief Executive Officer (Group CEO). Developments in The various Committees and reflect the newly separated roles of the Vice Chairman and the Senior Independent Director. The BoD is ultimately responsible for the financial success of the Group, and thus decides on the business strategy of the Group upon recommendation of the Group CEO and the GEB. The BoD is responsible for approving approving Operational Group structure The operational structure of the Group is comprised of the Corporate Center and four business divisions: Wealth Management & Swiss Bank, Wealth Management Americas, Global Asset Management and the Investment Bank. Shareholder participation We are committed to shareholder participation in our decision-making process. Our directly registered shareholders, as well as US shareholders registered via nominee companies, regularly receive written information about our activities and performance and are personally invited to shareholder meetings. We fully subscribe to the In addition, the Annual General Meeting Transparency report In October 2010, we published the “Transparency report to the
2010 compensation at a glance
Bonuses granted for 2010 In making UBS’s compensation decisions for 2010, the BoD and the GEB have carefully balanced all the relevant factors such as our improved business performance, industry compensation trends and regulatory requirements. From a shareholder’s perspective, it is essential to weigh the short-term potential for raising profitability against the long-term requirement to retain and attract key staff. Although our financial performance in 2010 was markedly better than in 2009, with an increase in profitability of CHF 10 billion, given the considerations outlined above, the bonus pool for 2010 was set at CHF 4,245 million, 11% lower than it was last year. High levels of deferred bonuses for Group Executive Board members At least 76% of a GEB member’s bonus, including 60% in equity (under the Performance Equity Plan [PEP] and the Senior Executive Equity Ownership Plan [SEEOP]), is deferred and at risk of forfeiture for periods of up to five years. Moreover, the vest- ing of these awards is subject to the fulfillment of specific performance conditions. A maximum of 24% in cash (under the Cash Balance Plan [CBP]) is paid out immediately, subject to a cap of CHF / USD 2 million.
Corporate governance and compensation Corporate governance Our corporate governance principles are designed to support We are subject to, and fully comply with, the following regulatory requirements regarding corporate governance: the Swiss Code of Obligations (CO) articles 663bbis and 663c (paragraph three) regarding transparency of compensation paid to members of the In addition, as a foreign company with shares listed on the New York Stock Exchange (NYSE), we comply with all corporate governance standards applicable to foreign listed companies. This section
In addition to the regulatory requirements mentioned above, this section On 1
Group structure and shareholders UBS Group legal entity structure Under Swiss company law, UBS AG is organized as a limited Our legal entity structure is designed to support our businesses within an efficient legal, regulatory, tax and funding framework. Neither Operational Group structure On 31 December
Listed and non-listed companies belonging to the Group The Group includes a number of
Significant shareholders Under the Federal Act on Stock Exchanges and Securities Trading of 24 March 1995, as amended (the Swiss Stock Exchange In addition, pursuant to the CO, UBS must disclose in its notes to the financial statements the identity of any shareholder with a According to disclosure notifications filed with UBS AG and the
191 Corporate governance and compensation Exchange Act, the percentages indicated above were calculated in relation to the share capital reflected in the Articles of Association of UBS AG According to tors or beneficial owners) listed in the “Significant shareholders” table below, were registered with 3% or more of the total Cross shareholdings We have no cross shareholdings in excess of a reciprocal 5% of capital or voting rights with any other company.
Capital structure Capital Under Swiss company law, shareholders must approve in a shareholders’ meeting any increase in the total number of issued shares, which may arise from an ordinary share capital increase, or the creation of conditional or authorized capital. At year-end 2010. Conditional share capital At year-end
Authorized share capital The BoD has no authorized share capital available. Changes of shareholders’ equity According to International Financial Reporting Standards (IFRS), equity attributable to UBS shareholders amounted to CHF
Shares and participation certificates We have only one unified class of shares issued. Our shares are issued in registered form, and are traded and settled as global registered shares. Each registered share has a par value of CHF 0.10 and carries one Ownership of UBS shares is widely spread. The additional tables on the following page provide information about the distribution of our shareholders by category and geographical location. This information relates only to registered shareholders and cannot be assumed to be representative of our entire investor base nor the actual beneficial ownership. Only shareholders registered in the share register as “shareholders with voting rights” are entitled to exercise voting rights.
On 31 December
register without voting rights, and At year-end 2010, we owned UBS registered shares corresponding to less than 3% of the total share capital of UBS. At the same time, we had disposal positions relating to 508,052,477 voting rights of UBS, corresponding to 13.26% of the total voting rights of UBS. They consisted mainly of 9.66% of voting rights on shares deliverable in respect of employee awards. The calculation methodology for the disposal position is based on the Ordinance of the Swiss Financial Market Supervisory Authority on Stock Exchanges and Securities Trading, which takes into account all future potential share delivery obligations irrespective of the contingent nature of the delivery. We 193 Corporate governance and compensation
194
Transferability, voting rights and nominee registration We do not apply any restrictions or limitations on the transferability of shares. Voting rights may be exercised without any restrictions by shareholders entered into the share register, if they expressly render a declaration of beneficial ownership according to the provisions of the We have special provisions for the registration of fiduciaries and nominees. Fiduciaries and nominees are entered in the share register with voting rights up to a total of 5% of all shares issued, if they agree to disclose upon our request, beneficial owners holding 0.3% or more of all UBS shares. An exception to the 5% voting limit rule exists for securities clearing organizations such as The Depository Trust Company in New York.
On 31 December 2010, there were no contingent capital securities or convertible bonds outstanding requiring the issuance of new shares. We had CHF 4,903 million principal amount of deeply subordinated capital instruments outstanding, which count as hybrid tier 1 capital under Swiss regulatory rules, and Options In connection with the loan granted by the SNB to the SNB Stab-Fund, we have issued warrants granted to the SNB sourced by conditional capital for which 100,000,000 shares were approved by our shareholders. The warrants are exercisable only if the SNB incurs a loss on its loan to the fund. On 31 December source our option-based
Corporate governance and compensation Shareholders’ participation rights We are committed to shareholder participation in our decision- making process. More than 350,000 directly registered shareholders, as well as some 90,000 US shareholders registered via nominee companies, regularly receive written information about our activities and performance and are personally invited to shareholder meetings.
Relationships with shareholders We fully subscribe to the principle of equal treatment of all shareholders, who range from large investment institutions to individual investors, and regularly inform them about the development of the company of which they are co-owners. The AGM offers shareholders the opportunity to raise any questions regarding our development and the events of the year that is under review. BoD and GEB members, as well as the internal and external auditors, are present to answer these questions. Voting rights, restrictions and representation We place no restrictions on share ownership and voting rights. Nominee companies and trustees, who normally represent a large number of individual shareholders, may hold an unlimited number of shares, but we have provisions according to which voting rights are limited to a maximum of 5% of outstanding UBS shares in order to avoid the risk of unknown shareholders with large stakes being entered in the share register. Securities clearing organizations, such as The Depository Trust Company in New York, are not subject to the 5% voting limit. In order to be recorded in the share register with voting rights, shareholders must confirm that they acquired UBS shares in their own name and for their own account. Nominee companies and trustees are required to sign an agreement confirming their willingness to disclose, upon our request, individual beneficial owners holding more than 0.3% of all issued shares. All shareholders registered with voting rights are entitled to participate in shareholder meetings. If they do not wish to attend in person, they can issue instructions to accept, reject or abstain on each individual item on the meeting agenda, either by giving instructions to an independent proxy designated by UBS, as required under Swiss company law, or by appointing UBS, another bank or another registered shareholder of their choice to vote on their behalf. Nominee companies normally submit the proxy material to the beneficial owners and transmit the collected votes to UBS. Statutory quorums Shareholder resolutions, the election and reelection of BoD members and the appointment of the Group and statutory auditors are decided at the AGM by an absolute majority of the votes cast, excluding blank and invalid ballots. Swiss company law requires that, for certain specific issues, a majority of two-thirds of the votes represented at the AGM, and the absolute majority of the par value of shares represented at the AGM, must vote in favor of the resolution. These issues include, among others, the creation of shares with privileged voting rights, the introduction of restrictions on the transferability of registered shares, conditional and authorized capital increases, and restrictions or exclusion of shareholders’ pre-emptive rights. The Articles of Association also requires a two-thirds majority of votes represented for any change to its provisions regarding the number of BoD members, and any decision to remove one-fourth or more of the BoD members. Votes and elections are normally conducted electronically to clearly ascertain the exact number of votes cast. Voting by a show of hands remains possible if a clear majority is predictable. Shareholders representing at least 3% of the votes represented may still request that a vote or election take place electronically or by written ballot. In order to allow shareholders to clearly express their views on all individual topics, each item on the agen- 196
da is put to vote separately and BoD elections are made on a person-by-person basis. Convocation of general meetings of shareholders The AGM normally takes place each year in April, but in any case within six months of the close of the financial year. A personal invitation including a detailed agenda and explanation of each motion is sent to every registered shareholder at least 20 days ahead of the scheduled AGM. The meeting agenda is also published in the Swiss Official Gazette of Commerce and in selected Swiss newspapers as well as on the internet at www.ubs.com/agm. Extraordinary General Meetings (EGM) may be convened whenever the BoD or the statutory auditors consider it necessary. Shareholders individually or jointly representing at least 10% of the share capital may, at any time, ask in writing that an EGM be convened to deal with a specific issue put forward by them. Such a request may also be brought forward during the AGM. Placing of items on the agenda Shareholders individually or jointly representing shares with an aggregate par value of CHF 62,500 may submit proposals for matters to be placed on the agenda for consideration at the shareholders’ meeting. We publish the deadline for submitting such proposals in the Swiss Official Gazette of Commerce and on our website www.ubs.com/agm. Requests for items to be placed on the agenda must include the actual motions to be put forward, together with a short explanation, if necessary. The BoD formulates opinions on the proposals, which are published together with the motions. Registrations in the share register The general rules for being entered with voting rights in our Swiss or US share registers also apply before general meetings of shareholders. There is no “closing of the share register” in the days before the meeting. Registrations, including the transfer of voting rights, are processed for as long as technically possible, normally until two days before the meeting. 197 Corporate governance and compensation Corporate governance Board of Directors The BoD, under the leadership of the Chairman, decides on the strategy of the Group upon recommendation of the Group Chief Executive Officer (Group CEO), exercises the ultimate supervision over the BoD Committees and their respective Chairpersons. Members of the Board of Directors At the AGM held on G. Parrett were reelected as their terms of office expired. Sergio Marchionne and Peter The following biographies provide information on the BoD members on 31 December 2010.
198
Corporate governance and compensation Corporate governance
Corporate governance and compensation |
Wolfgang Mayrhuber Austrian, born 22 March 1947 Deutsche Lufthansa AG, Flughafen Frankfurt am Main 302, D-60549 Frankfurt am Main Functions in UBS Member of the Corporate Responsibility Committee/member of the Human Resources and Compensation Committee Year of initial appointment: 2010 | Wolfgang Mayrhuber was elected to the BoD at the 2010 AGM and is a member of the Corporate Responsibility Committee and the Human Resources and Compensation Committee. He was Chairman of the Executive Board and CEO of Deutsche Lufthansa AG from 2003 to 2010. In 2002, he was elected Deputy Chairman of the Executive Board, and in 2001, he was appointed to the Executive Board with responsibility for the passenger airline business. From 1994 to the end of 2000, he was Chairman of the Executive Board of the newly founded Lufthansa Technik AG. After holding a variety of management positions in the maintenance, repair and overhaul division, he was appointed Executive Vice President and Chief Operating Officer Technical in 1992. In 1970, he joined Lufthansa as an engineer at the engine overhaul facility in Hamburg. Mr. Mayrhuber studied mechanical engineering at the Technical College in Steyr, Austria, and at the Bloor Collegiate Institute in Canada, until 1965. In 1990, he completed an Executive Management Training course at the Massachusetts Institute of Technology. Other activities and functions Mandates on boards of important corporations, organizations and foundations or interest groups: Mr. Mayrhuber is Chairman of the supervisory board and Chairperson of the Mediation Committee, the Nomination Committee and the Executive Committee of Infineon Technologies AG, as well as a member of the supervisory boards of Munich Re Group, BMW Group, Lufthansa Technik AG and Austrian Airlines AG. Furthermore, he serves on the board of SN Airholding SA / NV, Brussels, and HEICO Corporation, Hollywood, FL. | ||||||
Helmut Panke German, born 31 August 1946 BMW AG, Petuelring 130, D-80788 Munich Functions in UBS Member of the Risk Committee and as of 11 February 2011 ad-interim Chairperson of the Human Resources and Compensation Committee Year of initial appointment: 2004 | Professional history and education Helmut Panke was elected to the BoD at the 2004 Other activities and functions Mandates on boards of important corporations, organizations and foundations or interest groups: Mr. Panke is a member of the | ||||||
William G. Parrett American (US), born 4 June 1945 UBS AG, Bahnhofstrasse 45, CH-8098 Zurich Function in UBS Year of initial appointment: 2008 | Professional history and education William G. Parrett was elected to the BoD at the October 2008 EGM and chairs the Audit Committee. Mr. Parrett served his entire career with Deloitte Touche Other activities and functions Mandates on boards of important corporations, organizations and foundations or interest groups: Mr. Parrett is an independent Director of the Eastman Kodak Company, the Blackstone Group LP, and Thermo Fisher Scientific Inc., in all of which he chairs the Audit Committee. He is also the Immediate Past Chairman of the | ||||||
194201
Corporate governance and compensation
Elections and terms of office
In accordance with article 19 (paragraph one) of the “ArticlesArticles of Association, of UBS AG” (Articles of Association), all BoD members are to be elected on an individual basis for a one-year term of office. As a result, shareholders must confirm the entire membership of the BoD on a yearly basis beginning withat the next AGM, which will take place on 1428 April 2010.
Organizational principles and structure
The competenciesOrganization Regulations were revised and are valid as of executive management have been increased1 August 2010. Major changes consisted of separating the roles of the Vice Chairman and simultaneously, the supervisory roleSID, integrating the requirements of the FINMA Circular 2010/1, and enhancing the approval authority of the BoD has been accentuated, duewith regard to the revised Organization Regulations. The BoD’s ultimate responsibilitycost of equity for strategicUBS and financial success includes deciding on theits business strategy of the Group upon recommendation of the Group CEO, and taking into account the proposals and alternatives presented by the GEB. Furthermore, the BoD is responsible for appointing and dismissing all GEB members, the Company Secretary and the Head of Group Internal Audit, and approving the firm’s risk capacities and appetite, taking into account the proposals and alternatives suggested by the Risk Committee (RC).
Audit Committee
195
202
Corporate governance and compensation |
è | Refer to the “Corporate responsibility” section of this report for more information |
Governance and Nominating Committee
Human Resources and Compensation Committee
è | Refer to the “Compensation |
Risk Committee
Roles and responsibilities of the Chairman of the
Board of Directors
Kaspar Villiger, the Chairman, has entered into a full-time employment contract with UBS in connection with his service on the BoD.
196
Roles and responsibilities of the Senior Independent Director
The BoD appoints a Vice Chairman and an SID. Both the Vice Chairman and the SID must be independent. The Vice Chairman is required to lead the BoD in the absence of the Chairman as well as provide support and advice to the Chairman. At least twice a year, the SID organizes and leads a meeting of the independent BoD members without the presence of the Chairman. In 2009, six2010,
203
Corporate governance and compensation
Corporate governance
Important business connections of independent members of the Board of Directors with UBS
As a global financial services provider and a major bank in Switzerland, we have business relationships with many large companies, including those in which our BoD members assume management or independent board responsibilities. The nature of the relationships between UBS and companies whose chair, chief executive or other officer is a member of our BoD is not considered to compromise the BoD members’ capacity for independent judgment. Furthermore, no independent BoD member has personal business relationships with UBS that could compromise his or her independence.
Checks and balances: Board of Directors and
Group Executive Board
We operate under a strict dual board structure, as mandated by Swiss banking law. The separation of responsibilities between the
è | Refer to www.ubs.com/governance for more details on checks and balances for the BoD and GEB |
Transparency report
On 14 October 2010, we published the “Transparency report to the shareholders of UBS”, which is a comprehensive review of the
è | Refer to www.ubs.com/transparencyreport for more information |
Information and control instruments vis-à-vis the
Group Executive Board
The BoD is kept informed of the activities of the GEB in various ways. The minutes of the GEB meetings are made available to the BoD members. At BoD meetings, the Group CEO and GEB members regularly update the BoD on important issues.
è | Refer to the “Risk management and control” section of this report for more information |
197204
Corporate governance and compensation |
Group Executive Board
UBS operates under a strict dual board structure, as required by Swiss banking law. The management of the business is delegated by the BoD to the GEB.
Members of the Group Executive Board
Lukas Gähwiler was named CEO of UBS Switzerland on the composition1 April 2010, replacing Francesco Morra who stepped down on that date.
an interim basis. Mr. Cryan took on these responsibilities in addition to the Group Executive Board in 2009
Oswald J. Grübel German, born 23 November 1943 UBS AG, Bahnhofstrasse 45, CH-8098 Zurich Function in UBS Group CEO Year of initial appointment: 2009 | Professional history and education Oswald J. Grübel was named Other activities and functions Mandates on boards of important corporations, organizations and foundations or interest groups: Mr. Grübel is a board member of the | ||||||
John Cryan British, born 16 December 1960 UBS AG, Bahnhofstrasse 45, CH-8098 Zurich Group CFO CEO UBS AG London Branch and UBS Limited Chairman and CEO UBS Group Europe Middle East and Africa (EMEA) ad interim Year of initial appointment: 2008 | Professional history and education John Cryan was appointed CEO of UBS AG London Branch and UBS Limited in November 2010 as well as Chairman and CEO of UBS Group Europe, Middle East and Africa (EMEA) on an interim basis. Mr. Cryan took on these responsibilities in addition to his existing role as Group Chief Financial Officer (Group CFO). He was appointed Group CFO and became a GEB member | ||||||
198205
Corporate governance and compensation
Markus U. Diethelm Swiss, born 22 October 1957 UBS AG, Bahnhofstrasse 45, CH-8098 Zurich Function in UBS Group General Counsel Year of initial appointment: 2008 | Professional history and education Markus U. Diethelm was appointed Group General Counsel of UBS and a GEB member in September 2008. From 1998 until 2008, he served as Other activities and functions Mandates on boards of important corporations, organizations and foundations or interest groups: Mr. Diethelm is the Chairman of the Swiss-American Chamber of Commerce’s Legal Committee and member of the Swiss Advisory Council of the American | ||||||
John A. Fraser Australian and British, born 8 August 1951 UBS AG, Bahnhofstrasse 45, CH-8098 Zurich Functions in UBS Chairman and CEO Global Asset Management Chairman UBS Saudi Arabia Year of initial appointment: 2002 | Professional history and education John A. Fraser was appointed Chairman and CEO of the Global Asset Management business division in Other activities and functions Mandates on boards of important corporations, organizations and foundations or interest groups: Mr. Fraser is a | ||||||
Lukas Gähwiler Swiss, born 4 May 1965 UBS AG, Bahnhofstrasse 45, CH-8098 Zurich Functions in UBS CEO UBS Switzerland and co-CEO Wealth Management & Swiss Bank Year of initial appointment: 2010 | Lukas Gähwiler became a GEB member in April 2010, and was appointed CEO of UBS Switzerland and co-CEO of Wealth Management & Swiss Bank. In his role as CEO of UBS Switzerland he is responsible for all businesses including retail and wealth management, corporate and institutional banking, investment banking and asset management in UBS’s home market. Before joining UBS, he held the position of Chief Credit Officer with Credit Suisse since 2003, and was accountable for the worldwide credit business of Private Banking, including Commercial Banking in Switzerland. In 1998, Mr. Gähwiler was appointed Chief of Staff to the CEO of the Credit Suisse Private and Corporate Business Unit. Previously, he held various front-office positions in Switzerland and North America. Mr. Gähwiler earned a bachelor’s degree in business administration from the University of Applied Sciences in St. Gallen. He completed an MBA program in corporate finance at the International Bankers School in New York, as well as the Advanced Management Program at Harvard Business School. Other activities and functions Mandates on boards of important corporations, organizations and foundations or interest groups: Mr. Gähwiler is a member of the boards of the Zurich Chamber of Commerce and the Opernhaus AG as well as Vice Chairman of the Swiss Finance Institute. |
206
Corporate governance and compensation |
Carsten Kengeter German, born 31 March 1967 UBS AG, Bahnhofstrasse 45, CH-8098 Zurich Year of initial appointment: 2009 | Professional history and education Carsten Kengeter was appointed | ||||||
Ulrich Körner German and Swiss, born 25 October 1962 UBS AG, Bahnhofstrasse 45, CH-8098 Zurich Functions in UBS Group Chief Operating Officer and CEO Corporate Center Year of initial appointment: 2009 | Professional history and education Ulrich Körner was appointed Group Chief Operating Officer Other activities and functions Mandates on boards of important corporations, organizations and foundations or interest groups: Mr. Körner is Vice Chairman of the Committee of the Governing Board of the Swiss Bankers Association, Chairman of the Widder Hotel, Zurich, and Vice President of the | ||||||
199
Philip British, born 9 April 1962 UBS AG, Bahnhofstrasse 45, CH-8098 Zurich Function in UBS Group CEO UBS Group Americas as of 1 January 2011 Year of initial appointment: 2008 | Professional history and education Philip J. Lofts was appointed CEO of UBS Group Americas in January 2011. He became a GEB member in November 2008. From 2008 until 2010, he was Group Chief Risk Officer Other activities and functions Mandates on boards of important corporations, organizations and foundations or interest groups: Mr. Lofts is a board member of the University of Connecticut Foundation. |
207
Corporate governance and compensation
Corporate governance
Robert J. McCann American (US) UBS AG, Bahnhofstrasse 45, CH-8098 Zurich Function in UBS CEO Wealth Management Americas Year of initial appointment: 2009 | Professional history and education Robert J. McCann was appointed CEO of Wealth Management Americas and became a GEB member Other activities and functions Mandates on boards of important corporations, organizations and foundations or interest groups: Mr. McCann is a board member of the American Ireland Fund, and is Vice Chairman of the Bethany College Board of Trustees. He is a member of the No Greater Sacrifice Advisory Board, | ||||||
UBS AG, Bahnhofstrasse 45, CH-8098 Zurich Year of initial appointment: | Professional history and education | ||||||
Alexander Wilmot-Sitwell was appointed co-Chairman and co-CEO of UBS Group APAC in November 2010. He became a GEB member in February 2008. From 2009 to 2010, he served as co-CEO of the Other activities and functions Mandates on boards of important corporations, organizations and foundations or interest groups: Mr. Wilmot-Sitwell is Vice President of the Save the Children Fund, London. | |||||||
200
Robert Wolf American (US), born 8 March 1962 UBS AG, Bahnhofstrasse 45, CH-8098 Zurich Functions in UBS Chairman and CEO UBS Group Americas, CEO until 31 December 2010 President Investment Bank Year of initial appointment: 2008 | Professional history and education Robert Wolf was appointed President of the Other activities and functions Mandates on boards of important corporations, organizations and foundations or interest groups: Mr. Wolf is a member of President Obama’s Economic Recovery Advisory Board. He is a member of the Undergraduate Executive Board of the Wharton School, the University of Pennsylvania Athletics Board of Overseers, and the Financial Services Round Table. Mr. Wolf is also a member of the Council on Foreign Relations and the Committee Encouraging Corporate Philanthropy. He is on the board and in the Leadership Council of the Multiple Myeloma Research |
208
Corporate governance and compensation |
Chi-Won Yoon UBS AG, Bahnhofstrasse 45, CH-8098 Zurich Functions in UBS Year of initial appointment: 2009 | Professional history and education Chi-Won Yoon Other activities and functions Mandates on boards of important corporations, organizations and foundations or interest groups: Mr. Yoon is on the Asian Executive Board of MIT’s Sloan School of Management. | ||||||
Jürg Zeltner Swiss, born 4 May 1967 UBS AG, Bahnhofstrasse 45, CH-8098 Zurich CEO UBS Wealth Management and co-CEO Wealth Management & Swiss Bank Year of initial appointment: 2009 | Professional history and education Jürg Zeltner was appointed CEO UBS Wealth Management and co-CEO of Wealth Management & Swiss Bank, and became a GEB member Other activities and functions Mandates on boards of important corporations, organizations and foundations or interest groups: Mr. Zeltner is a board member of the |
201
Under the leadership of the Group CEO, the GEB has executive management responsibility for the Group and its business. It assumes overall responsibility for the development of the Group and business division strategies and the implementation of approved strategies. The GEB constitutes itself as the risk council of the Group. In this function, the GEB has overall responsibility for establishing and supervising the implementation of risk management and control principles, for approving the core risk policies as proposed by the Group Chief Risk Officer (Group CRO),CRO, the Group CFO and the Group General Counsel (Group GC)GC, as well as for controlling the risk profile of the Group as a whole as determined by the BoD and the RC. The GEB plays a key role in proposing the human resources policy and the compensation principles of the Group. In 2009,2010, the GEB held in total 21 meetings of which 11 were jointly with the Executive Committee and 4 were jointly with the EC and the Group ALCO.
è | Refer to the Organization Regulations, which are available at www.ubs.com/governance, for more information on the authorities of the GEB |
Responsibilities and authorities of the formerExecutive Committee and the new Group Asset and
Liability Management Committee
The EC,Group ALCO, established by the GEB in January 2009, was disbanded in October 2009. The EC consistedis responsible for setting strategies to maximize the financial performance of the Group, CEO, the Group CFO, the Group COO, the Group CRO and the Group GC. Under the leadership of the Group CEO, the EC was responsible for allocating the Group’s financial resourcesis subject to the business divisions – i.e. capital, termsguidelines, constraints and availability of funding, risk capacity and parameters – in each case within the limitstolerances set by the BoD. Additionally,The Group ALCO is also responsible for managing the EC set the performance targetsbalance sheet of the business divisions monitoredthrough allocation and evaluated them. Under the guidancemonitoring of limits as well as managing liquidity, funding and capital; and promoting a one-firm financial management culture. The Organization Regulations additionally specify which powers of the Group CEO, the EC prepared proposals for approval by the BoD and supported the BoD in its decision-making process. The EC had overall responsibility for implementing our risk management and control principles, allocating risk capacityGEB are delegated to the business divisions and controlling our overall risk profile.Group ALCO. In 2009, the EC held eight meetings on its own; 11 jointly with the GEB and four with the GEB and the Group ALCO.
Management contracts
We have not entered into management contracts with any third parties.
202
Shareholders’ participation rights
Relationships with shareholders
We fully subscribe to the principle of equal treatment of all shareholders, who range from large investment institutions to individual investors, and regularly inform them about the development of the company of which they are co-owners.
Voting rights, restrictions and representation
We place no restrictions on share ownership and voting rights. Nominee companies and trustees, who normally represent a large number of individual shareholders, may hold an unlimited number of shares, but voting rights are limited to a maximum of 5% of outstanding UBS shares in order to avoid the risk of unknown shareholders with large stakes being entered in the share register. Securities clearing organizations, such as The Depository Trust Company in New York, are not subject to the 5% voting limit.
appointing UBS, another bank or another registered shareholder of their choice to vote on their behalf. Nominee companies normally submit the proxy material to the beneficial owners and transmit the collected votes to UBS.
Statutory quorums
Shareholder resolutions, the election and reelection of members of the BoD and the appointment of the Group and statutory auditors are decided at the AGM by an absolute majority of the votes cast, excluding blank and invalid ballots. Swiss company law requires that, for certain specific issues, a majority of two-thirds of the votes represented at the meeting must vote in favor of the resolution. These issues include, among others, the creation of shares with privileged voting right, the introduction of restrictions on the transferability of registered shares, conditional and authorized capital increases, and restrictions or exclusion of shareholders’ pre-emptive rights.
Convocation of general meetings of shareholders
The AGM normally takes place each year in April, but in any case within six months of the close of the financial year. A personal invitation including a detailed agenda and explanation of each motion is sent to every registered shareholder at least 20 days ahead of the scheduled meeting. The meeting agenda is also published in various Swiss newspapers and on the internet atwww.ubs.com/agm.
203209
Corporate governance and compensation
Corporate governance
with a specific issue put forward by them. Such a request may also be brought forward during the AGM.
Placing of items on the agenda
Shareholders individually or jointly representing shares with an aggregate par value of CHF 62,500 may submit proposals for matters to be placed on the agenda for consideration at the shareholders’ meeting.
together with a short explanation, if necessary. The BoD formulates opinions on the proposals, which are published together with the motions.
Registrations in the share register
The general rules for being entered with voting rights in our Swiss or US share registers also apply before general meetings of shareholders. There is no “closing of the share register” in the days before the meeting. Registrations, including the transfer of voting rights, are processed for as long as technically possible, normally until two days before the meeting.
204
Change of control and defense measures
We refrain from restrictions that would hinder developments initiated in, or supported by, the financial markets. We also do not have any specific defenses in place to prevent hostile takeovers.
Duty to make an offer
An investor who acquires more than 331/1/3% of all voting rights (directly, indirectly or in concert with third parties), whether they are exercisable or not, is required to submit a takeover offer for all shares outstanding, according to Swiss stock exchange law. We have not elected to change or opt out of this rule.
Clauses on change of control
TheNeither the service agreements and employment contractsagreement with the Chairman of the BoD, andnor the employment contracts with the GEB members, do not contain change of control clauses, except for two agreements with GEB members. In one clause, a change of control would reduce the employment notice of termination period from six to two months, and in the other clause, which wasclauses.
applicable only until 1 March 2010, compensation plan awards would be treated as if employment had ceased due to “mutually agreed termination”.
205210
Corporate governance and compensation
Corporate governance and compensation |
Auditors
Audit is an integral part of corporate governance. While safeguarding their independence, the external auditors closely coordinate their work with Group Internal Audit. The AC, and ultimately the BoD, supervises the effectiveness of audit work.
External, independent auditors
At the 20092010 AGM, Ernst & Young Ltd., Basel, (Ernst & Young) were reelectedre-elected as principal auditors for the Group for a further one-year term of office. Ernst & Young assume virtually all auditing functions according to laws, regulatory requests and the “ArticlesArticles of Association of UBS AG”.Association. The Ernst & Young lead partner in charge of the UBS audit has been Andrew Mclntyre since 2005, who will be replaced in 2010 by Jonathan Bourne duesince 2010 and his incumbency is limited to a five-year rotation requirement;five years. Andreas Blumer has acted as the global engagement partner since 2004, and his incumbency is limited2004. He will be replaced in 2011 by Andreas Loetscher due to seven years.a seven-year rotation requirement. Ernst & Young will be proposed for reelection at the AGM in 2010.2011.
Fees paid to external independent auditors
investment funds, many of which have independent fund boards or trustees.
Fees paid to external auditors
UBS paid the following fees (including expenses) to its external auditors Ernst & Young Ltd.:
For the year ended | ||||||||
in CHF thousand | 31.12.09 | 31.12.08 | ||||||
Audit | ||||||||
Global audit fees | 45,276 | 45,848 | ||||||
Additional services classified as audit (services required by law or statute, including work of a non-recurring nature mandated by regulators) | 8,856 | 9,918 | ||||||
Total audit | 54,132 | 55,766 | ||||||
Non-audit | ||||||||
Audit-related fees | 7,405 | 8,430 | ||||||
of which assurance and attest services | 3,142 | 3,143 | ||||||
of which control and performance reports | 4,023 | 4,622 | ||||||
of which advisory on accounting standards, transaction consulting including due diligence, other | 240 | 665 | ||||||
Tax advisory | 509 | 504 | ||||||
Other | 279 | 1,246 | ||||||
Total non-audit | 8,193 | 10,180 | ||||||
206
“Other”“Other” services are approved on an exceptional basis only. In 2008 and 2009, theyThey mainly comprisedcomprise on-call advisory services.services; in addition, 2010 included non-recurring expenses.
Pre-approval procedures and policies
Fees paid to external auditors
UBS paid the following fees (including expenses) to its external auditors Ernst & Young Ltd.:
For the year ended | ||||||||
in CHF thousand | 31.12.10 | 31.12.09 | ||||||
Audit | ||||||||
Global audit fees | 46,939 | 45,276 | ||||||
Additional services classified as audit (services required by law or statute, including work of a non-recurring nature mandated by regulators) | 11,604 | 8,856 | ||||||
Total audit | 58,543 | 54,132 | ||||||
Non-audit | ||||||||
Audit-related fees | 7,225 | 7,405 | ||||||
of which assurance and attest services | 3,073 | 3,142 | ||||||
of which control and performance reports | 4,058 | 4,023 | ||||||
of which advisory on accounting standards, transaction consulting including due diligence, other | 94 | 240 | ||||||
Tax advisory | 521 | 509 | ||||||
Other | 1,152 | 279 | ||||||
Total non-audit | 8,898 | 8,193 | ||||||
211
Corporate governance and compensation
Corporate governance
The AC has delegated pre-approval authority to its Chairman;Chairperson; hence the Group CFO submits all proposals for services by Ernst & Young to the ChairmanChairperson of the AC for approval, unless there is a bucket pre-approval in place. At each quarterly meeting, the AC is informed of the approvals granted by its ChairmanChairperson and of services authorized under bucket pre-approvals.
Group Internal Audit
Group Internal Audit, with 313 personnel worldwide on 31 December 2009,2010, performs the internal auditing function for the entire Group. Group Internal Audit supports
the BoD and its committeesCommittees in discharging their governance responsibilities by independently assessing the effectiveness of our system of internal controls and our compliance with statutory, legal and regulatory requirements. All reports with key issues are provided to the
Group CEO, the GEB members of the GEB responsible for the business divisions and other responsible management. In addition, the Chairman of the BoD, the RC and the AC are regularly informed about important issues. Group Internal Audit closely cooperates with internal and external legal advisors and risk control units on investigations into major control issues.
207212
Corporate governance and compensation
Corporate governance and compensation |
Information policy
We provide regular information to our shareholders and to the financial community.
Financial results will be published as follows
First quarter | ||
Second quarter | ||
Third quarter | ||
The Annual General Meeting of shareholders will
take place as follows
We meet with institutional investors worldwide throughout the year, and regularly hold results presentations, special investor seminars, road shows, and individual and group meetings. Where possible, meetings involve senior management as well as members of the investor relations team. We make use of diverse technologies such as webcasting, audio links and cross-location video-conferencing to widen our audience and maintain contact with shareholders around the world.
è | Refer to www.ubs.com/investors for a complete set of published reporting documents, the corporate calendar, access to | |
è | Refer to www.ubs.com/investors for future financial report publication dates |
Financial disclosure principles
Based on discussions with analysts and investors, we believe that the market rewards companies that provide clear, consistent and informative disclosure about their business. Therefore, we aim to communicate our strategy and results in a manner that allows shareholders and investors to gain an understanding of how our company works, what our
growth prospects are and what risks
our strategy and results might entail. Feedback from analysts and investors is continually assessed and, where relevant,we consider appropriate, reflected in our quarterly and annual reports. To continue to achieve these goals, we apply the following principles in our financial reporting and disclosure:
– | Transparencyin disclosure enhances understanding of the economic drivers and builds trust and credibility. | |
– | Consistencyin disclosure within each reporting period and between reporting periods. | |
– | Simplicityin disclosure allows readers to gain an understanding of the performance of our businesses. |
– | Relevancein disclosure avoids information overload by focusing on what is required by regulation or statute and is relevant to our stakeholders. |
– | Best practicein line with industry norms, leading the way to improved standards where possible. |
Financial reporting policies
We report our results after the end of every quarter, including a breakdown of results by business division and extensive disclosures relating to credit and market risk.
è | Refer to “Note 1 Summary of significant accounting policies” in the “Financial information” section of this report for a detailed explanation of the basis of UBS’s accounting |
We are committed to maintaining the transparency of our reported results and to ensuring that analysts and investors can make meaningful comparisons with previous periods. If there is a major reorganization of our business divisions, or if changes to accounting standards or interpretations lead to a material change in the Group’s reported results, our results are restated for previous periods when required by applicable accounting standards, to show how they would have been reported according to the new basis and provide clear explanations of all relevant changes.
US regulatory disclosure requirements
208213
Corporate governance and compensation
An evaluation was carried out under the supervision of management including the Group CEO and Group CFO, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15e)13a–15e) under the US Securities Exchange Act of 1934. Based upon that evaluation, the Group CEO and Group CFO concluded that our disclosure controls and procedures were effective as of that date.31 December 2010. No significant changes have been made in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.
In accordance with Section 404 of the US Sarbanes-Oxley Act of 2002, our management is responsible for establishing and maintaining adequate internal control over financial reporting. The financial statements of this report contain management’s assessment of the effectiveness of internal control over financial reporting, as perof 31 December 2009.2010. The external auditors’ report on this assessment is also included in this report.
209214
Corporate governance and compensation
Corporate governance and compensation |
Regulation and supervision
As a Swiss-registered company, our home country regulator and consolidated supervisor is FINMA. However, our operations are global and are therefore regulated and supervised by the relevant authorities in each of the jurisdictions in which we conduct business. The next sections describe the regulation and supervision of our business in Switzerland, our home market, and the regulatory and supervisory environments in the US and the UK, our next two largest areas of operations.
Regulation and supervision in Switzerland
Swiss Federal Legislation
è | Refer to the “Capital management” section of this report for more details about capital requirements, and to the “Regulatory developments” section of this report for more information on Basel III |
Regulation by the Swiss Financial Market Supervisory Authority
– | FINMA has substantial influence on the drafting of Swiss federal acts and ordinances from the Federal Council or the | |
– | On a more technical level, FINMA is empowered to issue its own ordinances and |
è | Refer to the “Regulatory developments” section of |
Self-regulation by the SIX Swiss Exchange and the
Swiss Bankers Association
Furthermore, we are also an issuer of listed shares subject to self-regulation by the SIX.
Two-tier system of supervision and direct supervision of UBSand Credit Suisse
210
firms. Under this two-tier supervisory system, FINMA has the responsibility for overall supervision and enforcement measures while the authorized audit firms carry out official duties on behalf of and subject to, sanctions imposed by FINMA. The responsibility of external auditors encompasses the audit of financial statements, the reviewing of banks’ compliance with all prudential requirements and on-site audits.
215
Corporate governance and Solvency and Capital sections.
Disclosures to the Swiss National Bank
è | Refer to the “Liquidity and funding management” section of this report for more |
Regulation and supervision in the US
Banking regulation
bank located in the state of Utah are insured by the Federal Deposit Insurance Corporation. The regulation of our US branches and subsidiaries imposes restrictions on the activities of those branches and subsidiaries, as well as prudential restrictions, such as limits on extensions of credit to a single borrower, including UBS subsidiaries and affiliates.
211
Corporate governanceA notable recent regulatory initiative is the Dodd-Frank Wall Street Reform and compensationCorporate governance
US regulation of other US operations
216
Corporate governance and compensation |
rumforum for investors and registered firms. It also performs market regulation under contract for the NASDAQ Stock Market, the American Stock Exchange and the Chicago Climate Exchange.
Regulation and supervision in the UK
Our operations in the UK are regulated by the Financial Services Authority (FSA),FSA, which establishes a regime of rules and guidance governing all relevant aspects of financial services businesses.
212217
Corporate governance and compensation
Compliance with NYSE listing standards on corporate governance
As a Swiss company listed on the NYSE, we comply with the NYSE corporate governance standards for foreign private issuers.
Independence of directors
Based on the listing standards of the NYSE, our BoD has established specific criteria for defining the independence of our external members. Each external director has to personally confirm his or her compliance with the criteria, which are published on our website underwww.ubs.com/governance.
Board of Directors and its committeesCommittees
è | Refer to the “Board of Directors” section of this report for further information on these |
Differences from corporate governance standards relevant to US listedUS-listed companies
According to the NYSE listing standards on corporate governance, foreign private issuers haveare required to disclose any significant ways in which their corporate governance practices differ from those to be followed by domestic companies.
Responsibility of the Audit Committee for appointment,
compensation, retention and oversight
of the independent auditorsOur
218
Corporate governance and compensation |
213
Corporate governance and compensationCorporate governance
Discussion of risk assessment and risk management policies by
the Risk Committee
Assistance by the Risk Committee of the internal audit function
Responsibility of the Human Resources and Compensation
Committee for oversight of management and evaluation by the Board
of Directors
The BoD has direct responsibility and authority to evaluate its own performance, without preparation by a BoD committee.Committee.
Proxy statement reports of the Audit and Human Resources
and Compensation Committees
Shareholders’ votes on Equity Compensation Plans
214219
Compensation
Our foremost priority is to encourage and shareholdings
The UBS Total Reward Principles are designedreward behavior that contributes to sustainable profitability and therefore the long-term success of our firm. In order to align employee incentives with the interests of our shareholders, we pay a significant part of our employees’ interests with thosevariable compensation in the form of shareholders – the creation of long-term value and sustainable shareholder returns. These principles, reproduceddeferred awards, mostly in full at the end of the report,UBS shares, which are established bysubject to strict forfeiture rules.
Dear shareholders,
In recent years, UBS has fundamentally reshaped its approach to compensation. Our priority remains to attract and provideretain talented professionals to enable us to further develop our business. At the same time, it is critical to encourage and reward behavior that contributes to sustainable profits. This is a fundamental prerequisite for the long-term success of our firm, which is in the best interests of our shareholders and other stakeholders.
During 2010, in collaboration with our regulators, we introduced measures to meet our main compensation objectives of better integrating risk within the compensation process and further aligning financial incentives with the long-term profitability of the firm. These measures include identifying our key risk-takers and controllers, individuals in our organization, who by the nature of their role, can materially commit or control the firm’s resources, and/or exert influence over the firm’s risk profile, and adopting appropriate measures regarding their compensation. We also made refinements to deferred compensation for certain other categories of employees.
Furthermore, in response to your concerns last year, we not only made a number of
adjustments to our compensation model, outlined in detail below, but also worked to improve the related disclosure. This year’s report provides greater transparency, especially with regard to our compensation structure and plans.
Focus on long-term profitability
For 2010, we raised the proportion of a Group Executive Board (GEB) member’s bonus paid in deferred equity from 50% to 60%, while at the same time reducing the portion of cash paid out immediately to a GEB member from 30% to 24%. As a result, at least 76% of a GEB member’s bonus, including part of the cash bonus, is deferred and at risk of forfeiture for up to five years. Apart from GEB members, approximately 8,000 employees across all of UBS’s business divisions receive bonuses in the form of deferred equity under the Equity Ownership Plan (EOP). Under this plan, 60% of their bonus is deferred as UBS shares over three years.
For 2010, the vesting of EOP awards for very senior and high-earning employees was made dependent on the profitability of the employee’s business division over the vesting period, or, in the case of Corporate Center employees, on the profitability of the UBS Group (Group) as a whole. We also introduced cash deferrals (for periods of up to three years) for Investment Bank employees whose total compensation exceeds CHF 1 million. Furthermore, we have reduced the use of leverage in our compensation plans.
Addressing risk in compensation decisions
220
Corporate governance and compensation |
Letter from
held two joint meetings over the last year with the Board of Directors’ (BoD) Risk Committee.
In a significant step toward strengthening our risk culture, and in line with regulatory guidance, we adopted stringent measures with regard to the performance assessment and compensation for risk-takers and controllers. Risk-takers are subject to an additional performance evaluation by the control functions, 60% of their bonus is deferred over three years and the vesting of their equity awards is subject to financial performance conditions.
Striking the right balance
While we believe that our current compensation system strikes the balance we seek, and are confident that the approach we have established is the right one, going forward we will continue adapting it to meet our requirements and those of our stakeholders, including ensuring that it complies with all applicable rules and regulations. By maintaining a focus on risk management throughout our business and encouraging sustainable business conduct, we are convinced that we are well-placed to execute our business strategy and achieve our goals.
Helmut Panke
Ad-interim Chairman of the Human
Resources and Compensation Committee
of the Board of Directors
Sally BottChairman of the HRCC
215
221
Compensation governance
Our compensation governance principles include appropriate checks and balances and are designed to support long-term value creation. They have great strategic importance in shaping the direction and success of the firm, supporting its ability to attract and retain the best talent.
Human Resources and Compensation Committee
The HRCC is composed of threefour independent members of the BoD.BoD members. On 31 December 2009,2010, the members were Sally Bott, (committee chair),who chaired the committee, Bruno Gehrig, Wolfgang Mayrhuber and Helmut Panke. Hostettler & Partner AG providedThe committee held 10 meetings in 2010. Upon Sally Bott’s
resignation from the BoD, effective 11 February 2011, Helmut Panke was appointed ad-interim Chairperson of the HRCC.
AuthoritiesResponsibilities and responsibilitiesauthorities of the HRCC
The HRCC is responsible for reviewingreviews the Total Reward Principles annually and for submitting themsubmits any amendments to the BoD. Additionally, on behalf ofBoD for final approval. In addition, the BoD, the committee has the following key areas of responsibility:
– | ||
– | reviews variable compensation funding throughout the year on behalf of the BoD and | |
– |
Compensation authorities
222
Corporate governance and compensation |
Inclusion of the Risk Committee
Compensation plans can have considerable influence in ensuring prudent and controlled risk-taking at financial institutions. In recognition of this fact, a key principle in the FINMA Circular 2010 / 1 is that a firm’s risk control functions and experts must be involved in designing and implementing compensation plans.
Compensation authorities
216
Decision-making process for Group Executive Board Member Total Compensationmember compensation
One of the most importantHRCC’s main responsibilities of the HRCC is to decide and approvemake recommendations for the actual amount of variable cash and equity compensation to be awarded to each GEB member for the 2010 performance during 2009.year. These recommendations are submitted to the BoD for approval. This process relies on a detailed and balanced review, of not only of the performance of the Group, performance, but also that of the relevant business division and also the impact of specific individuals. It considers Group and divisional performance information, (economic profit,including risk- adjusted profitability and other financial and non-financial factors such as leadership effectiveness, strategy execution reputation impact, etc.)and reputational impact. It also takes into account performance assessmentsinformation from the Board,businesses, initial compensation recommendations from the Group CEO, contractual and related commitmentsemployment contract terms, and relevant laws and regulations, together with relevant market data.
The 2010 non-bindingShareholders’ advisory vote on the compensation report
We value the opinions of our shareholders and, at the AGM to be held in April 2010,shareholders. As such, we will provide, shareholders withas we have done the past two years, an opportunity for shareholders to express their views through aan advisory vote on this compensation report. Asreport at the ultimate decision on compensation is legally within the powers of the BoD,AGM in April 2011. While such a vote is non-binding and advisory in nature. We believe that thisnature and not legally binding, we encourage our shareholders to participate in the vote presentsas we regard it as a meaningful way of involving our shareholdersthem in the compensation matters. Wediscussion and take its outcome seriously. Shareholders also encourage shareholdershave the opportunity to shareraise questions at the AGM, and can address their views regarding ourquestions about compensation programs andor related matters directly withissues at any time to BoD members by contacting the Company Secretary. Contact details are provided at the beginning of this report.
217223
Total Reward Principles
In September 2009, revised Group-wideOur approach to compensation is underpinned by what we call our “Total Reward Principles.” They establish a framework for integrating risk control and managing performance. At the same time, they specify how we structure compensation and the necessary bonus pool funding, that is, the amount of funds available in a given year for the payment of bonuses. They reflect our longstanding focus on pay for performance, sustained profitability, sound governance and strong risk awareness, and build on the UBS strategy of enhancing the firm’s reputation, increasing client focus and teamwork, and improving integration and execution. At the same time, they give full effect to the relevant regulatory requirements.
Total Reward Principles
Align reward with sustainable performanceWithin the context of
Throughout UBS, as a whole and the markets in which we operate, the sustainable performance of an employee’s business division is a key componentfactor in determining compensation. Our assessment of reward. In consideringperformance goes beyond whether financial objectives have been achieved and takes into account the Grouplong-term risk impact of employee actions.
è | Refer to the “Compensation Governance” section for more information about responsibilities and authorities for compensation-related decisions |
Support appropriate and controlled risk takingrisk-takingRewards are consistent with our risk framework and tolerance. Performance
Our compensation system provides incentives that take specific account of risk. Our performance reviews recognize thethat different businesses have different risk profileprofiles, and nature of each business, includingthat additional factors such asshould be considered, including the fact that earnings may vary in quality and time-horizonover time. All employees are expected to demonstrate an appropriate understanding of earnings, the nature of the relevant industry segmenttheir business and competitive trends.
224
Corporate governance and compensation |
quire deferral of up to five years. The deferred portion will be adjusted for activities and future risks that are not adequately reflectedforfeited in annual profits. Rewards determined forcertain cases, including if an employee acts contrary to the firm’s interests during the deferral period by contributing to significant financial losses or restatements, causing reputational harm, or breaching risk compliance andpolicy, legal or regulatory requirements, all of which constitute “harmful acts”.
Foster effective individual performance management and communicationBeyond
We evaluate performance rigorously to ensure that compensation is fairly and appropriately allocated. We base it not only on the contribution employees make to UBS’s business results, and achievement of individual performance objectives, rewardsbut also take into account:on whether they:
– | ||
– | ||
– | ||
– | ||
– | operate with a high level of integrity and in compliance with UBS policies; | |
– | actively | |
– |
218
Attract and engage a diverse, talented workforce
Our reward structure is designedneed to provideattract and retain talented, competent employees with rewardsunderpins our compensation policies. We offer market-competitive compensation that are appropriately balancedstrikes an appropriate balance between fixed and variable elements, that are competitive within the market and are paid out over an appropriate period of time.
Components of compensation
In general, total compensation comprises an annual base salary, reflecting the individual’s role, skills and knowledge, local market-based benefits and, where applicable, a discretionary incentive award.elements. Base salary levels are sufficientsalaries must be high enough to allow for a flexible discretionary incentive policy. Discretionary annual incentives may vary from yearpolicy when it comes to year, particularly for senior revenue producersvariable compensation. Our variable compensation encourages employees to perform and more highly paid employees. Discretionary incentive awards may be split between immediate cash and long-term awards to be granted inentrepreneurial, while at the form of either deferred UBS equity or deferred cash. The proportion of deferred incentive awards generally vest over three years,same time placing an emphasis on strong risk awareness and increase with total compensation in order to maintain focus on our long-term profitability and continued responsible behavior of the employee. Stock options and/or appreciation rights may be awarded as part of total reward to recognize the capabilities of key employees who are expected to carry out our strategic objectives. For employees in senior positions, reward focus is founded on sustainable long-term profitability that may require the application of multi-year performance conditions to recognize outstanding performance. Guaranteed incentive awards are used only exceptionally and are generally limited to a one-year duration.
è | Refer to the “Overview of our compensation model” section of this report for more information about our compensation system |
219225
Cash and equity incentives
Compensation plan awards
This section describes key features of the deferred compensation plans that are used to deliver variable incentive awards to members of the GEB and other employees.
Cash Balance PlanThe CBP applies to GEB members only and is designed as one of several tools to ensure that GEB compensation is directly and tightly linked to performance over the longer term. This ensures that the effect of risk events which occur after grant are fully captured “over the life of the instrument”. As such, the CBP relies on a cash deferral system. Generally, 50% of a GEB member’s variable incentive is delivered via the CBP.
Performance Equity PlanThe PEP applies to GEB members and is one of two deferred equity components that comprise the remaining 50% of their variable incentive award. This plan focuses on creating mid- to long-term added value over a three-year period. At the start of the performance period, executives are granted a certain number of restricted performance shares that, subject to the achievement of predefined economic profit and total shareholder return targets at a Group level cliff vest after three years.
The three-year target performance levels were set after consideration of our strategic business plan.
Incentive Performance PlanThe IPP, which applies to GEB members and certain other senior employees, is designed to be aligned with the long-term performance and value of UBS shares. The award is granted to senior key talent who are actively leading the drive to achieve sustained profitability at UBS and who are expected to contribute most significantly to our long-term future and economic success. The IPP acknowledges the strategic importance of retaining our key talents, returning to leading performance levels in all of our businesses and growing the UBS share price.
Equity Ownership Plan/Senior Executive Equity Ownership PlanEligible employees receive a portion of their annual variable compensation above a certain threshold in the form of a mandatory Equity Ownership Plan (EOP) award. This award can be in actual UBS shares or in notional UBS shares. For
220
certain employees in the Global Asset Management business only, a percentage of their variable incentive award that would have been delivered in UBS shares was instead granted over a specifically created Alternative Investment Vehicle. The vesting and forfeiture provisions of these awards mirror those of EOP.
compliance standards or individual behavior that contributes substantially to a material financial loss, restatement or reputational risk.
Conditional Variable Compensation PlanAs part of the constrained 2008 compensation program, the firm implemented CVCP as a one-time forward looking compensation plan. Under this program awards were granted to certain employees (excluding GEB members) in second quarter 2009. These awards constituted a contingent right to receive cash at vesting, subject to the satisfaction of predefined performance conditions, and were scheduled to vest in three equal tranches over a three-year period.
221
Variable compensation funding framework
Overview
Following approvalWe benchmark our compensation and benefit levels against those of the revised Total Reward Principles,our peers. With respect to compensation for GEB members, we also reviewed the framework usedrefer to fund variable compensation. This year, we amended our variable compensation funding framework to explicitly further take into consideration factors such as profitability after deducting costa peer group of capital and also the underlying business risk.
Market driven pool funding
Within UBS, not all units achieved a satisfactory level of economic contribution in 2009. However, achievement of our strategic goals including offering a greater integrated firm to our clients calls for us to continue investment in these lines of business. Different businesses are at different stages of development and different places on a profitability spectrum. Further, competitors are emerging from the global economic crisis at differing paces which is creating significant compensation tension. Our compensation system needs to be able to anticipate and respond to these pressures in
order to maintain our ability to attract and retain key talent. We need to be able to react decisively by maintaining the flexibility to pay top-performing individuals adequately and appropriately by taking into account predefined personal objectives, and achievements against other relevant key performance indicators, as set out in the Total Reward Principles.
Benchmarking against peers
Compensation and benefit levels are primarily result-driven and further benchmarked against appropriate peers.factors. These companies, which are selected for the similarity of their core businesslarge European and US banks operating internationally, are our main competitors when it comes to that of UBS, as well as for comparable size, geographic distribution, business strategy and performance. Typically, these are also the companies from which we are most likely to hire and to which we are most likely to lose employees. When benchmarking GEB members, generally ten peers are considered to represent the most relevant labor market for compensation namelyhiring. They are: Bank of America, Merrill Lynch, Barclays, Citigroup, Credit
Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorganJP Morgan Chase and Morgan Stanley and RBS. Stanley.
In the view of the HRCC, our executive compensation structure is positioned appropriatelyappropriate relative to these peers.our peer group. We review the peer group regularly to ensure that the firms that constitute it remain relevant benchmarks for our purposes.
As for compensation for other employees, given the diversity of our businesses, the companies we use as benchmarks
vary with and are dependent on the relevant business divisions and locations, as well as the nature of the positions involved. For certain businesses or positions, in particular those below the GEB, additional competitorswe may be takentake into account including other major international banks, the large Swiss private banks, private equity firms, and hedge funds whichand non-financial firms. Furthermore, we also benchmark employee compensation internally for comparable roles within and across business divisions and locations.
222
226
Corporate governance and compensation |
Compensation frameworkOverview of our compensation model
Compensation structure
ChairmanOur compensation model is consistent with and supports our Total Reward Principles. It rewards appropriate risk-taking and behavior that produces sustainable results. To encourage employees to act with the long-term interests of the Boardfirm in mind, which also serves the best interests of Directorsour shareholders, we pay a significant part of our variable compensation in the form of equity that is deferred over several years.
All UBS employees
The total compensation employees receive has two elements: a fixed element, which is generally the base salary, and a discretionary variable element, which is the bonus. In determining employees’ pay, and in benchmarking pay both internally and externally, we focus on total compensation, rather than its individual elements, as it presents a more comprehensive picture of an employee’s pay.
mine our commitment to providing market-competitive compensation. By not capping total compensation, we have the flexibility required to respond to different circumstances, such as changing business and market conditions or retention needs.
Base salary
Compensation overview
Independent members of the Board of Directors
mance of the Group. Fees for independent members are reviewed annually. The HRCC reviews a proposal by the Chairman of the BoD, and then submits a recommendation to the full BoD. Fees are paid 50% inadditional cash anddeferrals. 6 At least 50% in blocked UBS shares. However, members can elect to have 100% of their remunerationbase fee is paid in blocked UBS shares. These shares are attributed with a price discount of 15% and restricted from sale for four years from the date they are granted. None of the independent members of the BoD have a contract with UBS that provides benefits upon the termination of their term of office.
Group Executive Board
All UBS employees
Base salary
Compensation structure
223227
During 2009,Bonus
è | Refer to the “Our employees” section of this report for more information on the Core Cycle process |
è | Refer to the discussion in the “Deferred variable compensation plans” section of this report for more information |
Compensation for financial advisors in relation toWealth Management Americas
BenefitsOther variable compensation
Severance and sign-on payments1 | ||||||||||||||
These payments were made to certain GEB members, Group Managing Directors (replacing the former Group Managing Board in February 2010), and to certain key risk-takers and controllers in 2010. | ||||||||||||||
31.12.10 | ||||||||||||||
Of which expenses to | ||||||||||||||
Of which expenses | be recognized in | |||||||||||||
Total | recognized in 2010 | 2011 and later | ||||||||||||
Sum of all sign-on payments, in CHF million2 | 95 | 55 | 40 | |||||||||||
of which related to replacement awards and guarantees for the first year, in CHF million | 82 | 46 | 36 | |||||||||||
Number of beneficiaries | 19 | |||||||||||||
Sum of all severance payments, in CHF million | 13 | 13 | N/A | |||||||||||
Number of beneficiaries | 7 | |||||||||||||
Number of departing managers | 18 | |||||||||||||
1 For the purpose of this table we consider replacement awards and guarantees as sign-on payments. 2 Includes sign-on payments agreed in 2010 and awards granted in 2010. Awards granted are included with their fair value at the date of grant. |
228
Corporate governance and compensation |
ments are made outside the circumstances described, or where substantial severance payments are made, a further stringent approval process applies.
Pensions and benefits
Pensions
è | Refer to “Note 30 Pension and other |
As part of our efforts to attract and retain the best employees, our total compensation includes, in addition to a base salary and bonus, certain benefits such as health insurance and retirement benefits. These benefits vary depending on the location, but are competitive within each of the markets in which we operate.
Employee share purchase program
Risk-takers and controllers
Our risk-takers and controllers are a group of around 200 individuals who, by the nature of their role, have been determined to be able to materially commit or control the firm’s resources and / or exert significant influence over its risk profile, whether they are in the front office, logistics or control functions. Risk-taker activities are closely monitored, and risk-takers are subject to an additional level of performance evaluation by the control functions. Additionally, their compensation is adjusted to reflect the individual
risks that they take, and a deferral rate of 60% is applied to their annual bonus granted under the applicable plans. Furthermore, the vesting of their deferred awards is contingent on the profitability of the business division in which they work, or, in the case of Corporate Center employees, on the profitability of the Group as a whole. Like all other employees, risk-takers also face forfeiture or reduction of the deferred portion of their compensation if they commit harmful acts.
è | Refer to the |
While we comply with the relevant Swiss Financial Market Supervisory Authority (FINMA) requirements regarding risk-takers, we are currently seeking guidance from regulators across the European Union regarding the implementation of the Capital Requirements Directive issued by the European Commission, which contains some rules relating to compensation. In the UK, for instance, the Financial Services Authority (FSA) has already issued a revised remuneration code. In line with guidance from the FSA, we have identified senior management and employees whose professional activities could have a material impact on the firm’s risk profile in the UK, so-called “Code staff”. Of the approximately 100 Code staff, about half are also part of our wider population of risk-takers and controllers. Code staff compensation is generally similar to those of risk-takers. However, due to specific FSA requirements, 50% of Code staff bonuses that are paid out immediately are delivered in shares. Furthermore, any shares granted to Code staff under the EOP for their performance in 2010 will be subject to an additional six-month blocking period upon vesting.
Group Executive Board
Bonus
è | Refer to the discussion in the “Compensation funding and |
At least 76% of a GEB member’s bonus is deferred. Of the annual bonus, 40% is awarded in cash under the Cash Balance Plan (CBP): a maximum of 24% is paid out immediately, subject to a cash cap of CHF/USD 2 million. Vesting of the deferred cash portion is in equal installments over the following two years, with the amount vesting dependent on the return on equity achieved by the Group (Group RoE) in the financial year prior to vesting. The remaining 60% of a GEB member’s bonus is paid in equity, with 20% delivered under the Performance Equity Plan (PEP) and 40% under the Senior Executive Equity Ownership Plan (SEEOP). CBP awards vest over two years, PEP awards after three years, and
229
SEEOP awards over five years. The deferred portion of all these awards is subject to forfeiture under certain conditions.
è | Refer to the “Deferred Variable Compensation Plans” section for more information |
Cash and equity incentivesShare retention
client focus, teamwork and sound governance. Since performance can vary, the amount of variable compensation an individual receives can also vary considerably from year to year.
230
Corporate governance and | ||
Employment contractscontract terms
Benefits
Board of Directors
Chairman of the BoD
man’s employment contract does not provide for special severance terms, including supplementary contributions to pension plans.
Independent BoD members
Regulatory framework
è | Refer to the “2010 compensation for the Group Executive Board and the Board of Directors” section of this report for more information |
224231
pensation practices for 2009 already materially comply with the relevant rules and guidelines issued by the G-20, as well as by FINMA, the US Federal Reserve, the UK FSA and other jurisdictions in which we have a substantial presence. These rules require that material portions of compensation, in par-
ticular for senior management and risk-takers, are principally deferred into UBS shares over at least a three-year period. These awards are also required to be subject to forfeiture linked to conduct that contributes to substantial future underperformance or restatement of financial results.
225
Deferred variable compensation plans
2009 performance
BesidesUnder our present compensation model, all of our variable compensation plans featuremalus (forfeiture) provisions. These provisions, which UBS was among the first in the industry to incorporate in its compensation system, require that a significant part of an employee’s bonus be deferred over several years and enable the firm to forfeit the deferred portion if an employee commits certain harmful acts. As such, the firm maintains the right not to pay deferred awards, which allows us to meet our overriding objective of rewarding behavior that contributes to sustainable profitability and, conversely, to withdraw incentives in cases when employees act against the interests of the firm.
Business division performance
When considering compensation funding for 2009, the HRCC took into account a thorough assessment of business divisional performance as well as the improvementtheir business. Besides this, employees in the stability, security and risk positionInvestment Bank whose compensation exceeds CHF 1 million are subject to cash deferrals (for up to three years), leading to a reduction in their immediate cash payout. We have also reduced the use of leverage with the discontinuation of the firm and overall improvement in underlying Group profitability throughout the year.
Overview of their incentive accruals in light of the above data, expected business results and other factors such as market positioning and business protection.
Compensation is closely linked to long-term sustainable performance. All of our variable compensation plans featuremalusprovisions. A substantial part of variable compensation is deferred and at risk of forfeiture for 2009 and approved the individual divisional pools.
Individual performanceseveral years.
Individual performance is formally assessed each year by measuring achievement against personal objectives. These objectives are focused on a range of financial and non-financial areas such as:
226232
Corporate governance and compensation |
2009Variable compensation for the Board of Directors andGroup Executive Boardplans 2010
Cash Balance Plan (CBP)
Plan type – Deferred cash plans
BoardEligible employees:CBP awards are granted annually toGEB members.
Description: Generally, 40% of Directors remuneration
Chairmana GEB member’s annual bonus consists of cash awarded under the CBP. A maximum of 24% of the Boardtotal bonus is paid out immediately, subject to a cap of Directors
The amount of cash delivered on vesting depends on the return on equity achieved by the Group during the vesting period. If the Group RoE is below 6%, no adjustment will be made to the amount of cash delivered upon vesting. If the Group RoE exceeds 6%, the unvested amount will be increased in line with the RoE achieved, though any such increase may not exceed 20%. If the Group RoE is negative, the unvested amount will be decreased accordingly, up to a maximum of 100%, and no vesting will occur in that given year.
Restrictions:The CBP containsmalus provisions so that the deferred amount is partially or fully forfeited if a harmful act is committed. Even after a GEB member has left the firm, the deferred portion of the BoD, Kaspar Villiger, whoCBP award continues to be at risk of forfeiture. In addition, the award is forfeited if a GEB member voluntarily terminates his or her employment and joins another financial services organization.
Changes in 2010:The cap on the amount of cash that can be paid out immediately is set at CHF/USD 2 million. This was elected atraised from the mid-April AGM 2009, forprevious level of CHF/USD 1 million in line with industry practice.
The amount of cash delivered on vesting was made dependent on the 2009 financial year was CHF 676,571.
In addition to the existing forfeiture provisions, awards granted from 2011 onward are now also forfeited if a GEB member voluntarily terminates his base salary, Kaspar Villiger has elected not to receive a share awardor her employment and he has decided to voluntarily reduce his annual base salary from CHF 2 million to CHF 850,000.joins another financial services organization.
Highest paid member of the Board of DirectorsSenior Executive Equity Ownership Plan (SEEOP)
Plan type – UBS share plans
Remuneration for the former Chairman of theBoard of DirectorsEligible employees:
Independent members of the Board of Directors
Group Executive Board compensationDescription:
In 2009, total compensation for members of the GEB in their capacity as such, reflected not only the individual performance of each executive, but also the improved operating performance of each business division and the overall UBS Group. The HRCC also considered the relevant external competitive market and the steps required to ensure that the firm makes further significant strives in 2010 towards its strategic objectives.
Restrictions:SEEOP awards are subject to forfeiture in September 2008, he joinedthe event of a harmful act, if the business division to which a GEB member belongs makes a loss or if his or her employment is terminated voluntarily or for cause.
Changes in December 20082010:We introduced a performance condition for SEEOP awards, making the vesting of such awards contingent on the profitability of a GEB member’s business division, or, if the GEB member in question does not head a division, on the profitability of the Group as a memberwhole. If the business division (or Group) suffers a loss in a given performance year, then the portion of the former Group Managing Board and Global co-Head of Fixed Income, Currencies and Commodities (FICC). He was further promotedSEEOP award due to vest the GEB as co-CEOfollowing year will generally be reduced by 10%–50%, depending on the extent of the Investment Bank, together with Alexander Wilmot-Sitwell, on 27 April 2009, and maintained his FICC role in parallel until early 2010. He was previously a Partner and Co-Head of Goldman Sachs’ Securities division for Asia (ex-Japan), and represented aloss.
Compensation details and additional information for executive members of the BoD | ||||||||||||||||||||||||||||||||
CHF, except where indicateda | ||||||||||||||||||||||||||||||||
Annual | ||||||||||||||||||||||||||||||||
For the | Annual | incentive | Discretionary | Contributions | ||||||||||||||||||||||||||||
year | Base | incentive | award (shares | award (options | Benefits | to retirement | ||||||||||||||||||||||||||
Name, function1 | ended | salary | award (cash) | – fair value)c | – fair value)d | in kinde | benefits plans1 | Total | ||||||||||||||||||||||||
Kaspar Villiger, Chairman | 2009 | 602,083 | 0 | 0 | 0 | 74,488 | 0 | 676,571 | ||||||||||||||||||||||||
2008 | ||||||||||||||||||||||||||||||||
Peter Kurer, former Chairman | 2009 | 666,667 | 0 | 0 | 0 | 37,561 | 89,780 | 794,008 | ||||||||||||||||||||||||
2008 | 1,333,333 | 0 | 0 | 0 | 58,267 | 174,047 | 1,565,647 | |||||||||||||||||||||||||
Marcel Ospel, former Chairman | 2009 | |||||||||||||||||||||||||||||||
2008 | 666,667 | 0 | 0 | 0 | 80,755 | 87,023 | 834,445 | |||||||||||||||||||||||||
Stephan Haeringer, former Executive Vice Chairman | 2009 | |||||||||||||||||||||||||||||||
2008 | 1,125,000 | 0 | 0 | 0 | 108,846 | 195,802 | 1,429,648 | |||||||||||||||||||||||||
1 2009: Kaspar Villiger was the only non-indendendent member in office on 31 December 2009; Peter Kurer did not stand for reelection at the AGM on 15 April 2009. 2008: Peter Kurer was the only executive member in office on 31 December 2008; Marcel Ospel did not stand for reelection at the AGM on 23 April 2008 and Stephan Haeringer stepped down during the year as a member of the BoD, and both of these payments are pro-rata for the four and nine months, respectively, in their functions. |
227233
Performance Equity Plan (PEP)
Plan type – UBS share plans
Eligible employees:PEP awards are granted annually toGEB members.
Description:At the beginning of the three-year performance period, GEB members are granted a certain number of restricted performance shares. The actual number of UBS shares delivered at the end of the period can be between zero and shareholdingstwo times the number of performance shares granted initially, depending on whether performance targets relating to economic profit (EP) and relative total shareholder return (TSR) have been achieved. EP is a measure of risk-adjusted profit that takes into account the cost of risk capital and is only realized when the entire return on capital that is achieved is higher than the firm’s cost of capital. TSR measures the total return of a share to an investor, that is, both capital appreciation of the share price and the dividend yield. We measure our TSR over a three-year period relative to the companies in the Dow Jones Bank Titans 30 Index, an index representing 30 leading companies in the global banks sector.
To determine the number of UBS shares delivered upon vesting, it is necessary to first determine the EP multiplier to be used, as well as the TSR multiplier. The EP multiplier changes in line with the level of three-year cumulative EP achieved. The TSR multiplier used depends on the relative ranking achieved by UBS among the companies in the Dow Jones Banks Titans 30 Index at the time of vesting. As was the case last year, a 100% multiplier will be applied if UBS is ranked 15th among the companies in the index. The EP multiplier may range from 50%–150% and the TSR multiplier may range from 50%–133%, but if both measures are below the lowest threshold no shares will vest.
Once the EP and TSR multipliers have been established, to calculate the number of shares delivered upon vesting:
– | the EP multiplier is multiplied with the TSR multiplier; and | |
– | the resulting figure is then multiplied with the number of performance shares granted initially. |
Restrictions:PEP awards are subject to forfeiture in the event of a harmful act or if employment has been terminated voluntarily or for cause.
Changes in 2010:No changes were made to the plan’s design. Performance targets are set annually.
234
Corporate governance and compensation |
Equity Ownership Plan (EOP)
Plan type – UBS share plans / Equity Ownership Plan – fund linked
Eligible employees:The EOP is a mandatory bonus deferral plan forall employees with a total compensation of CHF/USD 250,000 or more. In 2010, around 8,000 employees received EOP awards. These employees include risk-takers, Group Managing Directors (GMD) and employees whose total bonus exceeds CHF/USD 2 million. EOP awards are granted annually.
Description:Employees with a total compensation (that is, base salary and bonus) of CHF/USD 250,000 or more receive 60% of their bonus above that level in UBS shares that are deferred over three years under the EOP.
To align their compensation with the performance of the funds that they manage, Global Asset Management employees receive their EOP awards in the form of cash, the amount of which is dependent on the value of the relevant underlying Global Asset Management funds at the time of vesting. The vesting and forfeiture provisions of these awards are the same as for EOP awards made in the form of UBS shares.
Restrictions:EOP awards are subject to forfeiture in the event of a harmful act or if employment is terminated voluntarily or for cause.
EOP awards made to risk-takers, GMD and employees whose total bonus exceeds CHF/USD 2 million will only vest in full if the business division to which the employee belongs is profitable. If the business division incurs an operating loss in a given year, then the deferred portion of the EOP award due to vest in the following year will be partially forfeited. The amount forfeited depends on the extent of the loss and generally ranges from 10%–50% of the award portion due to vest. In the case of Corporate Center employees, their awards are conditional on the profitability of the Group as a whole.
Changes in 2010:We introduced a performance condition for awards granted to risk-takers, GMD and employees whose total bonus exceeds CHF/USD 2 million, making the vesting of their deferred awards contingent on the profitability of their respective business division, or, if such employees belong to the Corporate Center, on the profitability of the Group as a whole.
Deferred Cash Plan (DCP)
Plan type – Deferred cash plans
Eligible employees:DCP awards were granted toInvestment Bank employees whose total compensation exceeds CHF 1 million.
Description:Although the mandatory bonus deferral plan (for total compensation above CHF/USD 250,000) or more applies to all employees, certain Investment Bank employees are subject to additional cash deferrals on the 40% cash component of their bonus. The DCP is a cash award denominated either in USD or CHF. It vests in equal installments in the three subsequent years following its grant. The CHF/USD 2 million cap on the amount of cash that can be paid out immediately applies.
Restrictions:DCP awards are subject to forfeiture in the event of a harmful act or if employment is terminated voluntarily or for cause.
235
Discontinued deferred compensation plans
The following table sets out the details of discontinued compensation plans, including those under which stock options, stock appreciation rights and other instruments were granted in the past. UBS has not granted any options since 2009. The strike price for stock options awarded under prior compensation plans has not been reset.
è | Refer to Note 31 “Equity participation and other compensation plans” in the “Financial Information” section of this report for more information |
Performance | Restrictions/ | Time frame and | |||||||||||||||||
Plan | Year granted | Eligible employees | Instrument | conditions | other conditions | vesting terms | |||||||||||||
Incentive | 2010 only | GEB members and | Performance shares | Dependent on share | Subject to continued | Vests in full at the end | |||||||||||||
Performance Plan | other senior employees | price at the end of the | employment and | of five years. Number | |||||||||||||||
(IPP) | (approximately 900 | five-year period | harmful act provisions. | of shares that vest can | |||||||||||||||
employees) | be between one and | ||||||||||||||||||
three times the number | |||||||||||||||||||
of performance shares | |||||||||||||||||||
initially granted. | |||||||||||||||||||
Vests in one-third | |||||||||||||||||||
Conditional Variable | 2009 only | Selected employees | Cash | No financial loss | Subject to continued | installments over a | |||||||||||||
Compensation Plan | (approximately 9,500 | incurred and no need | employment and | three-year period. | |||||||||||||||
(CVCP) | employees), excluding | for additional capital | harmful act provisions. | ||||||||||||||||
GEB members | injection by | ||||||||||||||||||
government | Tranche forfeited if the | ||||||||||||||||||
Group or relevant | |||||||||||||||||||
business division fails to | |||||||||||||||||||
achieve a profit in the | |||||||||||||||||||
year preceding the year | |||||||||||||||||||
of vesting, or if there is | |||||||||||||||||||
any government | |||||||||||||||||||
recapitalization during | |||||||||||||||||||
the vesting period. The | |||||||||||||||||||
first tranche of the | |||||||||||||||||||
CVCP was forfeited as | |||||||||||||||||||
the net profit | |||||||||||||||||||
prerequisite was not | |||||||||||||||||||
satisfied for the | |||||||||||||||||||
performance year 2009. | |||||||||||||||||||
The second tranche of | |||||||||||||||||||
the CVCP is to vest on | |||||||||||||||||||
12 April 2011 following | |||||||||||||||||||
the announcement of | |||||||||||||||||||
UBS's 2010 profit (paid | |||||||||||||||||||
to employees in all | |||||||||||||||||||
business divisions except | |||||||||||||||||||
Wealth Management | |||||||||||||||||||
Americas, which record- | |||||||||||||||||||
ed a full-year loss). | |||||||||||||||||||
Key Employee Stock | 2002-2009 | Selected employees | Share-settled stock | None | Subject to continued | Vests in full at the end | |||||||||||||
Appreciation Rights | (approximately 17,000 | appreciation rights | employment, | of the three-year | |||||||||||||||
Plan (KESAP) and | employees between | (SARs) or stock options | non-solicitation of | period. SARs and | |||||||||||||||
Key Employee Stock | 2002 and 2009) | with a strike price not | clients and employees | options expire 10 years | |||||||||||||||
Option Plan (KESOP) | less than the fair | and non-disclosure of | from the date of grant. | ||||||||||||||||
market value of a UBS | proprietary information. | Awards are settled by | |||||||||||||||||
share on the date of | the delivery of UBS | ||||||||||||||||||
grant | shares, except in | ||||||||||||||||||
countries where this is | |||||||||||||||||||
not permitted by law. | |||||||||||||||||||
Senior Executive | 2002-2009 | GEB members and | SARs or stock options | None | Subject to continued | Vests in full at the end | |||||||||||||
Stock Appreciation | Group Managing Board | with a strike price not | employment, | of the three-year | |||||||||||||||
Rights Plan (SESAP) | less than 110% of the | non-solicitation of | period. SARs and | ||||||||||||||||
and Senior | fair market value of a | clients and employees | options expire 10 years | ||||||||||||||||
Executive Stock | UBS share on the date | and non-disclosure of | from the date of grant. | ||||||||||||||||
Option Plan (SESOP) | of grant | proprietary information. | Awards are settled by | ||||||||||||||||
the delivery of UBS | |||||||||||||||||||
shares, except in | |||||||||||||||||||
countries where this is | |||||||||||||||||||
not permitted by law. |
236
Corporate governance and compensation |
Compensation funding and expenses
How we determine our bonus pool
Each business division plans its bonus pool annually based on the funding framework and process that has been agreed by the HRCC. The “management pool” is the amount that a business division proposes to award its employees for their performance in a given performance year after consideration of all relevant factors. These proposed pools are submitted to the Group CEO and the HRCC for review, and approved by the full BoD. A detailed description of this process is provided below. By comparison, the expenses charged to the profit and loss account for any given year include compensation expense, that is, accruals, for bonuses awarded for the latest performance year recognized in the current year, as well as amortization of deferred awards granted in prior years, that is, prior awards that have not yet vested.
Profitability
Funding rates and initial bonus pools
in years of downturn or recovery by retaining key employees, while providing additional shareholder return in good years by preventing excessive capital usage for compensation. As such, we optimize shareholder return in the longer term by adapting our compensation funding in line with the profitability situation of our businesses.
Management discretion
Review and approval process
Sustainable profitability is key to compensation funding
237
Business performance over the last two years
UBS achieved a profit before tax of CHF 7,455 million in 2010, compared with a loss of CHF 2,561 million in 2009. The Investment Bank returned to profitability and contributed CHF 8,278 million to the CHF 10 billion improvement in UBS’s operating profit. UBS ended 2010 with an industry-leading BIS tier 1 capital ratio of 17.8%. Client confidence in our business is growing, as demonstrated by increased business volumes as well as improvements in net new money. We also continued to control our costs and achieved our CHF 20 billion fixed costs target for the year.
Operating profit from continuing operations before tax
è Refer to the “UBS business divisions and Corporate Center” section for more information on 2010 business division financial performance
It also considers performance indicators and risk factors specific to each business division when assessing performance and earnings quality, before recommending the size of the final bonus pool to the BoD.
Bonuses granted in 2010
Despite our improved performance in 2010, our bonus pool of CHF 4,245 million for 2010 is 11% lower than that for 2009, reflecting factors such as the market environment, our need to further improve our profitability, and our performance relative to the rest of the industry.
Total bonus pool1 | ||||||||||||||||||||||||||||||||||||||||||
Expenses deferred | Accounting | Number of | ||||||||||||||||||||||||||||||||||||||||
Expenses | to 2011 and later | adjustment | Total | beneficiaries | ||||||||||||||||||||||||||||||||||||||
CHF million, except where indicated | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||||||||||||||||||
Cash discretionary bonus | 2,079 | 2,245 | 0 | 0 | 0 | 0 | 2,079 | 2,245 | 51,522 | 51,747 | ||||||||||||||||||||||||||||||||
Deferred cash plans | 64 | 44 | 236 | 45 | 0 | 0 | 300 | 89 | 576 | 54 | ||||||||||||||||||||||||||||||||
UBS share plans | 440 | 276 | 1,271 | 1,827 | 60 | 107 | 1,771 | 2,210 | 7,516 | 10,690 | ||||||||||||||||||||||||||||||||
UBS share option plans | 0 | 33 | 0 | 34 | 0 | 0 | 0 | 67 | 0 | 7,552 | ||||||||||||||||||||||||||||||||
Equity Ownership Plan – fund-linked | 28 | 34 | 67 | 134 | 0 | 0 | 95 | 168 | 579 | 582 | ||||||||||||||||||||||||||||||||
Total discretionary bonus | 2,611 | 2,632 | 1,574 | 2,040 | 60 | 107 | 4,245 | 4,779 | ||||||||||||||||||||||||||||||||||
1 Refer to “Note 31 Equity participation and other compensation plans” in the “Financial information” section of this report for more information. |
238
Corporate governance and compensation |
very strong strategic hirecase of deferred cash and share awards, the final amount paid to an employee is influenced by forfeiture provisions and any performance conditions to which these awards are subject. The deferred share award amount is based on the fair value of these awards at the date of grant.
Total personnel expenses for 2010
Reconciling the overall bonus pool in 2010 with bonus expense
determine our variable compensation expense, several adjustments are required in order to reconcile the bonus pool to the accounting costs recognized in the Group’s financial statements prepared under IFRS:
– | reduction for the unrecognized future amortization of unvested deferred awards granted in 2011 for the performance year 2010; and | |
– | addition for the amortization of unvested deferred awards granted in previous years. |
As an increasingly large part of compensation consists of deferred awards, the amortization of unvested deferred awards granted in previous years became a more significant part of the 2010 accounting costs, and will increase in 2011.
è | Refer to “Note 31 Equity participation and other compensation plans” in the “Financial information” section of this report for more information |
Personnel expenses | ||||||||||||||
CHF million | 31.12.10 | 31.12.09 | 31.12.08 | |||||||||||
Salaries | 7,033 | 7,383 | 7,775 | |||||||||||
Variable compensation – discretionary bonus expense | 4,082 | 1 | 2,809 | 1,674 | ||||||||||
Variable compensation – other | 310 | 2 | 830 | 1,025 | ||||||||||
Contractors | 232 | 275 | 423 | |||||||||||
Social security | 826 | 804 | 660 | |||||||||||
Pension and other post-employment benefit plans | 724 | 988 | 972 | |||||||||||
Wealth Management Americas: financial advisor compensation3 | 2,667 | 2,426 | 2,435 | |||||||||||
Other personnel expenses4 | 1,047 | 1,027 | 1,298 | |||||||||||
Total personnel expenses | 16,920 | 5 | 16,543 | 16,262 | ||||||||||
1 Includes expensing of current year bonuses of CHF 2,611 million and expensing of deferred awards of CHF 1,471 million relating to bonuses for previous years. 2 Includes replacement awards of CHF 107 million, forfeitures of CHF (167) million, guaranteed bonuses of CHF 135 million, severance payments of CHF 69 million and UBS’s Equity Plus Plan of CHF 80 million. 3 Consists of grid-based compensation linked directly to compensable revenues generated by financial advisors, and supplemental compensation calculated based on financial advisor productivity, firm tenure, assets and other variables. Also includes costs related to compensation commitments and advances granted to financial advisors at the time of recruitment, which are subject to vesting requirements. 4 Includes employee mandatory insurance programs and family allowances, recruitment, training and related travel costs, the cost of employee anniversary awards, the costs of international assignees, and relocation costs. 5 Personnel expenses (including fixed and variable compensation) recognized in the profit and loss statement 2010 of CHF 16,920 million (less charges and credits that derive from remuneration for previous financial years of CHF 2,069 million plus expenses deferred to 2011 and later from the pool 2010 of CHF 2,609 million) amount to CHF 17,460 million. |
239
2010 compensation for the Group Executive Board and Board of Directors
Group Executive Board compensation
In 2010, total compensation for GEB members reflected the individual performance of each executive in the context of each business division’s improved operating performance, overall Group progress toward our medium-term strategic goals and the significant turnaround in the FICC business, toGroup’s profitability. In setting compensation levels, the effective unwinding of a large portionHRCC and the BoD also considered the collective achievements of the legacy positionsGEB in advancing our strategy, the relevant external competitive market and the firm’s relative performance.
goals set out in the firm’s overall strategy. His decision which was endorsedhas been gratefully accepted and agreed to by the HRCC.
Remuneration for members of the Group Executive Board whostepped down during 2009
Base salary
Benefits
è | Refer to “Note 30 Pension and other | |
è | Refer to the |
Compensation to former membersBoard of Directors compensation
Chairman of the Board of
Directors
Highest paid BoD member
Independent BoD members
240
Corporate governance and compensation |
by independent BoD members between the 2010 and 2011 AGM. Fees for 2010 to 2011 remained unchanged.
Compensation for former BoD and GEB members
Compensation and benefits in kind paid to former members of the BoD and the GEB members amounted to CHF 77,722 for 2010 and reflect legacy agreements still honored by UBS. These benefits have been discontinued for any member of the BoD and the GEB member who stepped down after 1 January 2008.
Transactions in 2010
In accordance with the applicable rules and regulations, management transactions in UBS shares by BoD and GEB members are publicly disclosed. Transactions which require reporting are those involving all types of financial instruments whose price is primarily influenced by the price of UBS shares.
exchange rules do not require disclosure of individual names of GEB or BoD members making such transactions.
Loans
BoD and GEB members are granted loans, fixed advances and mortgages. Such loans were made in the ordinary course of business, on substantially the same terms as those granted to other employees, including interest rates and collateral, and did not involve more than the normal risk of collectability or contain other unfavorable features.
è | Refer to “Note 32 Related parties” in the “Financial information” section of this report for information concerning loans granted to current and former executives |
Page | ||||
242 | ||||
243 | ||||
244 | ||||
244 | ||||
245 | ||||
245 | ||||
246 | ||||
246 | ||||
246 | ||||
247 | ||||
250 | ||||
250 |
241
Corporate governance and compensation
Compensation
Total compensation for all GEB members | ||||||||||||||||||||||||||||||||||||||||
Variable cash | ||||||||||||||||||||||||||||||||||||||||
CHF, except where indicateda | compensation under CBP | |||||||||||||||||||||||||||||||||||||||
Contribu- | ||||||||||||||||||||||||||||||||||||||||
For | tions to | |||||||||||||||||||||||||||||||||||||||
the | Annual | Annual | Annual | retirement | ||||||||||||||||||||||||||||||||||||
year | Immediate | Deferred | bonus | bonus under | bonus | Benefits | benefits | |||||||||||||||||||||||||||||||||
Name, function | ended | Base salary | cashb | cashb, 3 | under PEPc | SEEOPd | under IPPc | in kinde | plansf | Total | ||||||||||||||||||||||||||||||
Oswald J. Grübel, Group CEO | 2010 | 3,000,000 | 0 | 0 | 0 | 0 | – | 25,600 | 0 | 3,025,600 | ||||||||||||||||||||||||||||||
Carsten Kengeter, CEO Investment Bank (highest-paid) | 2010 | 874,626 | 1,002,496 | 2,339,158 | 1,670,827 | 3,341,654 | – | 92,547 | 0 | 9,321,308 | ||||||||||||||||||||||||||||||
Carsten Kengeter, CEO Investment Bank (highest-paid) | 2009 | 669,092 | 3,002,082 | 2,001,388 | 6,155,869 | – | 1,349,336 | 0 | 12,545 | 13,190,312 | ||||||||||||||||||||||||||||||
Aggregate of all GEB members who | ||||||||||||||||||||||||||||||||||||||||
were in office on 31 December 20101 | 2010 | 14,705,894 | 15,588,145 | 14,451,756 | 15,019,951 | 30,039,901 | – | 381,851 | 843,402 | 91,030,900 | ||||||||||||||||||||||||||||||
Aggregate of all GEB members who | ||||||||||||||||||||||||||||||||||||||||
were in office on 31 December 20091 | 2009 | 12,000,055 | 15,440,827 | 10,293,884 | 13,453,424 | 4 | – | 15,696,333 | 270,971 | 1,551,068 | 68,706,566 | |||||||||||||||||||||||||||||
Aggregate of all GEB members who | ||||||||||||||||||||||||||||||||||||||||
stepped down during 20102 | 2010 | 755,950 | 1,380,000 | 920,000 | 0 | 0 | – | 78,817 | 118,334 | 3,253,101 | ||||||||||||||||||||||||||||||
Aggregate of all GEB members who | ||||||||||||||||||||||||||||||||||||||||
stepped down during 20092 | 2009 | 2,447,544 | 23,065,858 | 15,377,239 | 0 | – | 0 | 215,151 | 171,122 | 41,276,914 | ||||||||||||||||||||||||||||||
1 Number and distribution of GEB members: 13 GEB members in office on 31 December 2010 and on 31 December 2009 respectively. 2 Number and distribution of former GEB members for 2010 includes Francesco Morra (three months in office, including a notice period of six months); and 2009 includes Marcel Rohner (two months in office), Walter H. Stürzinger and Raoul Weil (three months in office), Jerker Johansson (four months in office), Rory Tapner (six months in office) and Marten Hoekstra (10 months in office). 3 In 2010, for John Cryan, Carsten Kengeter and Alexander Wilmot-Sitwell, deferred cash includes blocked shares. 4 Included in the share awards are SEEOP awards at a fair value of GBP 4,655,950 and EOP awards at a fair value of GBP 1,594,250. |
Explanation of the tables outlining compensation details for GEB members and non-independent BoD members | ||||
a. | Local currencies are converted into CHF using the exchange rates as detailed in | |||
b. | ||||
c. | ||||
d. | ||||
e. | Benefits in kind | |||
f. | Swiss executives participate in the same pension plan as all other employees. Under this plan, | |||
In both the US and the UK, |
228242
Corporate governance and compensation |
Remuneration details and additional information for independent members of the BoD | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CHF, except where indicateda | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
HR & | Governance & | Corporate | period | Share | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Audit | Compensation | Nominating | Responsibility | Risk | Strategy | AGM to | Committee | Benefits | Additional | percent- | Number of | ||||||||||||||||||||||||||||||||||||||||||||||
Name, function1 | Committee | Committee | Committee | Committee | Committee | Committee | AGM | Base fee | retainer(s) | in kind | payments | Total | age3 | shares4,5 | |||||||||||||||||||||||||||||||||||||||||||
Sergio Marchionne, | M | 2009/2010 | 325,000 | 100,000 | 0 | 250,000 | 6 | 675,000 | 100 | 51,845 | |||||||||||||||||||||||||||||||||||||||||||||||
Senior Independent Director, Vice Chairman | M | M | 2008/2009 | 325,000 | 200,000 | 0 | 250,000 | 6 | 775,000 | 100 | 76,228 | ||||||||||||||||||||||||||||||||||||||||||||||
Ernesto Bertarelli, | 2009/2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
former member | M | M | 2008/2009 | 325,000 | 200,000 | 0 | 0 | 525,000 | 100 | 51,596 | |||||||||||||||||||||||||||||||||||||||||||||||
Sally Bott, | C | M | 2009/2010 | 325,000 | 350,000 | 0 | 0 | 675,000 | 50 | 27,261 | |||||||||||||||||||||||||||||||||||||||||||||||
member2 | M | M | 2008/2009 | 162,500 | 75,000 | 0 | 0 | 237,500 | 50 | 12,280 | |||||||||||||||||||||||||||||||||||||||||||||||
Michel Demaré, | M | 2009/2010 | 325,000 | 200,000 | 0 | 0 | 525,000 | 50 | 21,203 | ||||||||||||||||||||||||||||||||||||||||||||||||
member | 2008/2009 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rainer-Marc Frey, | M | 2009/2010 | 325,000 | 200,000 | 0 | 0 | 525,000 | 100 | 40,301 | ||||||||||||||||||||||||||||||||||||||||||||||||
member2 | M | M | 2008/2009 | 162,500 | 150,000 | 0 | 0 | 312,500 | 50 | 16,158 | |||||||||||||||||||||||||||||||||||||||||||||||
Bruno Gehrig, | M | M | 2009/2010 | 325,000 | 200,000 | 0 | 0 | 525,000 | 50 | 21,203 | |||||||||||||||||||||||||||||||||||||||||||||||
member2 | M | 2008/2009 | 162,500 | 100,000 | 0 | 0 | 262,500 | 50 | 13,572 | ||||||||||||||||||||||||||||||||||||||||||||||||
Ann F. Godbehere, | M | M | 2009/2010 | 325,000 | 250,000 | 0 | 0 | 575,000 | 50 | 23,222 | |||||||||||||||||||||||||||||||||||||||||||||||
member | 2008/2009 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gabrielle Kaufmann- | 2009/2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kohler, former member | C | M | 2008/2009 | 325,000 | 250,000 | 0 | 0 | 575,000 | 50 | 29,731 | |||||||||||||||||||||||||||||||||||||||||||||||
Axel P. Lehmann, | M | 2009/2010 | 325,000 | 200,000 | 0 | 0 | 525,000 | 100 | 40,301 | ||||||||||||||||||||||||||||||||||||||||||||||||
member | 2008/2009 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rolf A. Meyer, | 2009/2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
former member2 | M | M | 2008/2009 | 162,500 | 150,000 | 0 | 0 | 312,500 | 50 | 16,158 | |||||||||||||||||||||||||||||||||||||||||||||||
Helmut Panke, | M | M | 2009/2010 | 325,000 | 300,000 | 0 | 0 | 625,000 | 50 | 25,242 | |||||||||||||||||||||||||||||||||||||||||||||||
member | M | M | 2008/2009 | 325,000 | 300,000 | 0 | 0 | 625,000 | 50 | 32,316 | |||||||||||||||||||||||||||||||||||||||||||||||
William G. Parrett, | C | 2009/2010 | 325,000 | 300,000 | 0 | 0 | 625,000 | 50 | 25,242 | ||||||||||||||||||||||||||||||||||||||||||||||||
member2 | M | 2008/2009 | 162,500 | 100,000 | 0 | 0 | 262,500 | 50 | 13,572 | ||||||||||||||||||||||||||||||||||||||||||||||||
David Sidwell, | C | 2009/2010 | 325,000 | 400,000 | 0 | 0 | 725,000 | 50 | 29,281 | ||||||||||||||||||||||||||||||||||||||||||||||||
member | M | C | 2008/2009 | 325,000 | 450,000 | 0 | 0 | 775,000 | 50 | 40,072 | |||||||||||||||||||||||||||||||||||||||||||||||
Peter Spuhler, former | 2009/2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
member2 | 2008/2009 | 162,500 | 0 | 0 | 0 | 162,500 | 100 | 15,945 | |||||||||||||||||||||||||||||||||||||||||||||||||
Peter R.Voser, | M | 2009/2010 | 325,000 | 100,000 | 0 | 0 | 425,000 | 50 | 17,164 | ||||||||||||||||||||||||||||||||||||||||||||||||
member | C | M | 2008/2009 | 325,000 | 400,000 | 0 | 0 | 725,000 | 50 | 37,487 | |||||||||||||||||||||||||||||||||||||||||||||||
Lawrence A. Weinbach, | 2009/2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
former member2 | M | 2008/2009 | 162,500 | 100,000 | 0 | 0 | 262,500 | 50 | 13,572 | ||||||||||||||||||||||||||||||||||||||||||||||||
Joerg Wolle, | 2009/2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
former member | C | M | 2008/2009 | 325,000 | 300,000 | 0 | 0 | 625,000 | 50 | 32,316 | |||||||||||||||||||||||||||||||||||||||||||||||
Total 2009 | 6,425,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total 2008 | 6,437,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Legend: C = Chairperson of the respective committee; M = Member of the respective committee | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1 There were 11 independent BoD members in office on 31 December 2009. Michel Demaré, Ann F. Godbehere and Axel P. Lehmann were appointed at the AGM on 15 April 2009 and Ernesto Bertarelli, Gabrielle Kaufmann-Kohler and Joerg Wolle stepped down from the BoD at the AGM on 15 April 2009. There were 11 independent BoD members in office on 31 December 2008. David Sidwell was appointed at the AGM on 23 April 2008, and Rolf A. Meyer, Peter Spuhler and Lawrence A. Weinbach stepped down from the BoD at the EGM on 2 October 2008. Sally Bott, Rainer-Marc Frey, Bruno Gehrig and William G. Parrett were appointed at the EGM on 2 October 2008. 2 Remuneration for 2008/2009 is for six months only, as such members either stepped down or were appointed on 2 October 2008. 3 Fees are paid 50% in cash and 50% in restricted UBS shares. However, independent BoD members can elect to have 100% of their remuneration paid in restricted UBS shares. 4 For 2009, shares valued at CHF 14.57 (average price of UBS shares at SIX Swiss Exchange over the last 10 trading days of February 2010) included a price discount of 15%, for a new value of discount price CHF 12.38. These shares are blocked for four years. For 2008, shares valued at CHF 11.38 (average price of UBS shares at virt-x, now SIX Swiss Exchange, over the last 10 trading days of February 2009) included a price discount of 15%, discount price for a new value of CHF 9.67. These shares are blocked for four years. 5 Number of shares is reduced in case of the 100% election to deduct social I security contribution. All remuneration payments are submitted to social security contribution/withholding tax. 6 This payment is associated with the Senior Independent Director function. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In addition, for 2008/2009 only, one-off cash payments were made to the Chairmen of the RC (CHF 500,000), the GNC (CHF 300,000) and the HRCC (CHF 200,000). These payments reflect the substantial workload of setting up the new RC, and expanding the mandate of the GNC and the HRCC. |
Share and option ownership of GEB members on 31 December 2009 / 2010 | ||||||||||||||||||||||||||||
Potentially | Potentially | |||||||||||||||||||||||||||
Number of | conferred | conferred | ||||||||||||||||||||||||||
unvested | Number of | Total | voting | Number of | voting | |||||||||||||||||||||||
For the | shares / | vested | number of | rights | options | rights | ||||||||||||||||||||||
Name, function1 | year ended | at risk2 | shares | shares | in % | held3 | in %4 | |||||||||||||||||||||
Oswald J. Grübel, Group Chief Executive Officer | 2010 | 0 | 0 | 0 | 0.000 | 4,000,000 | 0.181 | |||||||||||||||||||||
2009 | – | – | 0 | 0.000 | 4,000,000 | 0.217 | ||||||||||||||||||||||
John Cryan, Group Chief Financial Officer | 2010 | 221,879 | 185,975 | 407,854 | 0.018 | 382,673 | 0.017 | |||||||||||||||||||||
2009 | – | – | 235,929 | 0.013 | 382,673 | 0.021 | ||||||||||||||||||||||
Markus U. Diethelm, Group General Counsel | 2010 | 178,619 | 75,700 | 254,319 | 0.012 | 0 | 0.000 | |||||||||||||||||||||
2009 | – | – | 112,245 | 0.006 | 0 | 0.000 | ||||||||||||||||||||||
John A. Fraser, | 2010 | 326,702 | 316,541 | 643,243 | 0.029 | 1,088,795 | 0.049 | |||||||||||||||||||||
Chairman and CEO Global Asset Management | 2009 | – | – | 480,464 | 0.026 | 1,088,795 | 0.059 | |||||||||||||||||||||
Lukas Gähwiler, CEO UBS Switzerland and co-CEO | 2010 | 110,000 | 850 | 110,850 | 0.005 | 0 | 0.000 | |||||||||||||||||||||
Wealth Management & Swiss Bank | 2009 | – | – | – | – | |||||||||||||||||||||||
Carsten Kengeter, CEO Investment Bank | 2010 | 916,201 | 363,047 | 1,279,248 | 0.058 | 905,000 | 0.041 | |||||||||||||||||||||
2009 | – | – | 516,909 | 0.028 | 905,000 | 0.049 | ||||||||||||||||||||||
Ulrich Körner, Group Chief Operating Officer and | 2010 | 177,592 | 95,597 | 273,189 | 0.012 | 0 | 0.000 | |||||||||||||||||||||
CEO Corporate Center | 2009 | – | – | 0 | 0.000 | 0 | 0.000 | |||||||||||||||||||||
Philip J. Lofts, Group Chief Risk Officer | 2010 | 200,009 | 144,603 | 344,612 | 0.016 | 577,723 | 0.026 | |||||||||||||||||||||
2009 | – | – | 179,234 | 0.010 | 577,723 | 0.031 | ||||||||||||||||||||||
Robert J. McCann, CEO Wealth Management Americas | 2010 | 138,598 | 540,866 | 679,464 | 0.031 | 0 | 0.000 | |||||||||||||||||||||
2009 | – | – | 602,481 | 0.033 | 0 | 0.000 | ||||||||||||||||||||||
Francesco Morra, former CEO UBS Switzerland5 | 2010 | – | – | – | – | |||||||||||||||||||||||
2009 | – | – | 153,860 | 0.008 | 325,086 | 0.018 | ||||||||||||||||||||||
Alexander Wilmot-Sitwell, co-Chairman and | 2010 | 274,739 | 213,613 | 488,352 | 0.022 | 353,807 | 0.016 | |||||||||||||||||||||
co-CEO Group Asia Pacific | 2009 | – | – | 286,767 | 0.016 | 353,807 | 0.019 | |||||||||||||||||||||
Robert Wolf, Chairman and CEO, UBS Group Americas / | 2010 | 242,805 | 635,382 | 878,187 | 0.040 | 948,473 | 0.043 | |||||||||||||||||||||
President Investment Bank | 2009 | – | – | 785,631 | 0.043 | 948,473 | 0.051 | |||||||||||||||||||||
Chi-Won Yoon, co-Chairman and | 2010 | 184,858 | 318,332 | 503,190 | 0.023 | 623,253 | 0.028 | |||||||||||||||||||||
co-CEO Group Asia Pacific | 2009 | – | – | 367,573 | 0.020 | 623,253 | 0.034 | |||||||||||||||||||||
Jürg Zeltner, CEO UBS Wealth Management and | 2010 | 113,609 | 9,405 | 123,014 | 0.006 | 205,470 | 0.009 | |||||||||||||||||||||
co-CEO Wealth Management & Swiss Bank | 2009 | – | – | 16,502 | 0.001 | 205,470 | 0.011 | |||||||||||||||||||||
1 This table includes vested and unvested shares and options held by GEB members, including related parties. 2 Includes shares granted under PEP and IPP. The actual number of shares vesting in the future will be calculated under the terms of the plans. Refer to “Deferred variable compensation plans” in this section for more information on both plans. 3 Refer to “Note 31 Equity participation and other compensation plans” in the “Financial information” section of this report for more information. 4 No conversion rights are outstanding. 5 GEB member who stepped down during 2010. |
229243
Corporate governance and compensation
Compensation and shareholdings
Total payments to all members of the BoD | ||||||||
For the | ||||||||
CHF, except where indicateda | year ended | Total | ||||||
Aggregate of all members of the BoD | 2009 | 7,895,579 | ||||||
Aggregate of all members of the BoD | 2008 | 10,267,240 | ||||||
Compensation details and additional information for non-independent BoD members | ||||||||||||||||||||||||||||
CHF, except where indicateda | ||||||||||||||||||||||||||||
Contributions | ||||||||||||||||||||||||||||
For the | Annual bonus | Annual | to retirement | |||||||||||||||||||||||||
Name, function1 | year ended | Base salary | (cash) | share award | Benefits in kinde | benefits plansf | Total | |||||||||||||||||||||
Kaspar Villiger, Chairman | 2010 | 850,000 | 0 | 500,000 | 2 | 141,308 | 0 | 1,491,308 | ||||||||||||||||||||
2009 | 602,083 | 0 | 0 | 74,488 | 0 | 676,571 | ||||||||||||||||||||||
Peter Kurer, former Chairman | 2010 | – | – | – | – | – | – | |||||||||||||||||||||
2009 | 666,667 | 0 | 0 | 37,561 | 89,780 | 794,008 | ||||||||||||||||||||||
1 2010: Kaspar Villiger was the only non-independent member in office on 31 December 2010 and 31 December 2009, respectively. Peter Kurer did not stand for reelection at the AGM on 15 April 2009. 2 These shares are blocked for four years. |
Total compensation for all members of the GEB | ||||||||||||||||||||||||||||||||
CHF, except where indicateda | ||||||||||||||||||||||||||||||||
Annual | Contributions | |||||||||||||||||||||||||||||||
incentive | Annual | Annual | to retirement | |||||||||||||||||||||||||||||
For the | award CBP | incentive | incentive | Benefits | benefits | |||||||||||||||||||||||||||
Name, function | year ended | Base salary | and cashb | award PEPc | award IPPc | in kinde | plansf | Total | ||||||||||||||||||||||||
Carsten Kengeter, co-CEO Investment Bank (highest-paid) | 2009 | 669,092 | 5,003,470 | 6,155,869 | 1,349,336 | 0 | 12,545 | 13,190,312 | ||||||||||||||||||||||||
Marcel Rohner, Group Chief Executive Officer (highest-paid) | 2008 | 1,500,000 | 0 | 0 | 0 | 161,768 | 152,934 | 1,814,702 | ||||||||||||||||||||||||
Aggregate of all members of the GEB who were in office on 31 December 20091 | 2009 | 12,000,055 | 25,734,711 | 13,453,424 | 3 | 15,696,333 | 270,971 | 1,551,068 | 68,706,562 | |||||||||||||||||||||||
Aggregate of all members of the GEB who were in office on 31 December 20081 | 2008 | 7,815,943 | 0 | 0 | 0 | 457,652 | 817,315 | 9,090,911 | ||||||||||||||||||||||||
Aggregate of all members of the GEB who stepped down during 20092 | 2009 | 2,447,544 | 38,443,097 | 0 | 0 | 215,151 | 171,122 | 41,276,914 | ||||||||||||||||||||||||
Aggregate of all members of the GEB who stepped down during 20082 | 2008 | 1,614,871 | 0 | 0 | 0 | 234,838 | 258,423 | 2,108,132 | ||||||||||||||||||||||||
1 Numbers and distribution of GEB members in 2009: 13 GEB members in office on 31 December. 2008: 12 GEB members in office on 31 December. 2 Number and distribution of GEB members in 2009: includes two months in office as a GEB member for Marcel Rohner, three months in office for Walter H. Stürzinger and Raoul Weil, four months in office for Jerker Johansson, six months in office for Rory Tapner and ten for Marten Hoekstra. 2008: includes four months in office as a GEB member for Peter Kurer, eight months in office for Marco Suter and ten months for Joe Scoby. 3 Included in the share awards are SEEOP awards at a fair value of GBP 4,655,950 and EOP awards at a fair value of GBP 1,594,250. |
Compensation paid to former members of the BoD and GEB1 | ||||||||||||||||
CHF, except where indicateda | ||||||||||||||||
For the | Benefits | |||||||||||||||
Name, function | year ended | Compensation | in kind | Total | ||||||||||||
Georges Blum, former member of the BoD | 2009 | 92,399 | 92,399 | |||||||||||||
(Swiss Bank Corporation) | 2008 | 101,579 | 101,579 | |||||||||||||
Franz Galliker, former member of the BoD | 2009 | 10,659 | 10,659 | |||||||||||||
(Swiss Bank Corporation) | 2008 | 69,596 | 69,596 | |||||||||||||
Walter G. Frehner, former member of the BoD | 2009 | 25,371 | 25,371 | |||||||||||||
(Swiss Bank Corporation) | 2008 | 74,663 | 74,663 | |||||||||||||
Hans (Liliane) Strasser, former member of the BoD | 2009 | 9,758 | 9,758 | |||||||||||||
(Swiss Bank Corporation) | 2008 | 32,673 | 32,673 | |||||||||||||
Robert Studer, former member of the BoD | 2009 | 18,751 | 18,751 | |||||||||||||
(Union Bank of Switzerland) | 2008 | 126,208 | 126,208 | |||||||||||||
Alberto Togni, former member of the BoD | 2009 | 320,136 | 355,983 | 676,119 | ||||||||||||
(UBS) | 2008 | 318,461 | 427,949 | 746,410 | ||||||||||||
Philippe (Alix) de Weck, former member of the BoD | 2009 | 93,135 | 93,135 | |||||||||||||
(Union Bank of Switzerland) | 2008 | 109,703 | 109,703 | |||||||||||||
Aggregate of all former members of the GEB2 | 2009 | 0 | 18,293 | 18,293 | ||||||||||||
2008 | 0 | 171,180 | 171,180 | |||||||||||||
Aggregate of all former members of the BoD and GEB | 2009 | 320,136 | 624,349 | 944,485 | ||||||||||||
2008 | 318,461 | 1,113,551 | 1,432,012 | |||||||||||||
1 Compensation or remuneration that is connected with the former members’ activity on the BoD or GEB, or that is not at market conditions. 2 Includes two former GEB members. |
Remuneration details and additional information for independent BoD members | ||||||||||||||||||||||||||||||||||||||||||||||||
CHF, except where indicateda | ||||||||||||||||||||||||||||||||||||||||||||||||
Human | For the | |||||||||||||||||||||||||||||||||||||||||||||||
Resources & | Governance & | Corporate | period | Share | ||||||||||||||||||||||||||||||||||||||||||||
Audit | Compensation | Nominating | Responsibility | Risk | AGM to | Committee | Benefits | Additional | percen- | Number of | ||||||||||||||||||||||||||||||||||||||
Name, function1 | Committee | Committee | Committee | Committee | Committee | AGM | Base fee | retainer(s) | in kind | payments | Total | tage2 | shares3,4 | |||||||||||||||||||||||||||||||||||
Michel Demaré, | M | M | 2010 / 2011 | 325,000 | 300,000 | 250,000 | 5 | 875,000 | 100 | 52,631 | ||||||||||||||||||||||||||||||||||||||
Vice Chairman | M | 2009 / 2010 | 325,000 | 200,000 | 0 | 0 | 525,000 | 50 | 21,203 | |||||||||||||||||||||||||||||||||||||||
David Sidwell, | C | 2010 / 2011 | 325,000 | 400,000 | 250,000 | 5 | 975,000 | 50 | 30,893 | |||||||||||||||||||||||||||||||||||||||
Senior Independent Director | C | 2009 / 2010 | 325,000 | 400,000 | 0 | 0 | 725,000 | 50 | 29,281 | |||||||||||||||||||||||||||||||||||||||
Sally Bott, | C | M | M | 2010 / 2011 | 325,000 | 450,000 | 775,000 | 50 | 24,556 | |||||||||||||||||||||||||||||||||||||||
member | C | M | 2009 / 2010 | 325,000 | 350,000 | 0 | 0 | 675,000 | 50 | 27,261 | ||||||||||||||||||||||||||||||||||||||
Rainer-Marc Frey, | M | M | 2010 / 2011 | 325,000 | 400,000 | 725,000 | 100 | 43,583 | ||||||||||||||||||||||||||||||||||||||||
member | M | 2009 / 2010 | 325,000 | 200,000 | 0 | 0 | 525,000 | 100 | 40,301 | |||||||||||||||||||||||||||||||||||||||
Bruno Gehrig, | M | M | 2010 / 2011 | 325,000 | 200,000 | 525,000 | 50 | 16,634 | ||||||||||||||||||||||||||||||||||||||||
member | M | M | 2009 / 2010 | 325,000 | 200,000 | 0 | 0 | 525,000 | 50 | 21,203 | ||||||||||||||||||||||||||||||||||||||
Ann F. Godbehere, | M | M | 2010 / 2011 | 325,000 | 250,000 | 575,000 | 50 | 18,219 | ||||||||||||||||||||||||||||||||||||||||
member | M | M | 2009 / 2010 | 325,000 | 250,000 | 575,000 | 50 | 23,222 | ||||||||||||||||||||||||||||||||||||||||
Axel P. Lehmann, | M | 2010 / 2011 | 325,000 | 200,000 | 525,000 | 100 | 31,519 | |||||||||||||||||||||||||||||||||||||||||
member | M | 2009 / 2010 | 325,000 | 200,000 | 0 | 0 | 525,000 | 100 | 40,301 | |||||||||||||||||||||||||||||||||||||||
Sergio Marchionne, | 2010 / 2011 | – | ||||||||||||||||||||||||||||||||||||||||||||||
former Senior Independent Director, former Vice Chairman | M | 2009 / 2010 | 325,000 | 100,000 | 0 | 250,000 | 5 | 675,000 | 100 | 51,845 | ||||||||||||||||||||||||||||||||||||||
Wolfgang Mayrhuber, | M | M | 2010 / 2011 | 325,000 | 150,000 | 475,000 | 50 | 15,050 | ||||||||||||||||||||||||||||||||||||||||
member | 2009 / 2010 | – | ||||||||||||||||||||||||||||||||||||||||||||||
Helmut Panke, | M | M | 2010 / 2011 | 325,000 | 300,000 | 625,000 | 50 | 19,803 | ||||||||||||||||||||||||||||||||||||||||
member | M | M | 2009 / 2010 | 325,000 | 300,000 | 0 | 0 | 625,000 | 50 | 25,242 | ||||||||||||||||||||||||||||||||||||||
William G. Parrett, | C | 2010 / 2011 | 325,000 | 300,000 | 625,000 | 50 | 19,803 | |||||||||||||||||||||||||||||||||||||||||
member | C | 2009 / 2010 | 325,000 | 300,000 | 0 | 0 | 625,000 | 50 | 25,242 | |||||||||||||||||||||||||||||||||||||||
Peter R. Voser, | 2010 / 2011 | – | ||||||||||||||||||||||||||||||||||||||||||||||
former member | M | 2009 / 2010 | 325,000 | 100,000 | 0 | 0 | 425,000 | 50 | 17,164 | |||||||||||||||||||||||||||||||||||||||
Total 2010 | 6,700,000 | |||||||||||||||||||||||||||||||||||||||||||||||
Total 2009 | 6,425,000 | |||||||||||||||||||||||||||||||||||||||||||||||
Legend:C = Chairperson of the respective Committee; M = Member of the respective Committee | ||||||||||||||||||||||||||||||||||||||||||||||||
1 There were 10 independent BoD members in office on 31 December 2010. Wolfgang Mayrhuber was appointed at the AGM on 14 April 2010 and Sergio Marchionne and Peter Voser stepped down from the BoD at the AGM on 14 April 2010. There were 11 independent BoD members in office on 31 December 2009. Michel Demaré, Ann F. Godbehere and Axel P. Lehmann were appointed at the AGM on 15 April 2009 and Ernesto Bertarelli, Gabrielle Kaufmann-Kohler and Joerg Wolle stepped down from the BoD at the AGM on 15 April 2009. 2 Fees are paid 50% in cash and 50% in blocked UBS shares. However, independent BoD members can elect to have 100% of their remuneration paid in blocked UBS shares. 3 For 2010, shares valued at CHF 18.56 (average price of UBS shares at SIX Swiss Exchange over the last 10 trading days of February 2011), included a price discount of 15%, for a new value of discount price CHF 15.78. These shares are blocked for four years. For 2009, shares valued at CHF 14.57 (average price of UBS shares at SIX Swiss Exchange over the last 10 trading days of February 2010), included a price discount of 15%, for a new value of discount price CHF 12.38. These shares are blocked for four years. 4 Number of shares is reduced in case of the 100% election to deduct social security contribution. All remuneration payments are submitted to social security contribution / withholding tax. 5 This payment is associated with the Vice Chairman or the SID function, respectively. |
230244
Corporate governance and compensation |
Total payments to all BoD members | ||||||||
CHF, except where indicateda | For the year ended | Total | ||||||
Aggregate of all BoD members | 2010 | 8,191,310 | ||||||
2009 | 7,895,579 | |||||||
Share holdings of BoD members on 31 December 2009 / 2010 | ||||||||||||
Name, function1 | For the year ended | Number of shares held | Voting rights in % | |||||||||
Kaspar Villiger, Chairman | 2010 | 22,500 | 0.001 | |||||||||
2009 | 22,500 | 0.001 | ||||||||||
Michel Demaré, Vice Chairman | 2010 | 23,703 | 0.001 | |||||||||
2009 | 2,500 | 0.000 | ||||||||||
David Sidwell, Senior Independent Director | 2010 | 69,354 | 0.003 | |||||||||
2009 | 40,073 | 0.002 | ||||||||||
Sally Bott, member | 2010 | 39,542 | 0.002 | |||||||||
2009 | 12,281 | 0.001 | ||||||||||
Rainer-Marc Frey, member | 2010 | 56,459 | 0.003 | |||||||||
2009 | 16,158 | 0.001 | ||||||||||
Bruno Gehrig, member | 2010 | 37,775 | 0.002 | |||||||||
2009 | 16,572 | 0.001 | ||||||||||
Ann F. Godbehere, member | 2010 | 23,222 | 0.001 | |||||||||
2009 | 0 | 0.000 | ||||||||||
Axel P. Lehmann, member | 2010 | 58,452 | 0.003 | |||||||||
2009 | 18,151 | 0.001 | ||||||||||
Sergio Marchionne, | 2010 | – | ||||||||||
former Senior Independent Director, former Vice Chairman2 | 2009 | 164,154 | 0,009 | |||||||||
Wolfgang Mayrhuber, member | 2010 | 0 | 0.000 | |||||||||
2009 | – | |||||||||||
Helmut Panke, member | 2010 | 89,529 | 0.004 | |||||||||
2009 | 64,287 | 0.003 | ||||||||||
William G. Parrett, member | 2010 | 42,815 | 0.002 | |||||||||
2009 | 17,573 | 0.001 | ||||||||||
Peter R. Voser, former member2 | 2010 | – | ||||||||||
2009 | 68,310 | 0.004 | ||||||||||
1 This table includes vested, unvested, blocked and unblocked shares held by BoD members, including related parties. No options were granted in 2009 and 2010. 2 BoD members who stepped down at the 2010 AGM. |
Shares and options held by the Board of Directors and Group ExecutiveBoard (at end of 2009)
Share and option ownership of members of the BoD on 31 December 2008/2009 | ||||||||||||||||||||||||||
For the | Number of | Voting rights | Number of | Potentially conferred | Type and quantity | |||||||||||||||||||||
Name, function1 | year ended | shares held | in % | options held | voting rights in %2 | of options3 | ||||||||||||||||||||
Kaspar Villiger, Chairman | 2009 | 22,500 | 0.001 | 0 | 0.000 | |||||||||||||||||||||
2008 | – | – | ||||||||||||||||||||||||
Sergio Marchionne, | 2009 | 164,154 | 0.009 | 0 | 0.000 | |||||||||||||||||||||
Senior Independent Director, Vice Chairman | 2008 | 87,926 | 0.005 | 0 | 0 000 | |||||||||||||||||||||
Ernesto Bertarelli, former member4 | 2009 | – | – | |||||||||||||||||||||||
2008 | 89,434 | 0.005 | 0 | 0.000 | ||||||||||||||||||||||
Sally Bott, member | 2009 | 12,281 | 0.001 | 0 | 0.000 | |||||||||||||||||||||
2008 | 1 | 0.000 | 0 | 0.000 | ||||||||||||||||||||||
Michel Demaré, member | 2009 | 2,500 | 0.000 | 0 | 0.000 | |||||||||||||||||||||
2008 | – | – | ||||||||||||||||||||||||
Rainer-Marc Frey, member | 2009 | 16,158 | 0.001 | 0 | 0.000 | |||||||||||||||||||||
2008 | 0 | 0.000 | 0 | 0.000 | ||||||||||||||||||||||
Bruno Gehrig, member | 2009 | 16,572 | 0.001 | 0 | 0.000 | |||||||||||||||||||||
2008 | 3,000 | 0.000 | 0 | 0.000 | ||||||||||||||||||||||
Ann F. Godbehere, member | 2009 | 0 | 0.000 | 0 | 0.000 | |||||||||||||||||||||
2008 | – | – | ||||||||||||||||||||||||
Gabrielle Kaufmann-Kohler, former member4 | 2009 | – | – | |||||||||||||||||||||||
2008 | 18,713 | 0.001 | 0 | 0.000 | ||||||||||||||||||||||
Peter Kurer, former Chairman4 | 2009 | – | – | |||||||||||||||||||||||
2008 | 416,088 | 0.025 | 372,995 | 0.022 | xli: | 85,256 | ||||||||||||||||||||
xlvii: | 95,913 | |||||||||||||||||||||||||
lvi: | 95,913 | |||||||||||||||||||||||||
lxiv: | 95,913 | |||||||||||||||||||||||||
Axel P. Lehmann, member | 2009 | 18,151 | 0.001 | 0 | 0.000 | |||||||||||||||||||||
2008 | – | – | ||||||||||||||||||||||||
Helmut Panke, member | 2009 | 64,287 | 0.003 | 0 | 0.000 | |||||||||||||||||||||
2008 | 31,971 | 0.002 | 0 | 0.000 | ||||||||||||||||||||||
William G. Parrett, member | 2009 | 17,573 | 0.001 | 0 | 0.000 | |||||||||||||||||||||
2008 | 4,000 | 0.000 | 0 | 0.000 | ||||||||||||||||||||||
David Sidwell, member | 2009 | 40,073 | 0.002 | 0 | 0.000 | |||||||||||||||||||||
2008 | 1 | 0.000 | 0 | 0.000 | ||||||||||||||||||||||
Peter R. Voser, member | 2009 | 68,310 | 0.004 | 0 | 0.000 | |||||||||||||||||||||
2008 | 30,823 | 0.002 | 0 | 0.000 | ||||||||||||||||||||||
Joerg Wolle, former member4 | 2009 | – | – | |||||||||||||||||||||||
2008 | 41,509 | 0.002 | 0 | 0.000 | ||||||||||||||||||||||
1 This table includes vested, unvested, blocked and unblocked shares and options held by members of the BoD including related parties. 2 No conversion rights are outstanding. 3 Refer to “Note 31 Equity participation and other compensation plans” in the “Financial information” section of this report for more information on stock option plans. 4 Members of the BoD who stepped down at the AGM 2009. |
231245
Share and option ownership of members of the GEB on 31 December 2008/2009 | ||||||||||||||||||||||||||
Type and | ||||||||||||||||||||||||||
For the | Number of | Voting rights | Number of | Potentially conferred | quantity of | |||||||||||||||||||||
Name, function1 | year ended | shares held | in % | options held | voting rights in %2 | options3 | ||||||||||||||||||||
Oswald J. Grübel, | 2009 | 0 | 0.000 | 4,000,000 | 0.217 | lxx: | 4,000,000 | |||||||||||||||||||
Group Chief Executive Officer | 2008 | – | – | |||||||||||||||||||||||
Marcel Rohner, | 2009 | – | – | |||||||||||||||||||||||
former Group Chief Executive Officer4 | 2008 | 711,366 | 0.042 | 1,055,043 | 0.063 | xxxii: | 31,971 | |||||||||||||||||||
xli: | 213,140 | |||||||||||||||||||||||||
xlvii: | 277,082 | |||||||||||||||||||||||||
lvi: | 319,710 | |||||||||||||||||||||||||
lxiv: | 213,140 | |||||||||||||||||||||||||
John Cryan, | 2009 | 235,929 | 0.013 | 382,673 | 0.021 | iii: | 21,362 | |||||||||||||||||||
Group Chief Financial Officer | iv: | 20,731 | ||||||||||||||||||||||||
vii: | 20,725 | |||||||||||||||||||||||||
xii: | 5,454 | |||||||||||||||||||||||||
xiii: | 5,294 | |||||||||||||||||||||||||
xvi: | 5,292 | |||||||||||||||||||||||||
xxi: | 23,626 | |||||||||||||||||||||||||
xxiii: | 23,620 | |||||||||||||||||||||||||
xxvi: | 23,612 | |||||||||||||||||||||||||
xxviii | 5,526 | |||||||||||||||||||||||||
xxix: | 5,524 | |||||||||||||||||||||||||
xxx: | 5,524 | |||||||||||||||||||||||||
xxxviii: | 17,072 | |||||||||||||||||||||||||
xl: | 17,068 | |||||||||||||||||||||||||
xlii: | 17,063 | |||||||||||||||||||||||||
xliv: | 14,210 | |||||||||||||||||||||||||
xlv: | 14,210 | |||||||||||||||||||||||||
xlvi: | 14,207 | |||||||||||||||||||||||||
liii: | 5,330 | |||||||||||||||||||||||||
liv: | 5,328 | |||||||||||||||||||||||||
lv: | 5,326 | |||||||||||||||||||||||||
lxi: | 17,762 | |||||||||||||||||||||||||
lxii: | 17,762 | |||||||||||||||||||||||||
lxiii: | 17,760 | |||||||||||||||||||||||||
lxvi: | 53,285 | |||||||||||||||||||||||||
2008 | 235,929 | 0.014 | 382,673 | 0.023 | iii: | 21,362 | ||||||||||||||||||||
iv: | 20,731 | |||||||||||||||||||||||||
vii: | 20,725 | |||||||||||||||||||||||||
xii: | 5,454 | |||||||||||||||||||||||||
xiii: | 5,294 | |||||||||||||||||||||||||
xvi: | 5,292 | |||||||||||||||||||||||||
xxi: | 23,626 | |||||||||||||||||||||||||
xxiii: | 23,620 | |||||||||||||||||||||||||
xxvi: | 23,612 | |||||||||||||||||||||||||
xxviii | 5,526 | |||||||||||||||||||||||||
xxix: | 5,524 | |||||||||||||||||||||||||
xxx: | 5,524 | |||||||||||||||||||||||||
xxxviii: | 17,072 | |||||||||||||||||||||||||
xl: | 17,068 | |||||||||||||||||||||||||
xlii: | 17,063 | |||||||||||||||||||||||||
xliv: | 14,210 | |||||||||||||||||||||||||
xlv: | 14,210 | |||||||||||||||||||||||||
xlvi: | 14,207 | |||||||||||||||||||||||||
liii: | 5,330 | |||||||||||||||||||||||||
liv: | 5,328 | |||||||||||||||||||||||||
lv: | 5,326 | |||||||||||||||||||||||||
lxi: | 17,762 | |||||||||||||||||||||||||
lxii: | 17,762 | |||||||||||||||||||||||||
lxiii: | 17,760 | |||||||||||||||||||||||||
lxvi: | 53,285 | |||||||||||||||||||||||||
Markus U. Diethelm, | 2009 | 112,245 | 0.006 | 0 | 0.000 | |||||||||||||||||||||
Group General Counsel | 2008 | 112,245 | 0.007 | 0 | 0.000 | |||||||||||||||||||||
John A. Fraser, | 2009 | 480,464 | 0.027 | 1,088,795 | 0.059 | viii: | 76,380 | |||||||||||||||||||
Chairman and CEO Global Asset Management | xix: | 127,884 | ||||||||||||||||||||||||
xxv: | 127,884 | |||||||||||||||||||||||||
xliii: | 170,512 | |||||||||||||||||||||||||
xlviii: | 202,483 | |||||||||||||||||||||||||
lvi: | 213,140 | |||||||||||||||||||||||||
lxiv: | 170,512 | |||||||||||||||||||||||||
Compensation paid to former BoD and GEB members1 | ||||||||||||||||
CHF, except where indicateda | ||||||||||||||||
For the | ||||||||||||||||
Name, function | year ended | Compensation | Benefits in kind | Total | ||||||||||||
Georges Blum, former BoD member | 2010 | 0 | 0 | 0 | ||||||||||||
(Swiss Bank Corporation) | 2009 | 0 | 92,399 | 92,399 | ||||||||||||
Franz Galliker, former BoD member | 2010 | 0 | 0 | 0 | ||||||||||||
(Swiss Bank Corporation) | 2009 | 0 | 10,659 | 10,659 | ||||||||||||
Walter G. Frehner, former BoD member | 2010 | 0 | 0 | 0 | ||||||||||||
(Swiss Bank Corporation) | 2009 | 0 | 25,371 | 25,371 | ||||||||||||
Hans (Liliane) Strasser, former BoD member | 2010 | 0 | 0 | 0 | ||||||||||||
(Swiss Bank Corporation) | 2009 | 0 | 9,758 | 9,758 | ||||||||||||
Robert Studer, former BoD member | 2010 | 0 | 0 | 0 | ||||||||||||
(Union Bank of Switzerland) | 2009 | 0 | 18,751 | 18,751 | ||||||||||||
Alberto Togni, former BoD member | 2010 | 0 | 20,493 | 20,493 | ||||||||||||
(UBS) | 2009 | 320,136 | 355,983 | 676,119 | ||||||||||||
Philippe (Alix) de Weck, former BoD member | 2010 | 0 | 0 | 0 | ||||||||||||
(Union Bank of Switzerland) | 2009 | 0 | 93,135 | 93,135 | ||||||||||||
Aggregate of all former GEB members2 | 2010 | 0 | 57,229 | 57,229 | ||||||||||||
2009 | 0 | 18,293 | 18,293 | |||||||||||||
Aggregate of all former BoD and GEB members | 2010 | 0 | 77,722 | 77,722 | ||||||||||||
2009 | 320,136 | 624,349 | 944,485 | |||||||||||||
1 Compensation or remuneration that is connected with the former member’s activity on the BoD or GEB, that is not at market conditions. 2 Includes one former GEB member in 2010 and one former GEB member in 2009. |
Total of all vested and unvested shares held by GEB members and non-independent BoD members1 | ||||||||||||||||||||||||||||||
Of which | ||||||||||||||||||||||||||||||
Total | vested | Of which vesting | ||||||||||||||||||||||||||||
2011 | 2012 | 2013 | 2014 | 2015 | ||||||||||||||||||||||||||
Shares held on 31 December 2010 | 4,409,345 | 2,922,411 | 582,787 | 411,339 | 282,754 | 105,027 | 105,027 | |||||||||||||||||||||||
2010 | 2011 | 2012 | 2013 | 2014 | ||||||||||||||||||||||||||
Shares held on 31 December 2009 | 3,760,095 | 1,971,557 | 1,078,664 | 397,046 | 222,601 | 90,227 | 0 | |||||||||||||||||||||||
1 Includes related parties. | ||||||||||||||||||||||||||||||
No individual BoD or GEB member holds 1% or more of all shares issued. |
Total of all blocked and unblocked shares held by independent BoD members1 | ||||||||||||||||||||||||||||||
Of which | ||||||||||||||||||||||||||||||
Total | unblocked | Of which blocked until | ||||||||||||||||||||||||||||
2011 | 2012 | 2013 | 2014 | |||||||||||||||||||||||||||
Shares held on 31 December 2010 | 440,851 | 46,010 | 4,266 | 9,349 | 127,970 | 253,256 | ||||||||||||||||||||||||
2010 | 2011 | 2012 | 2013 | |||||||||||||||||||||||||||
Shares held on 31 December 2009 | 420,059 | 123,053 | 6,232 | 13,352 | 35,737 | 241,685 | ||||||||||||||||||||||||
1 Includes related parties. | ||||||||||||||||||||||||||||||
No individual Board member holds 1% or more of all shares issued. |
232246
Corporate governance and compensation |
Share and option ownership of members of the GEB on 31 December 2008/2009 (continued) | ||||||||||||||||||||||||||
Type and | ||||||||||||||||||||||||||
For the | Number of | Voting rights | Number of | Potentially conferred | quantity of | |||||||||||||||||||||
Name, function1 | year ended | shares held | in % | options held | voting rights in %2 | options3 | ||||||||||||||||||||
John A. Fraser, | 2008 | 561,216 | 0.035 | 1,144,808 | 0.068 | i: | 56,013 | |||||||||||||||||||
Chairman and CEO Global Asset Management | viii: | 76,380 | ||||||||||||||||||||||||
xix: | 127,884 | |||||||||||||||||||||||||
xxv: | 127,884 | |||||||||||||||||||||||||
xliii: | 170,512 | |||||||||||||||||||||||||
xlviii: | 202,483 | |||||||||||||||||||||||||
lvi: | 213,140 | |||||||||||||||||||||||||
lxiv: | 170,512 | |||||||||||||||||||||||||
Marten Hoekstra, | 2009 | – | – | |||||||||||||||||||||||
former CEO Wealth Management US4 | 2008 | 245,397 | 0.015 | 684,168 | 0.041 | ii: | 8,679 | |||||||||||||||||||
vi: | 8,421 | |||||||||||||||||||||||||
ix: | 8,421 | |||||||||||||||||||||||||
xi: | 8,823 | |||||||||||||||||||||||||
xiv: | 4,262 | |||||||||||||||||||||||||
xv: | 8,563 | |||||||||||||||||||||||||
xviii: | 8,561 | |||||||||||||||||||||||||
xxxiii: | 42,628 | |||||||||||||||||||||||||
xliii: | 53,285 | |||||||||||||||||||||||||
xlviii: | 53,285 | |||||||||||||||||||||||||
lvi: | 85,256 | |||||||||||||||||||||||||
lxiv: | 154,931 | |||||||||||||||||||||||||
lxvii: | 239,053 | |||||||||||||||||||||||||
Jerker Johansson, | 2009 | – | – | |||||||||||||||||||||||
former Chairman and CEO Investment Bank4 | 2008 | 521,544 | 0.031 | 753,410 | 0.045 | lxviii: | 745,990 | |||||||||||||||||||
lxix: | 7,420 | |||||||||||||||||||||||||
Carsten Kengeter, | 2009 | 516,909 | 0.028 | 905,000 | 0.049 | lxxi: | 905,000 | |||||||||||||||||||
co-CEO Investment Bank | 2008 | – | – | |||||||||||||||||||||||
Ulrich Körner, | 2009 | 0 | 0.000 | 0 | 0.000 | |||||||||||||||||||||
Group Chief Operating Officer | 2008 | – | – | |||||||||||||||||||||||
Philip J. Lofts, | 2009 | 179,234 | 0.010 | 577,723 | 0.031 | iii: | 11,445 | |||||||||||||||||||
Group Chief Risk Officer | iv: | 11,104 | ||||||||||||||||||||||||
vii: | 11,098 | |||||||||||||||||||||||||
xii: | 1,240 | |||||||||||||||||||||||||
xiii: | 5,464 | |||||||||||||||||||||||||
xvi: | 1,199 | |||||||||||||||||||||||||
xxi: | 9,985 | |||||||||||||||||||||||||
xxiii: | 9,980 | |||||||||||||||||||||||||
xxvi: | 9,974 | |||||||||||||||||||||||||
xxviii: | 1,833 | |||||||||||||||||||||||||
xxix: | 1,830 | |||||||||||||||||||||||||
xxx: | 1,830 | |||||||||||||||||||||||||
xxxviii: | 35,524 | |||||||||||||||||||||||||
xl: | 35,524 | |||||||||||||||||||||||||
xlii: | 35,521 | |||||||||||||||||||||||||
xlvii: | 117,090 | |||||||||||||||||||||||||
lvi: | 117,227 | |||||||||||||||||||||||||
lxiv: | 85,256 | |||||||||||||||||||||||||
lxvii: | 74,599 | |||||||||||||||||||||||||
2008 | 186,434 | 0.011 | 577,723 | 0.034 | iii: | 11,445 | ||||||||||||||||||||
iv: | 11,104 | |||||||||||||||||||||||||
vii: | 11,098 | |||||||||||||||||||||||||
xii: | 1,240 | |||||||||||||||||||||||||
xiii: | 5,464 | |||||||||||||||||||||||||
xvi: | 1,199 | |||||||||||||||||||||||||
xxi: | 9,985 | |||||||||||||||||||||||||
xxiii: | 9,980 | |||||||||||||||||||||||||
xxvi: | 9,974 | |||||||||||||||||||||||||
xxviii: | 1,833 | |||||||||||||||||||||||||
xxix: | 1,830 | |||||||||||||||||||||||||
xxx: | 1,830 | |||||||||||||||||||||||||
xxxviii: | 35,524 | |||||||||||||||||||||||||
xl: | 35,524 | |||||||||||||||||||||||||
xlii: | 35,521 | |||||||||||||||||||||||||
xlvii: | 117,090 | |||||||||||||||||||||||||
lvi: | 117,227 | |||||||||||||||||||||||||
lxiv: | 85,256 | |||||||||||||||||||||||||
lxvii: | 74,599 | |||||||||||||||||||||||||
Total | ||||||||||||||||||||||||
For the | number of | Number of | Year of | Vesting | Expiry | Strike | ||||||||||||||||||
year ended | options held2 | options3 | grant | date | date | price | ||||||||||||||||||
Oswald J. Grübel, Group Chief Executive Officer | ||||||||||||||||||||||||
2010 | 4,000,000 | 4,000,000 | 2009 | 26/02/2009 | 25/02/2014 | CHF 10.10 | ||||||||||||||||||
2009 | 4,000,000 | 4,000,000 | 2009 | 26/02/2009 | 25/02/2014 | CHF 10.10 | ||||||||||||||||||
John Cryan, Group Chief Financial Officer | ||||||||||||||||||||||||
2010 | 382,673 | 21,362 | 2002 | 31/01/2003 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||
20,731 | 2002 | 31/01/2004 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||||
20,725 | 2002 | 31/01/2005 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||||
5,454 | 2002 | 28/02/2003 | 28/02/2012 | CHF 36.65 | ||||||||||||||||||||
5,294 | 2002 | 28/02/2004 | 28/02/2012 | CHF 36.65 | ||||||||||||||||||||
5,292 | 2002 | 28/02/2005 | 28/02/2012 | CHF 36.65 | ||||||||||||||||||||
23,626 | 2003 | 01/03/2004 | 31/01/2013 | CHF 27.81 | ||||||||||||||||||||
23,620 | 2003 | 01/03/2005 | 31/01/2013 | CHF 27.81 | ||||||||||||||||||||
23,612 | 2003 | 01/03/2006 | 31/01/2013 | CHF 27.81 | ||||||||||||||||||||
5,526 | 2003 | 01/03/2004 | 28/02/2013 | CHF 26.39 | ||||||||||||||||||||
5,524 | 2003 | 01/03/2005 | 28/02/2013 | CHF 26.39 | ||||||||||||||||||||
5,524 | 2003 | 01/03/2006 | 28/02/2013 | CHF 26.39 | ||||||||||||||||||||
17,072 | 2004 | 01/03/2005 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
17,068 | 2004 | 01/03/2006 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
17,063 | 2004 | 01/03/2007 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
14,210 | 2005 | 01/03/2006 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
14,210 | 2005 | 01/03/2007 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
14,207 | 2005 | 01/03/2008 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
5,330 | 2006 | 01/03/2007 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
5,328 | 2006 | 01/03/2008 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
5,326 | 2006 | 01/03/2009 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
17,762 | 2007 | 01/03/2008 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
17,762 | 2007 | 01/03/2009 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
17,760 | 2007 | 01/03/2010 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
53 285 | 2008 | 01/03/2011 | 28/02/2018 | CHF 32.45 | ||||||||||||||||||||
2009 | 382,673 | 21,362 | 2002 | 31/01/2003 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||
20,731 | 2002 | 31/01/2004 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||||
20,725 | 2002 | 31/01/2005 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||||
5,454 | 2002 | 28/02/2003 | 28/02/2012 | CHF 36.65 | ||||||||||||||||||||
5,294 | 2002 | 28/02/2004 | 28/02/2012 | CHF 36.65 | ||||||||||||||||||||
5,292 | 2002 | 28/02/2005 | 28/02/2012 | CHF 36.65 | ||||||||||||||||||||
23,626 | 2003 | 01/03/2004 | 31/01/2013 | CHF 27.81 | ||||||||||||||||||||
23,620 | 2003 | 01/03/2005 | 31/01/2013 | CHF 27.81 | ||||||||||||||||||||
23,612 | 2003 | 01/03/2006 | 31/01/2013 | CHF 27.81 | ||||||||||||||||||||
5,526 | 2003 | 01/03/2004 | 28/02/2013 | CHF 26.39 | ||||||||||||||||||||
5,524 | 2003 | 01/03/2005 | 28/02/2013 | CHF 26.39 | ||||||||||||||||||||
5,524 | 2003 | 01/03/2006 | 28/02/2013 | CHF 26.39 | ||||||||||||||||||||
17,072 | 2004 | 01/03/2005 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
17,068 | 2004 | 01/03/2006 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
17,063 | 2004 | 01/03/2007 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
14,210 | 2005 | 01/03/2006 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
14,210 | 2005 | 01/03/2007 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
14,207 | 2005 | 01/03/2008 | 28/02/2015 | CHF 47.58 |
Total | ||||||||||||||||||||||||
For the | number of | Number of | Year of | Vesting | Expiry | Strike | ||||||||||||||||||
year ended | options held2 | options3 | grant | date | date | price | ||||||||||||||||||
John Cryan, Group Chief Financial Officer (continued) | ||||||||||||||||||||||||
2009 | 382,673 | 5,330 | 2006 | 01/03/2007 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||
5,328 | 2006 | 01/03/2008 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
5,326 | 2006 | 01/03/2009 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
17,762 | 2007 | 01/03/2008 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
17,762 | 2007 | 01/03/2009 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
17,760 | 2007 | 01/03/2010 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
53,285 | 2008 | 01/03/2011 | 28/02/2018 | CHF 32.45 | ||||||||||||||||||||
Markus U. Diethelm, Group General Counsel | ||||||||||||||||||||||||
2010 | 0 | |||||||||||||||||||||||
2009 | 0 | |||||||||||||||||||||||
John A. Fraser, Chairman and CEO Global Asset Management | ||||||||||||||||||||||||
2010 | 1,088,795 | 76,380 | 2002 | 31/01/2005 | 31/01/2012 | USD 21.24 | ||||||||||||||||||
127,884 | 2002 | 28/06/2005 | 28/06/2012 | CHF 37.90 | ||||||||||||||||||||
127,884 | 2003 | 31/01/2006 | 31/01/2013 | USD 22.53 | ||||||||||||||||||||
170,512 | 2004 | 01/03/2007 | 27/02/2014 | USD 38.13 | ||||||||||||||||||||
202,483 | 2005 | 01/03/2008 | 28/02/2015 | USD 44.81 | ||||||||||||||||||||
213,140 | 2006 | 01/03/2009 | 28/02/2016 | CHF 72.57 | ||||||||||||||||||||
170,512 | 2007 | 01/03/2010 | 28/02/2017 | CHF 73.67 | ||||||||||||||||||||
2009 | 1,088,795 | 76,380 | 2002 | 31/01/2005 | 31/01/2012 | USD 21.24 | ||||||||||||||||||
127,884 | 2002 | 28/06/2005 | 28/06/2012 | CHF 37.90 | ||||||||||||||||||||
127,884 | 2003 | 31/01/2006 | 31/01/2013 | USD 22.53 | ||||||||||||||||||||
170,512 | 2004 | 01/03/2007 | 27/02/2014 | USD 38.13 | ||||||||||||||||||||
202,483 | 2005 | 01/03/2008 | 28/02/2015 | USD 44.81 | ||||||||||||||||||||
213,140 | 2006 | 01/03/2009 | 28/02/2016 | CHF 72.57 | ||||||||||||||||||||
170,512 | 2007 | 01/03/2010 | 28/02/2017 | CHF 73.67 | ||||||||||||||||||||
Lukas Gähwiler, CEO UBS Switzerland and | ||||||||||||||||||||||||
co-CEO Wealth Management & Swiss Bank | ||||||||||||||||||||||||
2010 | 0 | |||||||||||||||||||||||
2009 | – | |||||||||||||||||||||||
Carsten Kengeter, CEO Investment Bank | ||||||||||||||||||||||||
2010 | 905,000 | 905,000 | 2009 | 01/03/2012 | 27/12/2019 | CHF 40.00 | ||||||||||||||||||
2009 | 905,000 | 905,000 | 2009 | 01/03/2012 | 27/12/2019 | CHF 40.00 | ||||||||||||||||||
Ulrich Körner, Group Chief Operating Officer and CEO Corporate Center | ||||||||||||||||||||||||
2010 | 0 | |||||||||||||||||||||||
2009 | 0 | |||||||||||||||||||||||
Philip J. Lofts, Group Chief Risk Officer | ||||||||||||||||||||||||
2010 | 577,723 | 11,445 | 2002 | 31/01/2003 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||
11,104 | 2002 | 31/01/2004 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||||
11,098 | 2002 | 31/01/2005 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||||
1,240 | 2002 | 28/02/2003 | 28/02/2012 | CHF 36.65 | ||||||||||||||||||||
5,464 | 2002 | 28/02/2004 | 28/02/2012 | CHF 36.65 | ||||||||||||||||||||
1,199 | 2002 | 28/02/2005 | 28/02/2012 | CHF 36.65 |
233247
Vested and shareholdingsunvested options held by GEB members on 31 December 2009 / 20101 (continued)
Share and option ownership of members of the GEB on 31 December 2008/2009 (continued) | ||||||||||||||||||||||||||
Type and | ||||||||||||||||||||||||||
For the | Number of | Voting rights | Number of | Potentially conferred | quantity of | |||||||||||||||||||||
Name, function1 | year ended | shares held | in % | options held | voting rights in %2 | options3 | ||||||||||||||||||||
Robert J. McCann, | 2009 | 602,481 | 0.033 | 0 | 0.000 | |||||||||||||||||||||
CEO Wealth Management Americas | 2008 | – | – | |||||||||||||||||||||||
Franco Morra, | 2009 | 153,860 | 0.008 | 325,086 | 0.018 | lvi: | 43,911 | |||||||||||||||||||
CEO UBS Switzerland | lxiv: | 66,866 | ||||||||||||||||||||||||
lxvii: | 114,309 | |||||||||||||||||||||||||
lxxii: | 100,000 | |||||||||||||||||||||||||
2008 | – | – | ||||||||||||||||||||||||
Walter H. Stürzinger, | 2009 | – | – | |||||||||||||||||||||||
former Chief Operating Officer, Corporate Center4 | 2008 | 296,886 | 0.018 | 372,995 | 0.022 | xx: | 31,971 | |||||||||||||||||||
xli: | 63,942 | |||||||||||||||||||||||||
xlvii: | 85,256 | |||||||||||||||||||||||||
lvi: | 95,913 | |||||||||||||||||||||||||
lxiv: | 95,913 | |||||||||||||||||||||||||
Rory Tapner, | 2009 | – | – | |||||||||||||||||||||||
former Chairman and CEO Asia Pacific4 | 2008 | 827,809 | 0.049 | 1,379,533 | 0.082 | vii: | 281,862 | |||||||||||||||||||
xix: | 213,140 | |||||||||||||||||||||||||
xxxi: | 213,140 | |||||||||||||||||||||||||
xli: | 170,512 | |||||||||||||||||||||||||
xlvii: | 159,855 | |||||||||||||||||||||||||
lvi: | 170,512 | |||||||||||||||||||||||||
lxiv: | 170,512 | |||||||||||||||||||||||||
Raoul Weil, | 2009 | – | – | |||||||||||||||||||||||
former Chairman and CEO Global Wealth | 2008 | 315,698 | 0.019 | 432,409 | 0.026 | xix: | 53,285 | |||||||||||||||||||
Management & Business Banking4 | xlvii: | 102,281 | ||||||||||||||||||||||||
lvi: | 127,884 | |||||||||||||||||||||||||
lxiv: | 148,959 | |||||||||||||||||||||||||
Alexander Wilmot-Sitwell, | 2009 | 286,767 | 0.016 | 353,807 | 0.019 | xlvi: | 53,282 | |||||||||||||||||||
co-CEO Investment Bank | xlix: | 2,130 | ||||||||||||||||||||||||
liii: | 35,524 | |||||||||||||||||||||||||
liv: | 35,524 | |||||||||||||||||||||||||
lv: | 35,521 | |||||||||||||||||||||||||
lxiv: | 106,570 | |||||||||||||||||||||||||
lxvii: | 85,256 | |||||||||||||||||||||||||
2008 | 304,655 | 0.018 | 353,807 | 0.021 | xlvi: | 53,282 | ||||||||||||||||||||
xlix: | 2,130 | |||||||||||||||||||||||||
liii: | 35,524 | |||||||||||||||||||||||||
liv: | 35,524 | |||||||||||||||||||||||||
lv: | 35,521 | |||||||||||||||||||||||||
lxiv: | 106,570 | |||||||||||||||||||||||||
lxvii: | 85,256 | |||||||||||||||||||||||||
Robert Wolf, | 2009 | 785,631 | 0.043 | 948,473 | 0.051 | xxv: | 287,739 | |||||||||||||||||||
Chairman and CEO, UBS Group Americas/ | xliii: | 213,140 | ||||||||||||||||||||||||
President Investment Bank | xlviii: | 127,884 | ||||||||||||||||||||||||
lvi: | 106,570 | |||||||||||||||||||||||||
lxiv: | 106,570 | |||||||||||||||||||||||||
lxvii: | 106,570 | |||||||||||||||||||||||||
2008 | 827,307 | 0.049 | 948,473 | 0.056 | xxv: | 287,739 | ||||||||||||||||||||
xliii: | 213,140 | |||||||||||||||||||||||||
xlviii: | 127,884 | |||||||||||||||||||||||||
lvi: | 106,570 | |||||||||||||||||||||||||
lxiv: | 106,570 | |||||||||||||||||||||||||
lxvii: | 106,570 | |||||||||||||||||||||||||
Total | ||||||||||||||||||||||||
For the | number of | Number of | Year of | Vesting | Expiry | Strike | ||||||||||||||||||
year ended | options held2 | options3 | grant | date | date | price | ||||||||||||||||||
Philip J. Lofts, Group Chief Risk Officer (continued) | ||||||||||||||||||||||||
2010 | 577,723 | 9,985 | 2003 | 01/03/2004 | 31/01/2013 | CHF 27.81 | ||||||||||||||||||
9,980 | 2003 | 01/03/2005 | 31/01/2013 | CHF 27.81 | ||||||||||||||||||||
9,974 | 2003 | 01/03/2006 | 31/01/2013 | CHF 27.81 | ||||||||||||||||||||
1,833 | 2003 | 01/03/2004 | 28/02/2013 | CHF 26.39 | ||||||||||||||||||||
1,830 | 2003 | 01/03/2005 | 28/02/2013 | CHF 26.39 | ||||||||||||||||||||
1,830 | 2003 | 01/03/2006 | 28/02/2013 | CHF 26.39 | ||||||||||||||||||||
35,524 | 2004 | 01/03/2005 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
35,524 | 2004 | 01/03/2006 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
35,521 | 2004 | 01/03/2007 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
117,090 | 2005 | 01/03/2008 | 28/02/2015 | CHF 52.32 | ||||||||||||||||||||
117,227 | 2006 | 01/03/2009 | 28/02/2016 | CHF 72.57 | ||||||||||||||||||||
85,256 | 2007 | 01/03/2010 | 28/02/2017 | CHF 73.67 | ||||||||||||||||||||
74,599 | 2008 | 01/03/2011 | 28/02/2018 | CHF 35.66 | ||||||||||||||||||||
2009 | 577,723 | 11,445 | 2002 | 31/01/2003 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||
11,104 | 2002 | 31/01/2004 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||||
11,098 | 2002 | 31/01/2005 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||||
1,240 | 2002 | 28/02/2003 | 28/02/2012 | CHF 36.65 | ||||||||||||||||||||
5,464 | 2002 | 28/02/2004 | 28/02/2012 | CHF 36.65 | ||||||||||||||||||||
1,199 | 2002 | 28/02/2005 | 28/02/2012 | CHF 36.65 | ||||||||||||||||||||
9,985 | 2003 | 01/03/2004 | 31/01/2013 | CHF 27.81 | ||||||||||||||||||||
9,980 | 2003 | 01/03/2005 | 31/01/2013 | CHF 27.81 | ||||||||||||||||||||
9,974 | 2003 | 01/03/2006 | 31/01/2013 | CHF 27.81 | ||||||||||||||||||||
1,833 | 2003 | 01/03/2004 | 28/02/2013 | CHF 26.39 | ||||||||||||||||||||
1,830 | 2003 | 01/03/2005 | 28/02/2013 | CHF 26.39 | ||||||||||||||||||||
1,830 | 2003 | 01/03/2006 | 28/02/2013 | CHF 26.39 | ||||||||||||||||||||
35,524 | 2004 | 01/03/2005 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
35,524 | 2004 | 01/03/2006 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
35,521 | 2004 | 01/03/2007 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
117,090 | 2005 | 01/03/2008 | 28/02/2015 | CHF 52.32 | ||||||||||||||||||||
117,227 | 2006 | 01/03/2009 | 28/02/2016 | CHF 72.57 | ||||||||||||||||||||
85,256 | 2007 | 01/03/2010 | 28/02/2017 | CHF 73.67 | ||||||||||||||||||||
74,599 | 2008 | 01/03/2011 | 28/02/2018 | CHF 35.66 | ||||||||||||||||||||
Robert J. McCann, CEO Wealth Management Americas | ||||||||||||||||||||||||
2010 | 0 | |||||||||||||||||||||||
2009 | 0 | |||||||||||||||||||||||
Francesco Morra, former CEO UBS Switzerland4 | ||||||||||||||||||||||||
2010 | – | |||||||||||||||||||||||
2009 | 325,086 | 43,911 | 2006 | 01/03/2009 | 28/02/2016 | CHF 72.57 | ||||||||||||||||||
66,866 | 2007 | 01/03/2010 | 28/02/2017 | CHF 73.67 | ||||||||||||||||||||
114,309 | 2008 | 01/03/2011 | 28/02/2018 | CHF 35.66 | ||||||||||||||||||||
100,000 | 2009 | 01/03/2012 | 27/02/2019 | CHF 11.35 | ||||||||||||||||||||
Alexander Wilmot-Sitwell, co-Chairman and co-CEO Group Asia Pacific | ||||||||||||||||||||||||
2010 | 353,807 | 53,282 | 2005 | 01/03/2008 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||
2,130 | 2005 | 04/03/2007 | 04/03/2015 | CHF 47.89 |
Total | ||||||||||||||||||||||||
For the | number of | Number of | Year of | Vesting | Expiry | Strike | ||||||||||||||||||
year ended | options held2 | options3 | grant | date | date | price | ||||||||||||||||||
Alexander Wilmot-Sitwell, co-Chairman und co-CEO Group Asia Pacific (cont.) | ||||||||||||||||||||||||
2010 | 353,807 | 35,524 | 2006 | 01/03/2007 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||
35,524 | 2006 | 01/03/2008 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
35,521 | 2006 | 01/03/2009 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
106,570 | 2007 | 01/03/2010 | 28/02/2017 | CHF 73.67 | ||||||||||||||||||||
85,256 | 2008 | 01/03/2011 | 28/02/2018 | CHF 35.66 | ||||||||||||||||||||
2009 | 353,807 | 53,282 | 2005 | 01/03/2008 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||
2,130 | 2005 | 04/03/2007 | 04/03/2015 | CHF 47.89 | ||||||||||||||||||||
35,524 | 2006 | 01/03/2007 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
35,524 | 2006 | 01/03/2008 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
35,521 | 2006 | 01/03/2009 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
106,570 | 2007 | 01/03/2010 | 28/02/2017 | CHF 73.67 | ||||||||||||||||||||
85,256 | 2008 | 01/03/2011 | 28/02/2018 | CHF 35.66 | ||||||||||||||||||||
Robert Wolf, Chairman and CEO, UBS Group Americas/ | ||||||||||||||||||||||||
President Investment Bank | ||||||||||||||||||||||||
2010 | 948,473 | 287,739 | 2003 | 31/01/2006 | 31/01/2013 | USD 22.53 | ||||||||||||||||||
213,140 | 2004 | 01/03/2007 | 27/02/2014 | USD 38.13 | ||||||||||||||||||||
127,884 | 2005 | 01/03/2008 | 28/02/2015 | USD 44.81 | ||||||||||||||||||||
106,570 | 2006 | 01/03/2009 | 28/02/2016 | CHF 72.57 | ||||||||||||||||||||
106,570 | 2007 | 01/03/2010 | 28/02/2017 | CHF 73.67 | ||||||||||||||||||||
106,570 | 2008 | 01/03/2011 | 28/02/2018 | CHF 35.66 | ||||||||||||||||||||
2009 | 948,473 | 287,739 | 2003 | 31/01/2006 | 31/01/2013 | USD 22.53 | ||||||||||||||||||
213,140 | 2004 | 01/03/2007 | 27/02/2014 | USD 38.13 | ||||||||||||||||||||
127,884 | 2005 | 01/03/2008 | 28/02/2015 | USD 44.81 | ||||||||||||||||||||
106,570 | 2006 | 01/03/2009 | 28/02/2016 | CHF 72.57 | ||||||||||||||||||||
106,570 | 2007 | 01/03/2010 | 28/02/2017 | CHF 73.67 | ||||||||||||||||||||
106,570 | 2008 | 01/03/2011 | 28/02/2018 | CHF 35.66 | ||||||||||||||||||||
Chi-Won Yoon, co-Chairman and co-CEO Group Asia Pacific | ||||||||||||||||||||||||
2010 | 623,253 | 11,577 | 2002 | 31/01/2002 | 31/01/2012 | USD 21.24 | ||||||||||||||||||
11,229 | 2002 | 31/01/2004 | 31/01/2012 | USD 21.24 | ||||||||||||||||||||
11,227 | 2002 | 31/01/2005 | 31/01/2012 | USD 21.24 | ||||||||||||||||||||
2,252 | 2002 | 28/02/2002 | 28/02/2012 | USD 21.70 | ||||||||||||||||||||
6,446 | 2002 | 29/02/2004 | 28/02/2012 | USD 21.70 | ||||||||||||||||||||
2,184 | 2002 | 28/02/2005 | 28/02/2012 | USD 21.70 | ||||||||||||||||||||
8,648 | 2003 | 01/03/2004 | 31/01/2013 | USD 20.49 | ||||||||||||||||||||
8,642 | 2003 | 01/03/2005 | 31/01/2013 | USD 20.49 | ||||||||||||||||||||
8,635 | 2003 | 01/03/2006 | 31/01/2013 | USD 20.49 | ||||||||||||||||||||
4,262 | 2003 | 28/02/2005 | 28/02/2013 | USD 19.53 | ||||||||||||||||||||
3,374 | 2003 | 01/03/2004 | 28/02/2013 | USD 19.53 | ||||||||||||||||||||
3,371 | 2003 | 01/03/2005 | 28/02/2013 | USD 19.53 | ||||||||||||||||||||
3,371 | 2003 | 01/03/2006 | 28/02/2013 | USD 19.53 | ||||||||||||||||||||
6,200 | 2004 | 01/03/2005 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
4,262 | 2004 | 27/02/2006 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
6,198 | 2004 | 01/03/2006 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
6,195 | 2004 | 01/03/2007 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
10,659 | 2005 | 01/03/2006 | 28/02/2015 | CHF 47.58 |
234248
Corporate governance and compensation |
Share and option ownership of members of the GEB on 31 December 2008/2009 (continued) | ||||||||||||||||||||||||||
Type and | ||||||||||||||||||||||||||
For the | Number of | Voting rights | Number of | Potentially conferred | quantity of | |||||||||||||||||||||
Name, function1 | year ended | shares held | in % | options held | voting rights in %2 | options3 | ||||||||||||||||||||
Chi-Won Yoon, | 2009 | 367,573 | 0.020 | 623,253 | 0.034 | i: | 11,577 | |||||||||||||||||||
Chairman and CEO Asia Pacific | v: | 11,229 | ||||||||||||||||||||||||
viii: | 11,227 | |||||||||||||||||||||||||
x: | 2,252 | |||||||||||||||||||||||||
xiv: | 6,446 | |||||||||||||||||||||||||
xvii: | 2,184 | |||||||||||||||||||||||||
xxii: | 8,648 | |||||||||||||||||||||||||
xxiv: | 8,642 | |||||||||||||||||||||||||
xxvii: | 8,635 | |||||||||||||||||||||||||
xxxiv: | 4,262 | |||||||||||||||||||||||||
xxxv: | 3,374 | |||||||||||||||||||||||||
xxxvi: | 3,371 | |||||||||||||||||||||||||
xxxvii: | 3,371 | |||||||||||||||||||||||||
xxxvii: | 6,200 | |||||||||||||||||||||||||
xxxix: | 4,262 | |||||||||||||||||||||||||
xl: | 6,198 | |||||||||||||||||||||||||
xlii: | 6,195 | |||||||||||||||||||||||||
xliv: | 10,659 | |||||||||||||||||||||||||
xlv: | 10,657 | |||||||||||||||||||||||||
xlvi: | 10,654 | |||||||||||||||||||||||||
liii: | 21,316 | |||||||||||||||||||||||||
liv: | 21,314 | |||||||||||||||||||||||||
lv: | 21,311 | |||||||||||||||||||||||||
lxi: | 8,881 | |||||||||||||||||||||||||
lxii: | 8,880 | |||||||||||||||||||||||||
lxiii: | 8,880 | |||||||||||||||||||||||||
lxvi: | 42,628 | |||||||||||||||||||||||||
lxxii: | 350,000 | |||||||||||||||||||||||||
2008 | – | – | ||||||||||||||||||||||||
Jürg Zeltner, | 2009 | 16,502 | 0.001 | 205,470 | 0.011 | iii: | 809 | |||||||||||||||||||
CEO Wealth Management | iv: | 784 | ||||||||||||||||||||||||
vii: | 784 | |||||||||||||||||||||||||
xlii: | 4,972 | |||||||||||||||||||||||||
xliv: | 7,106 | |||||||||||||||||||||||||
xlv: | 7,103 | |||||||||||||||||||||||||
xlvi: | 7,103 | |||||||||||||||||||||||||
xlix: | 93 | |||||||||||||||||||||||||
l: | 161 | |||||||||||||||||||||||||
li: | 149 | |||||||||||||||||||||||||
lii: | 127 | |||||||||||||||||||||||||
liii: | 7,106 | |||||||||||||||||||||||||
liv: | 7,103 | |||||||||||||||||||||||||
lv: | 7,103 | |||||||||||||||||||||||||
lvii: | 110 | |||||||||||||||||||||||||
lviii: | 242 | |||||||||||||||||||||||||
lix: | 230 | |||||||||||||||||||||||||
lx: | 221 | |||||||||||||||||||||||||
lxi: | 7,105 | |||||||||||||||||||||||||
lxii: | 7,105 | |||||||||||||||||||||||||
lxiii: | 7,103 | |||||||||||||||||||||||||
lxv: | 223 | |||||||||||||||||||||||||
lxvii: | 42,628 | |||||||||||||||||||||||||
lxxii: | 90,000 | |||||||||||||||||||||||||
2008 | – | – | ||||||||||||||||||||||||
1 This table includes vested and unvested shares and options held by members of the GEB, including related parties. 2 No conversion rights are outstanding. 3 Refer to “Note 31 Equity participation and other compensation plans” in the “Financial information” section of this report for more information. 4 GEB members who stepped down during 2009. |
235Vested and unvested options held by GEB members on 31 December 2009 / 20101 (continued)
Total | ||||||||||||||||||||||||
For the | number of | Number of | Year of | Vesting | Expiry | Strike | ||||||||||||||||||
year ended | options held2 | options3 | grant | date | date | price | ||||||||||||||||||
Chi-Won Yoon, co-Chairman und co-CEO Group Asia Pacific (continued) | ||||||||||||||||||||||||
2010 | 623,253 | 10,657 | 2005 | 01/03/2007 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||
10,654 | 2005 | 01/03/2008 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
21,316 | 2006 | 01/03/2007 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
21,314 | 2006 | 01/03/2008 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
21,311 | 2006 | 01/03/2009 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
8,881 | 2007 | 01/03/2008 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
8,880 | 2007 | 01/03/2009 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
8,880 | 2007 | 01/03/2010 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
42,628 | 2008 | 01/03/2011 | 28/02/2018 | CHF 32.45 | ||||||||||||||||||||
350,000 | 2009 | 01/03/2012 | 27/02/2019 | CHF 11.35 | ||||||||||||||||||||
2009 | 623,253 | 11,577 | 2002 | 31/01/2002 | 31/01/2012 | USD 21.24 | ||||||||||||||||||
11,229 | 2002 | 31/01/2004 | 31/01/2012 | USD 21.24 | ||||||||||||||||||||
11,227 | 2002 | 31/01/2005 | 31/01/2012 | USD 21.24 | ||||||||||||||||||||
2,252 | 2002 | 28/02/2002 | 28/02/2012 | USD 21.70 | ||||||||||||||||||||
6,446 | 2002 | 29/02/2004 | 28/02/2012 | USD 21.70 | ||||||||||||||||||||
2,184 | 2002 | 28/02/2005 | 28/02/2012 | USD 21.70 | ||||||||||||||||||||
8,648 | 2003 | 01/03/2004 | 31/01/2013 | USD 20.49 | ||||||||||||||||||||
8,642 | 2003 | 01/03/2005 | 31/01/2013 | USD 20.49 | ||||||||||||||||||||
8,635 | 2003 | 01/03/2006 | 31/01/2013 | USD 20.49 | ||||||||||||||||||||
4,262 | 2003 | 28/02/2005 | 28/02/2013 | USD 19.53 | ||||||||||||||||||||
3,374 | 2003 | 01/03/2004 | 28/02/2013 | USD 19.53 | ||||||||||||||||||||
3,371 | 2003 | 01/03/2005 | 28/02/2013 | USD 19.53 | ||||||||||||||||||||
3,371 | 2003 | 01/03/2006 | 28/02/2013 | USD 19.53 | ||||||||||||||||||||
6,200 | 2004 | 01/03/2005 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
4,262 | 2004 | 27/02/2006 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
6,198 | 2004 | 01/03/2006 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
6,195 | 2004 | 01/03/2007 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
10,659 | 2005 | 01/03/2006 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
10,657 | 2005 | 01/03/2007 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
10,654 | 2005 | 01/03/2008 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
21,316 | 2006 | 01/03/2007 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
21,314 | 2006 | 01/03/2008 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
21,311 | 2006 | 01/03/2009 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
8,881 | 2007 | 01/03/2008 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
8,880 | 2007 | 01/03/2009 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
8,880 | 2007 | 01/03/2010 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
42,628 | 2008 | 01/03/2011 | 28/02/2018 | CHF 32.45 | ||||||||||||||||||||
350,000 | 2009 | 01/03/2012 | 27/02/2019 | CHF 11.35 | ||||||||||||||||||||
Jürg Zeltner, CEO UBS Wealth Management and | ||||||||||||||||||||||||
co-CEO Wealth Management & Swiss Bank | ||||||||||||||||||||||||
2010 | 205,470 | 809 | 2002 | 31/01/2003 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||
784 | 2002 | 31/01/2004 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||||
784 | 2002 | 31/01/2005 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||||
4,972 | 2004 | 01/03/2007 | 27/02/2014 | CHF 44.32 |
Total | ||||||||||||||||||||||||
For the | number of | Number of | Year of | Vesting | Expiry | Strike | ||||||||||||||||||
year ended | options held2 | options3 | grant | date | date | price | ||||||||||||||||||
Jürg Zeltner, CEO UBS Wealth Management and | ||||||||||||||||||||||||
co-CEO Wealth Management & Swiss Bank (continued) | ||||||||||||||||||||||||
2010 | 205,470 | 7,106 | 2005 | 01/03/2006 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||
7,103 | 2005 | 01/03/2007 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
7,103 | 2005 | 01/03/2008 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
93 | 2005 | 04/03/2007 | 04/03/2015 | CHF 47.89 | ||||||||||||||||||||
161 | 2005 | 06/06/2007 | 06/06/2015 | CHF 45.97 | ||||||||||||||||||||
149 | 2005 | 09/09/2007 | 09/09/2015 | CHF 50.47 | ||||||||||||||||||||
127 | 2005 | 05/12/2007 | 05/12/2015 | CHF 59.03 | ||||||||||||||||||||
7,106 | 2006 | 01/03/2007 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
7,103 | 2006 | 01/03/2008 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
7,103 | 2006 | 01/03/2009 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
110 | 2006 | 03/03/2008 | 03/03/2016 | CHF 65.91 | ||||||||||||||||||||
242 | 2006 | 09/06/2008 | 09/06/2016 | CHF 61.84 | ||||||||||||||||||||
230 | 2006 | 08/09/2008 | 08/09/2016 | CHF 65.76 | ||||||||||||||||||||
221 | 2006 | 08/12/2008 | 08/12/2016 | CHF 67.63 | ||||||||||||||||||||
7,105 | 2007 | 01/03/2008 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
7,105 | 2007 | 01/03/2009 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
7,103 | 2007 | 01/03/2010 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
223 | 2007 | 02/03/2009 | 02/03/2017 | CHF 67.08 | ||||||||||||||||||||
42,628 | 2008 | 01/03/2011 | 28/02/2018 | CHF 35.66 | ||||||||||||||||||||
90,000 | 2009 | 01/03/2012 | 27/02/2019 | CHF 11.35 | ||||||||||||||||||||
2009 | 205,470 | 809 | 2002 | 31/01/2003 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||
784 | 2002 | 31/01/2004 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||||
784 | 2002 | 31/01/2005 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||||
4,972 | 2004 | 01/03/2007 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
7,106 | 2005 | 01/03/2006 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
7,103 | 2005 | 01/03/2007 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
7,103 | 2005 | 01/03/2008 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
93 | 2005 | 04/03/2007 | 04/03/2015 | CHF 47.89 | ||||||||||||||||||||
161 | 2005 | 06/06/2007 | 06/06/2015 | CHF 45.97 | ||||||||||||||||||||
149 | 2005 | 09/09/2007 | 09/09/2015 | CHF 50.47 | ||||||||||||||||||||
127 | 2005 | 05/12/2007 | 05/12/2015 | CHF 59.03 | ||||||||||||||||||||
7,106 | 2006 | 01/03/2007 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
7,103 | 2006 | 01/03/2008 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
7,103 | 2006 | 01/03/2009 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
110 | 2006 | 03/03/2008 | 03/03/2016 | CHF 65.91 | ||||||||||||||||||||
242 | 2006 | 09/06/2008 | 09/06/2016 | CHF 61.84 | ||||||||||||||||||||
230 | 2006 | 08/09/2008 | 08/09/2016 | CHF 65.76 | ||||||||||||||||||||
221 | 2006 | 08/12/2008 | 08/12/2016 | CHF 67.63 | ||||||||||||||||||||
7,105 | 2007 | 01/03/2008 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
7,105 | 2007 | 01/03/2009 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
7,103 | 2007 | 01/03/2010 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
223 | 2007 | 02/03/2009 | 02/03/2017 | CHF 67.08 | ||||||||||||||||||||
42,628 | 2008 | 01/03/2011 | 28/02/2018 | CHF 35.66 | ||||||||||||||||||||
90,000 | 2009 | 01/03/2012 | 27/02/2019 | CHF 11.35 |
249
Vested and unvested options held by independent members of the BoD and | ||||||||||||||||||||||||||
by members of the GEB on 31 December 2008/2009 | ||||||||||||||||||||||||||
Type | Number of options | Year of grant | Vesting date | Expiry date | Subscription ratio | Strike price | ||||||||||||||||||||
i | 11,577 | 2002 | 31.01.2002 | 31.01.2012 | 1:1 | USD 21.24 | ||||||||||||||||||||
ii | 8,679 | 2002 | 31.01.2002 | 31.07.2012 | 1:1 | USD 21.24 | ||||||||||||||||||||
iii | 33,616 | 2002 | 31.01.2003 | 31.01.2012 | 1:1 | CHF 36.49 | ||||||||||||||||||||
iv | 32,619 | 2002 | 31.01.2004 | 31.01.2012 | 1:1 | CHF 36.49 | ||||||||||||||||||||
v | 11,229 | 2002 | 31.01.2004 | 31.01.2012 | 1:1 | USD 21.24 | ||||||||||||||||||||
vi | 8,421 | 2002 | 31.01.2004 | 31.07.2012 | 1:1 | USD 21.24 | ||||||||||||||||||||
vii | 314,469 | 2002 | 31.01.2005 | 31.01.2012 | 1:1 | CHF 36.49 | ||||||||||||||||||||
viii | 87,607 | 2002 | 31.01.2005 | 31.01.2012 | 1:1 | USD 21.24 | ||||||||||||||||||||
ix | 8,421 | 2002 | 31.01.2005 | 31.07.2012 | 1:1 | USD 21.24 | ||||||||||||||||||||
x | 2,252 | 2002 | 28.02.2002 | 28.02.2012 | 1:1 | USD 21.70 | ||||||||||||||||||||
xi | 8,823 | 2002 | 28.02.2002 | 28.08.2012 | 1:1 | USD 21.70 | ||||||||||||||||||||
xii | 6,694 | 2002 | 28.02.2003 | 28.02.2012 | 1:1 | CHF 36.65 | ||||||||||||||||||||
xiii | 10,758 | 2002 | 28.02.2004 | 28.02.2012 | 1:1 | CHF 36.65 | ||||||||||||||||||||
xiv | 10,708 | 2002 | 29.02.2004 | 28.02.2012 | 1:1 | USD 21.70 | ||||||||||||||||||||
xv | 8,563 | 2002 | 29.02.2004 | 28.08.2012 | 1:1 | USD 21.70 | ||||||||||||||||||||
xvi | 6,491 | 2002 | 28.02.2005 | 28.02.2012 | 1:1 | CHF 36.65 | ||||||||||||||||||||
xvii | 2,184 | 2002 | 28.02.2005 | 28.02.2012 | 1:1 | USD 21.70 | ||||||||||||||||||||
xviii | 8,561 | 2002 | 28.02.2005 | 28.08.2012 | 1:1 | USD 21.70 | ||||||||||||||||||||
xix | 394,309 | 2002 | 28.06.2005 | 28.06.2012 | 1:1 | CHF 37.90 | ||||||||||||||||||||
xx | 31,971 | 2002 | 28.06.2005 | 28.12.2012 | 1:1 | CHF 37.90 | ||||||||||||||||||||
xxi | 33,611 | 2003 | 01.03.2004 | 31.01.2013 | 1:1 | CHF 27.81 | ||||||||||||||||||||
xxii | 8,648 | 2003 | 01.03.2004 | 31.01.2013 | 1:1 | USD 20.49 | ||||||||||||||||||||
xxiii | 33,600 | 2003 | 01.03.2005 | 31.01.2013 | 1:1 | CHF 27.81 | ||||||||||||||||||||
xxiv | 8,642 | 2003 | 01.03.2005 | 31.01.2013 | 1:1 | USD 20.49 | ||||||||||||||||||||
xxv | 415,623 | 2003 | 31.01.2006 | 31.01.2013 | 1:1 | USD 22.53 | ||||||||||||||||||||
xxvi | 33,586 | 2003 | 01.03.2006 | 31.01.2013 | 1:1 | CHF 27.81 | ||||||||||||||||||||
xxvii | 8,635 | 2003 | 01.03.2006 | 31.01.2013 | 1:1 | USD 20.49 | ||||||||||||||||||||
xxviii | 7,359 | 2003 | 01.03.2004 | 28.02.2013 | 1:1 | CHF 26.39 | ||||||||||||||||||||
xxix | 7,354 | 2003 | 01.03.2005 | 28.02.2013 | 1:1 | CHF 26.39 | ||||||||||||||||||||
xxx | 7,354 | 2003 | 01.03.2006 | 28.02.2013 | 1:1 | CHF 26.39 | ||||||||||||||||||||
xxxi | 213,140 | 2003 | 31.01.2006 | 31.01.2013 | 1:1 | CHF 30.50 | ||||||||||||||||||||
xxxii | 31,971 | 2003 | 31.01.2006 | 31.07.2013 | 1:1 | CHF 30.50 | ||||||||||||||||||||
xxxiii | 42,628 | 2003 | 31.01.2006 | 31.07.2013 | 1:1 | USD 22.53 | ||||||||||||||||||||
xxxiv | 4,262 | 2003 | 28.02.2005 | 28.02.2013 | 1:1 | USD 19.53 | ||||||||||||||||||||
xxxv | 3,374 | 2003 | 01.03.2004 | 28.02.2013 | 1:1 | USD 19.53 | ||||||||||||||||||||
xxxvi | 3,371 | 2003 | 01.03.2005 | 28.02.2013 | 1:1 | USD 19.53 | ||||||||||||||||||||
xxxvii | 3,371 | 2003 | 01.03.2006 | 28.02.2013 | 1:1 | USD 19.53 | ||||||||||||||||||||
xxxviii | 58,796 | 2004 | 01.03.2005 | 27.02.2014 | 1:1 | CHF 44.32 | ||||||||||||||||||||
xxxix | 4,262 | 2004 | 27.02.2006 | 27.02.2014 | 1:1 | CHF 44.32 | ||||||||||||||||||||
xl | 58,790 | 2004 | 01.03.2006 | 27.02.2014 | 1:1 | CHF 44.32 | ||||||||||||||||||||
xli | 532,850 | 2004 | 28.02.2007 | 27.02.2014 | 1:1 | CHF 48.69 | ||||||||||||||||||||
xlii | 63,751 | 2004 | 01.03.2007 | 27.02.2014 | 1:1 | CHF 44.32 | ||||||||||||||||||||
xliii | 436,937 | 2004 | 01.03.2007 | 27.02.2014 | 1:1 | USD 38.13 | ||||||||||||||||||||
xliv | 31,975 | 2005 | 01.03.2006 | 28.02.2015 | 1:1 | CHF 47.58 | ||||||||||||||||||||
xlv | 31,970 | 2005 | 01.03.2007 | 28.02.2015 | 1:1 | CHF 47.58 | ||||||||||||||||||||
xlvi | 85,246 | 2005 | 01.03.2008 | 28.02.2015 | 1:1 | CHF 47.58 | ||||||||||||||||||||
xlvii | 837,477 | 2005 | 01.03.2008 | 28.02.2015 | 1:1 | CHF 52.32 | ||||||||||||||||||||
xlviii | 383,652 | 2005 | 01.03.2008 | 28.02.2015 | 1:1 | USD 44.81 | ||||||||||||||||||||
xlix | 2,223 | 2005 | 04.03.2007 | 04.03.2015 | 1:1 | CHF 47.89 | ||||||||||||||||||||
l | 161 | 2005 | 06.06.2007 | 06.06.2015 | 1:1 | CHF 45.97 | ||||||||||||||||||||
li | 149 | 2005 | 09.09.2007 | 09.09.2015 | 1:1 | CHF 50.47 | ||||||||||||||||||||
Loans granted to GEB members on 31 December 2009 / 2010 | ||||||||||
CHF, except where indicateda | ||||||||||
Name, function1 | For the year ended | Loans2 | ||||||||
Jürg Zeltner, CEO UBS Wealth Management, co-CEO Wealth Management & Swiss Bank3 | 2010 | 5,739,862 | ||||||||
Jürg Zeltner, CEO UBS Wealth Management, co-CEO Wealth Management & Swiss Bank3 | 2009 | 5,800,202 | ||||||||
Aggregate of all GEB members | 2010 | 20,696,569 | ||||||||
2009 | 15,356,483 | |||||||||
1 No loans have been granted to related parties of the GEB members at conditions not customary in the market. 2 All loans granted are secured loans. 3 GEB member with the highest loan granted. |
Loans granted to BoD members on 31 December 2009 / 2010 | ||||||||||
CHF, except where indicateda | ||||||||||
Name, function1 | For the year ended | Loans2 | ||||||||
Kaspar Villiger, Chairman | 2010 | 0 | ||||||||
2009 | 0 | |||||||||
Michel Demaré, Vice Chairman | 2010 | 850,000 | ||||||||
2009 | 850,000 | |||||||||
David Sidwell, Senior Independent Director | 2010 | 0 | ||||||||
2009 | 0 | |||||||||
Sergio Marchionne, former Senior Independent Director, former Vice Chairman3 | 2010 | – | ||||||||
2009 | 0 | |||||||||
Sally Bott, member | 2010 | 0 | ||||||||
2009 | 0 | |||||||||
Rainer-Marc Frey, member | 2010 | 0 | ||||||||
2009 | 0 | |||||||||
Bruno Gehrig, member4 | 2010 | 798,000 | ||||||||
2009 | 798,000 | |||||||||
Ann F. Godbehere, member | 2010 | 0 | ||||||||
2009 | 0 | |||||||||
Axel P. Lehmann, member | 2010 | 0 | ||||||||
2009 | 0 | |||||||||
Wolfgang Mayrhuber, member | 2010 | 0 | ||||||||
2009 | 0 | |||||||||
Helmut Panke, member | 2010 | 0 | ||||||||
2009 | 0 | |||||||||
William G. Parrett, member4 | 2010 | 0 | ||||||||
2009 | 1,260,731 | |||||||||
Peter R. Voser, member3 | 2010 | – | ||||||||
2009 | 0 | |||||||||
Aggregate of all BoD members | 2010 | 1,648,000 | ||||||||
2009 | 2,908,731 | |||||||||
1 No loans have been granted to related parties of BoD members at conditions not customary in the market. 2 All loans granted are secured loans. 3 BoD members who stepped down at the 2010 AGM. 4 Secured loans granted prior to their election to the BoD. |
236
Vested and unvested options held by independent members of the BoD and | ||||||||||||||||||||||||||
by members of the GEB on 31 December 2008/2009 (continued) | ||||||||||||||||||||||||||
Type | Number of options | Year of grant | Vesting date | Expiry date | Subscription ratio | Strike price | ||||||||||||||||||||
lii | 127 | 2005 | 05.12.2007 | 05.12.2015 | 1:1 | CHF 59.03 | ||||||||||||||||||||
liii | 69,276 | 2006 | 01.03.2007 | 28.02.2016 | 1:1 | CHF 65.97 | ||||||||||||||||||||
liv | 69,269 | 2006 | 01.03.2008 | 28.02.2016 | 1:1 | CHF 65.97 | ||||||||||||||||||||
lv | 69,261 | 2006 | 01.03.2009 | 28.02.2016 | 1:1 | CHF 65.97 | ||||||||||||||||||||
lvi | 1,376,036 | 2006 | 01.03.2009 | 28.02.2016 | 1:1 | CHF 72.57 | ||||||||||||||||||||
lvii | 110 | 2006 | 03.03.2008 | 03.03.2016 | 1:1 | CHF 65.91 | ||||||||||||||||||||
lviii | 242 | 2006 | 09.06.2008 | 09.06.2016 | 1:1 | CHF 61.84 | ||||||||||||||||||||
lix | 230 | 2006 | 08.09.2008 | 08.09.2016 | 1:1 | CHF 65.76 | ||||||||||||||||||||
lx | 221 | 2006 | 08.12.2008 | 08.12.2016 | 1:1 | CHF 67.63 | ||||||||||||||||||||
lxi | 33,748 | 2007 | 01.03.2008 | 28.02.2017 | 1:1 | CHF 67.00 | ||||||||||||||||||||
lxii | 33,747 | 2007 | 01.03.2009 | 28.02.2017 | 1:1 | CHF 67.00 | ||||||||||||||||||||
lxiii | 33,743 | 2007 | 01.03.2010 | 28.02.2017 | 1:1 | CHF 67.00 | ||||||||||||||||||||
lxiv | 1,415,142 | 2007 | 01.03.2010 | 28.02.2017 | 1:1 | CHF 73.67 | ||||||||||||||||||||
lxv | 223 | 2007 | 02.03.2009 | 02.03.2017 | 1:1 | CHF 67.08 | ||||||||||||||||||||
lxvi | 95,913 | 2008 | 01.03.2011 | 28.02.2018 | 1:1 | CHF 32.45 | ||||||||||||||||||||
lxvii | 662,415 | 2008 | 01.03.2011 | 28.02.2018 | 1:1 | CHF 35.66 | ||||||||||||||||||||
lxviii | 745,990 | 2008 | 01.03.2011 | 07.04.2018 | 1:1 | CHF 36.46 | ||||||||||||||||||||
lxix | 7,420 | 2008 | 01.03.2011 | 06.06.2018 | 1:1 | CHF 28.10 | ||||||||||||||||||||
lxx | 4,000,000 | 2009 | 26.02.2009 | 25.02.2014 | 1:1 | CHF 10.10 | ||||||||||||||||||||
lxxi | 905,000 | 2009 | 01.03.2012 | 27.12.2019 | 1:1 | CHF 40.00 | ||||||||||||||||||||
lxxii | 540,000 | 2009 | 01.03.2012 | 27.02.2019 | 1:1 | CHF 11.35 | ||||||||||||||||||||
Total of all blocked and unblocked shares held by independent members of the BoD1 | ||||||||||||||||||||||||||
Total | Of which unblocked | Of which blocked until | ||||||||||||||||||||||||
2010 | 2011 | 2012 | 2013 | |||||||||||||||||||||||
Shares held on 31 December 2009 | 420,059 | 123,053 | 6,232 | 13,352 | 35,737 | 241,685 | ||||||||||||||||||||
2009 | 2102 | 2011 | 2012 | |||||||||||||||||||||||
Shares held on 31 December 2008 | 307,378 | 177,027 | 12,126 | 13,592 | 30,193 | 74,440 | ||||||||||||||||||||
1 Includes related parties. |
No individual BoD member holds 1% or more of all shares issued.
Total of all vested and unvested shares held by the non-independent members of the BoD | ||||||||||||||||||||||||||||||
and members of the GEB1 | ||||||||||||||||||||||||||||||
Total | Of which vested | Of which vesting | ||||||||||||||||||||||||||||
2010 | 2011 | 2012 | 2013 | 2014 | ||||||||||||||||||||||||||
Shares held on 31 December 2009 | 3,760,095 | 1,971,557 | 1,078,664 | 397,046 | 222,601 | 90,227 | 0 | |||||||||||||||||||||||
Total | Of which vested | Of which vesting | ||||||||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||||||||||||
Shares held on 31 December 2008 | 5,562,574 | 2,955,211 | 1,058,881 | 595,638 | 461,376 | 319,776 | 171,692 | |||||||||||||||||||||||
1 Includes related parties. |
No individual BoD or GEB member holds 1% or more of all shares issued.
237
Group Executive Board
Replacement of forfeited awards for former employer compensation
Transactions in 2009
In accordance with applicable rules and regulations, management transactions in UBS shares by members of the BoD and the GEB are publicly disclosed. Transactions which require reporting are those involving all types of financial instruments whose price is primarily influenced by UBS shares.
applicable, while up to that date the EU requirements (paragraph 15a of the German Securities Trading Act) regarding the reporting of management transactions, were applicable.
Loans
The members of the BoD and GEB are granted loans, fixed advances and mortgages at arm’s length market terms.
238
Total Reward Principles
Overview
Reward is a key driver of behavior, motivation and culture, and can materially impact both reputation and financial results.
Within UBS our reward structure is aligned with our strategic priorities which bind the interests of employees with those of our shareholders. Employees are encouraged to identify and create sustainable value and profitability, and to build a strong client franchise both for their business and for UBS as a whole.
At UBS we reward behavior that helps to build and protect the firm’s reputation by focusing on sound risk and management practices. We believe in strong integration and excellence of execution, within an environment where all employees are able to achieve the highest standards of performance.
All UBS employees will be rewarded on the basis of their individual and team performance, and that of their business division, within the context of UBS as a whole and the markets in which we operate. UBS’s reward structure aims to:
Align reward with sustainable performance by encouraging a culture of integration and collaboration, a sense of engagement and long-term alignment with clients and shareholders, and quality execution of their orders.
Support appropriate and controlled risk taking consistent with UBS’s risk tolerance thereby protecting our capital, investors and reputation, and enhancing the quality of our financial results.
Foster effective individual performance management and communication by rigorously evaluating performance and ensuring the appropriate use of reward.
Attract and engage a diverse, talented workforce by providing attractive career opportunities underpinned by reward that is competitive in the market.
Align reward with sustainable performance
Within the context of UBS as a whole and the markets in which we operate, the sustainable performance of an employee’s business division is a key component of reward.
In considering UBS and business division performance, a range of factors will be taken into account including risk, capital usage, and market positioning. Assessment will focus on both current key performance indicators and the long-term actions that preserve and improve UBS’s ability to deliver future value.
Reward funding is not purely formulaic; discretion and judgment will be applied to ensure all relevant factors including market conditions are taken into account.
239
Support appropriate and controlled risk taking
Reward will be consistent with UBS’s risk framework and tolerance.
Performance reviews recognize the different risk profile and nature of each business including additional factors such as the quality and time horizon of earnings, the nature of the relevant industry segment, and competitive trends.
Faster effective individual performance management and communication
Rigorous evaluation of individual performance combined with effective communication ensures a link between achievement of business objectives and reward across UBS.
Beyond contribution to business results and achievement of individual performance objectives, rewards will also take into account:
Attract and engage a diverse, talented workforce
The UBS reward structure is designed to provide talented employees with reward that is appropriately balanced between fixed and variable elements, competitive in the market, and paid out over an appropriate period.
In general, total compensation comprises an annual base salary, reflecting the individual’s role, skills and knowledge, local market-based benefits and, where applicable, a discretionary incentive award.
Discretionary incentive awards may be split between immediate cash and long-term awards that can be granted in the form of either deferred UBS equity or deferred cash.
Stock options and/or stock appreciation rights may be awarded as part of total reward, to recognize the potential of key employees who are expected to drive the achievement of our strategic objectives.
Other reward programs may also be considered to further support the needs of our diverse global business, subject to considerations such as cost, risk and prevailing market and regulatory requirements. As such:
This document provides a summary only and may be supplemented by more detailed global or local policies. At UBS we are committed to full and proper disclosure of our remuneration policies, of which these Principles form a part, and we provide an annual advisory vote to shareholders at our AGM.
UBS AGP.O. BoxCH-8098 Zurich
www.ubs.com
250
Financial information
Table of contents
254 | Introduction and accounting principles | |||||
255 | Critical accounting policies | |||||
259 | Consolidated financial statements |
259 | Management’s report on internal control over financial reporting | |||||
260 | Report of independent registered public accounting firm on internal control over financial reporting | |||||
262 | Report of the statutory auditor and the independent registered public accounting firm on the consolidated financial statements | |||||
265 | Income statement | |||||
266 | Statement of comprehensive income | |||||
267 | Balance sheet | |||||
268 | Statement of changes in equity | |||||
271 | Statement of cash flows | |||||
273 | Notes to the consolidated financial statements | |||||
273 | 1 | |||||
293 | 2a | |||||
297 | 2b | |||||
298 | Income statement notes | |||||
298 | 3 | |||||
299 | 4 | |||||
300 | 5 | |||||
300 | 6 | |||||
300 | 7 | |||||
301 | 8 | |||||
302 | Balance sheet notes: assets | |||||
302 | 9a | |||||
303 | 9b | |||||
303 | 10 | |||||
304 | 11 | |||||
306 | 12 | |||||
307 | 13 | |||||
308 | 14 | |||||
308 | 15 | |||||
309 | 16 | |||||
311 | 17 |
312 | Balance sheet notes: liabilities | |||||
312 | 18 | |||||
312 | 19 | |||||
314 | 20 | |||||
314 | 21 | |||||
320 | 22 | |||||
322 | 23 | |||||
329 | Off-balance-sheet information | |||||
329 | 24 | |||||
329 | 25 | |||||
330 | Additional information | |||||
330 | 26 | |||||
330 | 27 | |||||
340 | 28 | |||||
341 | 29 | |||||
345 | 30 | |||||
351 | 31 | |||||
359 | 32 | |||||
362 | 33 | |||||
362 | 34 | |||||
365 | 35 | |||||
366 | 36 | |||||
367 | 37 | |||||
367 | 38 | |||||
368 | 39 | |||||
368 | 40 | |||||
370 | 41 |
242252
Financial information |
243253
Financial information
Introduction and accounting principles
244254
Financial information |
Critical accounting policies
Basis of preparation and selection of policies
UBS prepares its Financial Statements in accordance with IFRS as issued by the International Accounting Standards Board. The application of certain of these accounting principles requires considerable judgment based upon estimates and assumptions that involve significant uncertainty at the time they are made. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Changes in assumptions may have a significant impact on the Financial Statements in the periods where assumptions are changed. Accounting policies that are deemed critical to UBS’s results and financial position, in terms of materiality of the items to which the policy is applied, and which involve significant assumptions and estimates, are discussed in this section. A broader and more detailed description of the accounting policies that UBS employs is shown in Note 1 to the Financial Statements.
Fair value of financial instruments
The fair values of financial instruments where no active market exists or where quoted prices are not otherwise available are determined by using valuation techniques. In these cases, the fair values are estimated fromusing observable data in respect of similar financial instruments or usingas well as models. Where market observable inputs are not available, inputs are estimated based on appropriate assumptions. Where valuation techniques or models are used to determine fair values, they are periodically reviewed and validated by qualified person-
nelpersonnel independent of those thatwho sourced them. Models are calibrated to ensure that outputs reflect actual data and comparative market prices. To the extent practical,Where practicable, models use only observable data; however, areas such as default rates, volatilities and correlations require management to make estimates.
The valuation techniques or models employed may not fully reflect all of the factors relevant to the positions UBS holds. Valuations are therefore adjusted, where appropriate, to allow for additional factors including model risks,risk, liquidity risk and credit risk. UBS uses different approaches to calculate the credit risk, depending on the classification of a financial instrument at fair value. A credit valuation adjustment (CVA) approach based on an expected exposure profile is used to adjust the fair value ofPositive replacement values to reflect counterparty credit risk if deemed necessary. Correspondingly, a debit valuation adjustment (DVA) approach is applied to incorporate the own credit risk in the fair value of uncollateralizedNegative replacement values.values. The own credit risk forFinancial liabilities designated at fair valueis calculated using UBS’s senior debtthe funds transfer price (FTP) curve.
Goodwill impairment test
Goodwill allocated to the Investment Bank on 31 December 2010 amounted to CHF 3.0 billion, to Wealth Management Americas CHF 3.3 billion, to Wealth Management CHF 1.4 billion and to Global Asset Management CHF 1.4 billion.
245255
Financial information
thatfifth-year profit, the cost of equity and the long-term growth rate. For the 2010 test, the discount rates and long-term growth rates used to calculate the present values of the cash generating units remained unchanged. The recoverable amount of a segment is the sum of discounted earnings available to shareholders from the first five individually forecast years and the terminal value.
Management believes that reasonable changes in key assumptions used to determine the recoverable amounts of all segments will not result in an impairment situation.
Impairment of loans and receivables measured at amortized cost
Loan impairment allowances represent management’s best estimate of losses incurred in the lending portfolio at the balance
sheet date. The lendingloan portfolio, which is measured at amortized cost less impairment, is comprisedconsists of financial assets presented on the balance sheet line itemsDue from banks and Loans, including reclassified securities. In addition, irrevocable loan commitments are also tested for impairment as described below.
Reclassification of financial assets
The International Accounting Standards Board published an amendment to International Accounting Standard 39 (IAS 39Financial Instruments: Recognition and Measurement)on 13
246
October 2008, under which eligible financial assets, subject to certain conditions being met, may be reclassified out of the“Held for trading”category if the firm has the intent and ability to hold them for the foreseeable future or until maturity.
Consolidation of Special Purpose Entities
UBS sponsors the formation of Special Purpose Entities (SPEs) primarilyand interacts with non-sponsored SPEs for a variety of reasons, including to allow clients to hold investments in separate legal entities,obtain or be exposed to allow clientsspecific risk and reward profiles, to jointly invest in alternative assets, for asset securitization transactions and for buyingbe provided funding or sellingto sell or purchase credit protection.risk. In accordance with IFRS, UBS does not consolidate SPEs that it does not control. In order to determine whether UBS controls an SPE or not UBS has to make judgments about risks and rewards and assess the ability to make operational decisions for the SPE in question. In many instances, elements are present that, considered in isolation, indicate control or lack of control over an SPE, but when considered together make it difficult to reach a clear conclusion. When assessing whether UBS has to consolidatecontrols an SPE, it evaluates a range of factors, including whether (a) the activities of the SPE are being conducted on UBS’s behalf according to its specific business needs so that UBS obtains the benefits from the SPE’s operations, or (b) UBS has decision-making powers to obtain the majority of the benefits of the activities of the SPE, or UBS has delegated these decision-making
256
Financial information |
powers by setting up an autopilot mechanism, or (c) UBS has the rights to obtain the majority of the benefits of the activities of an SPE and therefore may be exposed to risks arising from the activities of the SPE, or (d) UBS retains the majority of the residual or ownership risks related to the SPE or its assets in order to obtain the benefits from its activities. UBS consolidatesIn many instances, elements are present that, considered in isolation, indicate control or lack of control over an SPE, if its assessmentbut when considered together require a significant degree of judgment to reach a conclusion. The exposure to volatility in profits and the relevant factors indicates that UBS controlsabsorption of risks and rewards, as well as the SPE.
others allowreaching a broad number of investors to invest in a diversified asset base through a single share or certificate. These latter SPEs range from mutual funds to trusts investing in real estate. The majority of UBS’s SPEs are created for client investment purposes and are not consolidated. However, UBS consolidates investment funds in certain cases where it provides financial support to a fund. In these instances UBS generally assumes the majority or a significant portion of the risks of the fund, which, combined with UBS’s role as investment manager, makes it the party that can exercise control over the entity.
247
Financial information
Equity compensation
UBS recognizes shares, performance shares, options and share-settled stock appreciation rights (SARs) awarded to employees as compensation expenseexpenses based on their fair value at grant date. The performance shares, options and SARs that UBS issues to its employees have features that make them incomparable to options and SARs onnot directly comparable with UBS’s shares traded in active markets. Accordingly, UBS cannot determine the fair value by reference to a quoted market price, but UBS ratherinstead estimates itfair value by using ansuitable option valuation model.models. The model, a Monte Carlo simulation, requiresmodels require inputs such as interest rates, expected dividends, share price volatility measures and specifichistorical employee exercise behavior patterns based on statistical data.
Deferred taxes
Deferred tax assets arise from a variety of sources, the most significant being: a) tax losses that can be carried forward to be utilized against profits in future years; and b) expenses recognized in UBS’s income statement but disallowed in the tax returnthat are not deductible until the associated cash flow occurs.flows occur.
ture profitability having regard to relevant business plan forecasts. At each balance sheet date, existing assessments are reviewed and, if necessary, revised to reflect changed circumstances. In a situation where recent losses have been incurred, the relevant accounting standards require convincing evidence that there will be sufficient future profitability.
Hedge accounting
The Group uses derivative instruments as part of its asset and liability management activities to manage exposures particularly to interest rate and foreign currency risks, including exposures arising from forecast transactions. If derivative and non-derivative instruments meet certain criteria, they are designated as fair value hedges, cash flow hedges or net investment hedges. The designation of derivatives as hedging instruments is at the discretion of UBS.
248257
Financial information
when a forecast transaction is no longer deemed highly probable. In certain circumstances, the Group may decide to discontinue hedge accounting even though the mentioned criteria for discontinuing are not fulfilled. De-designated hedging derivatives are treated as held for trading from the de-designation date.
Provisions
Provisions are recognized when UBS has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.
Further details of UBS’s policy on provisions are contained in Note 1a) 26).
Pension and other post-employment benefit plans
The defined benefit obligation at the end of the year and the net periodic pension cost for the year depend on the expected future benefit promises that are determined using a number of economic and demographic assumptions. The economic assumptions include the discount rate, the expected salary increase, the expected return on plan assets as well as the rate of pension increase.
258
Financial information |
Financial information
Consolidated financial statements
Consolidated financial statements
Management’s report on internal control
over financial reporting
The Board of Directors and management of UBS AG (UBS) are responsible for establishing and maintaining adequate internal control over financial reporting. UBS’s internal control over financial reporting is designed to provide reasonable assurance regarding the preparation and fair presentation of published financial statements in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.
– | Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; | |
– | Provide reasonable assurance that transactions are recorded as necessary to permit preparation and fair presentation of financial statements, and that receipts and expenditures of the company are being made only in accordance with authorizations of UBS management; and | |
– | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
259
Financial information
Consolidated financial statements
Ernst & Young Ltd Aeschengraben 9 CH-4002 Basel | ||||||
Phone | +41 58 286 86 86 | |||||
Fax | +41 58 286 86 00 | |||||
www.ey.com/ch |
To the General Meeting of
Basel, 3 March 2011
Report of independent registered public accounting firm on
internal control over financial reporting
We have audited the internal control over financial reporting of UBS AG and its subsidiaries as of 31 December 2010, based on criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). UBS AG’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in Management’s Report on Internal Control Over Financial Reporting on page 259. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
260
Financial information |
2 |
In our opinion, UBS management assessed the effectiveness of UBS’sAG and its subsidiaries maintained, in all material respects, effective internal control over financial reporting as of 31 December 20092010, based on the COSO criteria.
Ernst & Young Ltd | ||
Jonathan Bourne | Dr. Andreas Blumer | |
Licensed Audit Expert | Licensed Audit Expert | |
(Auditor in Charge) |
261
Financial information
Consolidated financial statements
Ernst & Young Ltd Aeschengraben 9 CH-4002 Basel | ||||||
Phone | +41 58 286 86 86 | |||||
Fax | +41 58 286 86 00 | |||||
www.ey.com/ch |
To the General Meeting of
Basel, 3 March 2011
Report of the statutory auditor and the independent registered public accounting firm on the consolidated financial statements
As statutory auditor, we have audited the consolidated financial statements of UBS AG and its subsidiaries which are comprised of the consolidated balance sheets as of 31 December 2010 and 2009, and the related consolidated income statements and consolidated statements of comprehensive income, changes in equity and cash flows, and notes thereto, for each of the three years in the period ended 31 December 2010 on pages 265 to 378.
Board of Directors’ responsibility
Auditor’s responsibility
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used
262
Financial information |
2 |
and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
Report on other legal and regulatory requirements
Ernst & Young Ltd | ||
Jonathan Bourne | Dr. Andreas Blumer | |
Licensed Audit Expert | Licensed Audit Expert | |
(Auditor in Charge) |
249
263
251
253
254264
Financial information |
Financial informationConsolidated financial statements
Income statement
Income statement | ||||||||||||||||||||||||||||||||||||||||
For the year ended | % change from | For the year ended | % change from | |||||||||||||||||||||||||||||||||||||
CHF million, except per share data | Note | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.08 | Note | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | ||||||||||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||||||||||||||||||
Interest income | 3 | 23,461 | 65,679 | 109,112 | (64 | ) | 3 | 18,872 | 23,461 | 65,679 | (20 | ) | ||||||||||||||||||||||||||||
Interest expense | 3 | (17,016 | ) | (59,687 | ) | (103,775 | ) | (71 | ) | 3 | (12,657 | ) | (17,016 | ) | (59,687 | ) | 26 | |||||||||||||||||||||||
Net interest income | 3 | 6,446 | 5,992 | 5,337 | 8 | 3 | 6,215 | 6,446 | 5,992 | (4 | ) | |||||||||||||||||||||||||||||
Credit loss (expense)/recovery | (1,832 | ) | (2,996 | ) | (238 | ) | (39 | ) | ||||||||||||||||||||||||||||||||
Credit loss (expense) / recovery | (66 | ) | (1,832 | ) | (2,996 | ) | 96 | |||||||||||||||||||||||||||||||||
Net interest income after credit loss expense | 4,614 | 2,996 | 5,099 | 54 | 6,149 | 4,614 | 2,996 | 33 | ||||||||||||||||||||||||||||||||
Net fee and commission income | 4 | 17,712 | 22,929 | 30,634 | (23 | ) | 4 | 17,160 | 17,712 | 22,929 | (3 | ) | ||||||||||||||||||||||||||||
Net trading income | 3 | (324 | ) | (25,820 | ) | (8,353 | ) | 99 | 3 | 7,471 | (324 | ) | (25,820 | ) | ||||||||||||||||||||||||||
Other income | 5 | 599 | 692 | 4,341 | (13 | ) | 5 | 1,214 | 599 | 692 | 103 | |||||||||||||||||||||||||||||
Total operating income | 22,601 | 796 | 31,721 | 31,994 | 22,601 | 796 | 42 | |||||||||||||||||||||||||||||||||
Personnel expenses | 6 | 16,543 | 16,262 | 25,515 | 2 | 6 | 16,920 | 16,543 | 16,262 | 2 | ||||||||||||||||||||||||||||||
General and administrative expenses | 7 | 6,248 | 10,498 | 8,429 | (40 | ) | 7 | 6,585 | 6,248 | 10,498 | 5 | |||||||||||||||||||||||||||||
Depreciation of property and equipment | 15 | 1,048 | 1,241 | 1,243 | (16 | ) | 15 | 918 | 1,048 | 1,241 | (12 | ) | ||||||||||||||||||||||||||||
Impairment of goodwill | 16, 38 | 1,123 | 341 | 0 | 229 | 16 | 0 | 1,123 | 341 | (100 | ) | |||||||||||||||||||||||||||||
Amortization of intangible assets | 200 | 213 | 276 | (6 | ) | 16 | 117 | 200 | 213 | (42 | ) | |||||||||||||||||||||||||||||
Total operating expenses | 25,162 | 28,555 | 35,463 | (12 | ) | 24,539 | 25,162 | 28,555 | (2 | ) | ||||||||||||||||||||||||||||||
Operating profit from continuing operations before tax | (2,561 | ) | (27,758 | ) | (3,742 | ) | 91 | 7,455 | (2,561 | ) | (27,758 | ) | ||||||||||||||||||||||||||||
Tax expense | 22 | (443 | ) | (6,837 | ) | 1,369 | 94 | |||||||||||||||||||||||||||||||||
Tax expense / (benefit) | 22 | (381 | ) | (443 | ) | (6,837 | ) | 14 | ||||||||||||||||||||||||||||||||
Net profit from continuing operations | (2,118 | ) | (20,922 | ) | (5,111 | ) | 90 | 7,836 | (2,118 | ) | (20,922 | ) | ||||||||||||||||||||||||||||
Discontinued operations | ||||||||||||||||||||||||||||||||||||||||
Profit from discontinued operations before tax | 37 | (7 | ) | 198 | 145 | 37 | 2 | (7 | ) | 198 | ||||||||||||||||||||||||||||||
Tax expense | 22 | 0 | 1 | (258 | ) | (100 | ) | 22 | 0 | 0 | 1 | |||||||||||||||||||||||||||||
Net profit from discontinued operations | (7 | ) | 198 | 403 | 2 | (7 | ) | 198 | ||||||||||||||||||||||||||||||||
Net profit | (2,125 | ) | (20,724 | ) | (4,708 | ) | 90 | 7,838 | (2,125 | ) | (20,724 | ) | ||||||||||||||||||||||||||||
Net profit attributable to minority interests | 610 | 568 | 539 | 7 | ||||||||||||||||||||||||||||||||||||
Net profit attributable to non-controlling interests | 304 | 610 | 568 | (50 | ) | |||||||||||||||||||||||||||||||||||
from continuing operations | 600 | 520 | 539 | 15 | 303 | 600 | 520 | (50 | ) | |||||||||||||||||||||||||||||||
from discontinued operations | 10 | 48 | 0 | (79 | ) | 1 | 10 | 48 | (90 | ) | ||||||||||||||||||||||||||||||
Net profit attributable to UBS shareholders | (2,736 | ) | (21,292 | ) | (5,247 | ) | 87 | 7,534 | (2,736 | ) | (21,292 | ) | ||||||||||||||||||||||||||||
from continuing operations | (2,719 | ) | (21,442 | ) | (5,650 | ) | 87 | 7,533 | (2,719 | ) | (21,442 | ) | ||||||||||||||||||||||||||||
from discontinued operations | (17 | ) | 150 | 403 | 1 | (17 | ) | 150 | ||||||||||||||||||||||||||||||||
Earnings per share (CHF) | ||||||||||||||||||||||||||||||||||||||||
Basic earnings per share | 8 | (0.75 | ) | (7.63 | ) | (2.40 | ) | 90 | 8 | 1.99 | (0.75 | ) | (7.63 | ) | ||||||||||||||||||||||||||
from continuing operations | (0.74 | ) | (7.68 | ) | (2.59 | ) | 90 | 1.99 | (0.74 | ) | (7.68 | ) | ||||||||||||||||||||||||||||
from discontinued operations | 0.00 | 0.05 | 0.18 | (100 | ) | 0.00 | 0.00 | 0.05 | ||||||||||||||||||||||||||||||||
Diluted earnings per share | 8 | (0.75 | ) | (7.63 | ) | (2.41 | ) | 90 | 8 | 1.96 | (0.75 | ) | (7.63 | ) | ||||||||||||||||||||||||||
from continuing operations | (0.74 | ) | (7.69 | ) | (2.59 | ) | 90 | 1.96 | (0.74 | ) | (7.69 | ) | ||||||||||||||||||||||||||||
from discontinued operations | 0.00 | 0.05 | 0.18 | (100 | ) | 0.00 | 0.00 | 0.05 |
255265
Financial information
Consolidated financial statements
Statement of comprehensive income
Statement of comprehensive income | ||||||||||||||||||||||||
For the year ended | For the year ended | |||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.10 | 31.12.09 | 31.12.08 | ||||||||||||||||||
Net profit | (2,125 | ) | (20,724 | ) | (4,708 | ) | 7,838 | (2,125 | ) | (20,724 | ) | |||||||||||||
Other comprehensive income | ||||||||||||||||||||||||
Foreign currency translation | ||||||||||||||||||||||||
Foreign currency translation movements, before tax | (35 | ) | (4,509 | ) | (1,405 | ) | (2,044 | ) | (35 | ) | (4,509 | ) | ||||||||||||
Foreign exchange amounts reclassified to the income statement from equity | (259 | ) | 202 | 108 | 237 | (259 | ) | 202 | ||||||||||||||||
Income tax relating to foreign currency translation movements | 22 | (17 | ) | 39 | 121 | 22 | (17 | ) | ||||||||||||||||
Subtotal foreign currency translation movements, net of tax | (272 | ) | (4,324 | ) | (1,258 | ) | (1,686) | 1 | (272 | ) | (4,324 | ) | ||||||||||||
Financial investments available-for-sale | ||||||||||||||||||||||||
Net unrealized gains/(losses) on financial investments available-for-sale, before tax | 157 | (903 | ) | 1,578 | ||||||||||||||||||||
Net unrealized gains / (losses) on financial investments available-for-sale, before tax | (499 | ) | 157 | (903 | ) | |||||||||||||||||||
Impairment charges reclassified to the income statement from equity | 70 | 47 | 14 | 72 | 70 | 47 | ||||||||||||||||||
Realized gains reclassified to the income statement from equity | (147 | ) | (645 | ) | (3,423 | ) | (357 | ) | (147 | ) | (645 | ) | ||||||||||||
Realized losses reclassified to the income statement from equity | 1 | 6 | 7 | 153 | 1 | 6 | ||||||||||||||||||
Income tax relating to net unrealized gains/(losses) on financial investments available-for-sale | (54 | ) | 341 | 421 | ||||||||||||||||||||
Income tax relating to net unrealized gains / (losses) on financial investments available-for-sale | 13 | (54 | ) | 341 | ||||||||||||||||||||
Subtotal net unrealized gains/(losses) on financial investments available-for-sale, net of tax | 27 | (1,154 | ) | (1,403 | ) | |||||||||||||||||||
Subtotal net unrealized gains / (losses) on financial investments available-for-sale, net of tax | (618) | 1 | 27 | (1,154 | ) | |||||||||||||||||||
Cash flow hedges | ||||||||||||||||||||||||
Effective portion of changes in fair value of derivative instruments designated as cash flow hedges, before tax | 78 | 2,001 | 369 | 927 | 78 | 2,001 | ||||||||||||||||||
Net unrealized (gains)/losses reclassified to the income statement from equity | (756 | ) | 178 | 172 | ||||||||||||||||||||
Net realized (gains) / losses reclassified to the income statement from equity | (1,108 | ) | (756 | ) | 178 | |||||||||||||||||||
Income tax effects relating to cash flow hedges | 257 | (520 | ) | (130 | ) | 38 | 257 | (520 | ) | |||||||||||||||
Subtotal changes in fair value of derivative instruments designated as cash flow hedges | (421 | ) | 1,659 | 411 | (143 | ) | (421 | ) | 1,659 | |||||||||||||||
Total other comprehensive income | (667 | ) | (3,818 | ) | (2,250 | ) | (2,447 | ) | (667 | ) | (3,818 | ) | ||||||||||||
Total comprehensive income | (2,792 | ) | (24,542 | ) | (6,958 | ) | 5,391 | (2,792 | ) | (24,542 | ) | |||||||||||||
Total comprehensive income attributable to minority interests | 484 | (77 | ) | 269 | ||||||||||||||||||||
Total comprehensive income attributable to non-controlling interests | (484 | ) | 484 | (77 | ) | |||||||||||||||||||
Total comprehensive income attributable to UBS shareholders | (3,276 | ) | (24,465 | ) | (7,227 | ) | 5,875 | (3,276 | ) | (24,465 | ) |
256266
Financial information |
Balance sheet
Balance sheet | ||||||||||||||||||||||||||||||||||||
% change from | % change from | |||||||||||||||||||||||||||||||||||
CHF million | Note | 31.12.09 | 31.12.08 | 31.12.08 | Note | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | |||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||
Cash and balances with central banks | 20,899 | 32,744 | (36 | ) | 26,939 | 20,899 | 32,744 | 29 | ||||||||||||||||||||||||||||
Due from banks | 9 | 46,574 | 64,451 | (28 | ) | 9 | 17,133 | 16,804 | 17,694 | 2 | ||||||||||||||||||||||||||
Cash collateral on securities borrowed | 10 | 63,507 | 122,897 | (48 | ) | 10 | 62,454 | 63,507 | 122,897 | (2 | ) | |||||||||||||||||||||||||
Reverse repurchase agreements | �� | 10 | 116,689 | 224,648 | (48 | ) | 10 | 142,790 | 116,689 | 224,648 | 22 | |||||||||||||||||||||||||
Trading portfolio assets | 11 | 188,037 | 271,838 | (31 | ) | 11 | 167,463 | 188,037 | 271,838 | (11 | ) | |||||||||||||||||||||||||
Trading portfolio assets pledged as collateral | 11 | 44,221 | 40,216 | 10 | 11 | 61,352 | 44,221 | 40,216 | 39 | |||||||||||||||||||||||||||
Positive replacement values | 23 | 421,694 | 854,100 | (51 | ) | 23 | 401,146 | 421,694 | 854,100 | (5 | ) | |||||||||||||||||||||||||
Cash collateral receivables on derivative instruments | 10 | 38,071 | 53,774 | 85,703 | (29 | ) | ||||||||||||||||||||||||||||||
Financial assets designated at fair value | 12 | 10,223 | 12,882 | (21 | ) | 12 | 8,504 | 10,223 | 12,882 | (17 | ) | |||||||||||||||||||||||||
Loans | 9 | 306,828 | 340,308 | (10 | ) | 9 | 262,877 | 266,477 | 291,456 | (1 | ) | |||||||||||||||||||||||||
Financial investments available-for-sale | 13 | 81,757 | 5,248 | 13 | 74,768 | 81,757 | 5,248 | (9 | ) | |||||||||||||||||||||||||||
Accrued income and prepaid expenses | 5,816 | 6,141 | (5 | ) | 5,466 | 5,816 | 6,141 | (6 | ) | |||||||||||||||||||||||||||
Investments in associates | 14 | 870 | 892 | (2 | ) | 14 | 790 | 870 | 892 | (9 | ) | |||||||||||||||||||||||||
Property and equipment | 15 | 6,212 | 6,706 | (7 | ) | 15 | 5,467 | 6,212 | 6,706 | (12 | ) | |||||||||||||||||||||||||
Goodwill and intangible assets | 16 | 11,008 | 12,935 | (15 | ) | 16 | 9,822 | 11,008 | 12,935 | (11 | ) | |||||||||||||||||||||||||
Deferred tax assets | 22 | 8,868 | 8,880 | 0 | 22 | 9,522 | 8,868 | 8,880 | 7 | |||||||||||||||||||||||||||
Other assets | 17 | 7,336 | 9,931 | (26 | ) | 17 | 22,681 | 23,682 | 19,837 | (4 | ) | |||||||||||||||||||||||||
Total assets | 1,340,538 | 2,014,815 | (33 | ) | 1,317,247 | 1,340,538 | 2,014,815 | (2 | ) | |||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||
Due to banks | 18 | 65,166 | 125,628 | (48 | ) | 18 | 41,490 | 31,922 | 76,822 | 30 | ||||||||||||||||||||||||||
Cash collateral on securities lent | 10 | 7,995 | 14,063 | (43 | ) | 10 | 6,651 | 7,995 | 14,063 | (17 | ) | |||||||||||||||||||||||||
Repurchase agreements | 10 | 64,175 | 102,561 | (37 | ) | 10 | 74,796 | 64,175 | 102,561 | 17 | ||||||||||||||||||||||||||
Trading portfolio liabilities | 11 | 47,469 | 62,431 | (24 | ) | 11 | 54,975 | 47,469 | 62,431 | 16 | ||||||||||||||||||||||||||
Negative replacement values | 23 | 409,943 | 851,864 | (52 | ) | 23 | 393,762 | 409,943 | 851,864 | (4 | ) | |||||||||||||||||||||||||
Cash collateral payables on derivative instruments | 10 | 58,924 | 66,097 | 92,937 | (11 | ) | ||||||||||||||||||||||||||||||
Financial liabilities designated at fair value | 19 | 112,653 | 101,546 | 11 | 19 | 100,756 | 112,653 | 101,546 | (11 | ) | ||||||||||||||||||||||||||
Due to customers | 18 | 410,475 | 465,741 | (12 | ) | 18 | 332,301 | 339,263 | 362,639 | (2 | ) | |||||||||||||||||||||||||
Accrued expenses and deferred income | 8,689 | 10,196 | (15 | ) | 7,738 | 8,689 | 10,196 | (11 | ) | |||||||||||||||||||||||||||
Debt issued | 19 | 131,352 | 197,254 | (33 | ) | 19 | 130,271 | 131,352 | 197,254 | (1 | ) | |||||||||||||||||||||||||
Other liabilities | 20, 21, 22 | 33,986 | 42,998 | (21 | ) | 20, 21, 22 | 63,719 | 72,344 | 101,969 | (12 | ) | |||||||||||||||||||||||||
Total liabilities | 1,291,905 | 1,974,282 | (35 | ) | 1,265,384 | 1,291,905 | 1,974,282 | (2 | ) | |||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||||||||
Share capital | 356 | 293 | 22 | 383 | 356 | 293 | 8 | |||||||||||||||||||||||||||||
Share premium | 34,786 | 25,250 | 38 | 34,393 | 34,824 | 25,288 | (1 | ) | ||||||||||||||||||||||||||||
Net income recognized directly in equity, net of tax | (4,875 | ) | (4,335 | ) | (12 | ) | ||||||||||||||||||||||||||||||
Revaluation reserve from step acquisitions, net of tax | 38 | 38 | 0 | |||||||||||||||||||||||||||||||||
Cumulative net income recognized directly in equity, net of tax | (6,534 | ) | (4,875 | ) | (4,335 | ) | (34 | ) | ||||||||||||||||||||||||||||
Retained earnings | 11,751 | 14,487 | (19 | ) | 19,285 | 11,751 | 14,487 | 64 | ||||||||||||||||||||||||||||
Equity classified as obligation to purchase own shares | (2 | ) | (46 | ) | 96 | (54 | ) | (2 | ) | (46 | ) | |||||||||||||||||||||||||
Treasury shares | (1,040 | ) | (3,156 | ) | 67 | (654 | ) | (1,040 | ) | (3,156 | ) | 37 | ||||||||||||||||||||||||
Equity attributable to UBS shareholders | 41,013 | 32,531 | 26 | 46,820 | 41,013 | 32,531 | 14 | |||||||||||||||||||||||||||||
Equity attributable to minority interests | 7,620 | 8,002 | (5 | ) | ||||||||||||||||||||||||||||||||
Equity attributable to non-controlling interests | 5,043 | 7,620 | 8,002 | (34 | ) | |||||||||||||||||||||||||||||||
Total equity | 48,633 | 40,533 | 20 | 51,863 | 48,633 | 40,533 | 7 | |||||||||||||||||||||||||||||
Total liabilities and equity | 1,340,538 | 2,014,815 | (33 | ) | 1,317,247 | 1,340,538 | 2,014,815 | (2 | ) |
257267
Financial information
Consolidated financial statements
Statement of changes in equity
Statement of changes in equity | ||||||||||||||||||||||||||||||||
Equity classified | ||||||||||||||||||||||||||||||||
as obligation | Equity classified | |||||||||||||||||||||||||||||||
Share | Share | Treasury | to purchase | as obligation to | ||||||||||||||||||||||||||||
CHF million | capital | premium | shares | own shares | Share capital | Share premium | Treasury shares | purchase own shares | ||||||||||||||||||||||||
Balance at 1 January 2007 | 211 | 12,640 | (10,214 | ) | (185 | ) | ||||||||||||||||||||||||||
Balance at 1 January 2008 | 207 | 12,471 | (10,363 | ) | (74 | ) | ||||||||||||||||||||||||||
Issuance of share capital | 86 | |||||||||||||||||||||||||||||||
Acquisition of treasury shares | (7,169 | ) | (367 | ) | ||||||||||||||||||||||||||||
Disposition of treasury shares | 4,605 | 7,574 | ||||||||||||||||||||||||||||||
Cancellation of second trading line treasury shares | (4 | ) | 2,415 | |||||||||||||||||||||||||||||
Net premium/(discount) on treasury share and own equity derivative activity | (560 | ) | ||||||||||||||||||||||||||||||
Premium on shares issued and warrants exercised | 12 | |||||||||||||||||||||||||||||||
Employee share and share option plans | 898 | |||||||||||||||||||||||||||||||
Tax benefits from deferred compensation awards | (557 | ) | ||||||||||||||||||||||||||||||
Dividends | ||||||||||||||||||||||||||||||||
Equity classified as obligation to purchase own shares – movements | 111 | |||||||||||||||||||||||||||||||
Preferred securities | ||||||||||||||||||||||||||||||||
New consolidations and other increases | ||||||||||||||||||||||||||||||||
Deconsolidations and other decreases | ||||||||||||||||||||||||||||||||
Total comprehensive income for the year recognized in equity | ||||||||||||||||||||||||||||||||
Balance at 31 December 2007 | 207 | 12,433 | (10,363 | ) | (74 | ) | ||||||||||||||||||||||||||
Issuance of share capital | 86 | |||||||||||||||||||||||||||||||
Acquisition of treasury shares | (367 | ) | ||||||||||||||||||||||||||||||
Disposition of treasury shares | 7,574 | |||||||||||||||||||||||||||||||
Net premium/(discount) on treasury share and own equity derivative activity | (4,626 | ) | ||||||||||||||||||||||||||||||
Net premium / (discount) on treasury share and own equity derivative activity | (4,626 | ) | ||||||||||||||||||||||||||||||
Premium on shares issued and warrants exercised | 20,003 | 20,003 | ||||||||||||||||||||||||||||||
Employee share and share option plans | (1,961 | ) | (1,961 | ) | ||||||||||||||||||||||||||||
Tax benefits from deferred compensation awards | (176 | ) | (176 | ) | ||||||||||||||||||||||||||||
Transaction costs related to share issuances, net of tax | (423 | ) | (423 | ) | ||||||||||||||||||||||||||||
Dividends | ||||||||||||||||||||||||||||||||
Equity classified as obligation to purchase own shares – movements | 28 | 28 | ||||||||||||||||||||||||||||||
Preferred securities | ||||||||||||||||||||||||||||||||
New consolidations and other increases | ||||||||||||||||||||||||||||||||
Deconsolidations and other decreases | ||||||||||||||||||||||||||||||||
Total comprehensive income for the year recognized in equity | ||||||||||||||||||||||||||||||||
Balance at 31 December 2008 | 293 | 25,250 | (3,156 | ) | (46 | ) | 293 | 25,288 | (3,156 | ) | (46 | ) | ||||||||||||||||||||
Issuance of share capital | 63 | 63 | ||||||||||||||||||||||||||||||
Acquisition of treasury shares | (476 | ) | (476 | ) | ||||||||||||||||||||||||||||
Disposition of treasury shares | 2,592 | 2,592 | ||||||||||||||||||||||||||||||
Net premium/(discount) on treasury share and own equity derivative activity | (1,268 | ) | ||||||||||||||||||||||||||||||
Net premium / (discount) on treasury share and own equity derivative activity | (1,268 | ) | ||||||||||||||||||||||||||||||
Premium on shares issued and warrants exercised | 10,599 | 10,599 | ||||||||||||||||||||||||||||||
Employee share and share option plans | 291 | 291 | ||||||||||||||||||||||||||||||
Tax benefits from deferred compensation awards | 1 | 1 | ||||||||||||||||||||||||||||||
Transaction costs related to share issuances, net of tax | (87 | ) | (87 | ) | ||||||||||||||||||||||||||||
Dividends1 | ||||||||||||||||||||||||||||||||
Equity classified as obligation to purchase own shares – movements | 44 | 44 | ||||||||||||||||||||||||||||||
Preferred securities | ||||||||||||||||||||||||||||||||
New consolidations and other increases | ||||||||||||||||||||||||||||||||
Deconsolidations and other decreases | ||||||||||||||||||||||||||||||||
Total comprehensive income for the year recognized in equity | ||||||||||||||||||||||||||||||||
Balance at 31 December 2009 | 356 | 34,786 | (1,040 | ) | (2 | ) | 356 | 34,824 | (1,040 | ) | (2 | ) | ||||||||||||||||||||
Issuance of share capital | 27 | |||||||||||||||||||||||||||||||
Acquisition of treasury shares | (1,574 | ) | ||||||||||||||||||||||||||||||
Disposition of treasury shares | 1,960 | |||||||||||||||||||||||||||||||
Net premium / (discount) on treasury share and own equity derivative activity | (43 | ) | ||||||||||||||||||||||||||||||
Premium on shares issued and warrants exercised | (27 | ) | ||||||||||||||||||||||||||||||
Employee share and share option plans | (104 | ) | ||||||||||||||||||||||||||||||
Tax benefits from deferred compensation awards | (8 | ) | ||||||||||||||||||||||||||||||
Transaction costs related to share issuances, net of tax | (113 | ) | ||||||||||||||||||||||||||||||
Dividends1 | ||||||||||||||||||||||||||||||||
Equity classified as obligation to purchase own shares – movements | (52 | ) | ||||||||||||||||||||||||||||||
Preferred securities | ||||||||||||||||||||||||||||||||
New consolidations and other increases | (136 | ) | ||||||||||||||||||||||||||||||
Deconsolidations and other decreases | ||||||||||||||||||||||||||||||||
Total comprehensive income for the year recognized in equity | ||||||||||||||||||||||||||||||||
Balance at 31 December 2010 | 383 | 34,393 | (654 | ) | (54 | ) | ||||||||||||||||||||||||||
258268
Financial | Revaluation | Total equity | ||||||||||||||||||||||||||||||
investments | reserve | attributable | ||||||||||||||||||||||||||||||
Retained | Foreign currency | available- | Cash flow | from step | to UBS | Minority | ||||||||||||||||||||||||||
earnings | translation | for-sale | hedges | acquisitions | shareholders | interests | Total equity | |||||||||||||||||||||||||
47,728 | (1,614 | ) | 2,876 | (443 | ) | 38 | 51,037 | 6,089 | 57,126 | |||||||||||||||||||||||
0 | 0 | |||||||||||||||||||||||||||||||
(7,169 | ) | (7,169 | ) | |||||||||||||||||||||||||||||
4,605 | 4,605 | |||||||||||||||||||||||||||||||
(2,411 | ) | 0 | 0 | |||||||||||||||||||||||||||||
(560 | ) | (560 | ) | |||||||||||||||||||||||||||||
12 | 12 | |||||||||||||||||||||||||||||||
898 | 898 | |||||||||||||||||||||||||||||||
(557 | ) | (557 | ) | |||||||||||||||||||||||||||||
(4,275 | ) | (4,275 | ) | (400 | ) | (4,675 | ) | |||||||||||||||||||||||||
111 | 111 | |||||||||||||||||||||||||||||||
0 | 996 | 996 | ||||||||||||||||||||||||||||||
0 | 101 | 101 | ||||||||||||||||||||||||||||||
0 | (104 | ) | (104 | ) | ||||||||||||||||||||||||||||
(5,247 | ) | (986 | ) | (1,405 | ) | 411 | (7,227 | ) | 269 | (6,958 | ) | |||||||||||||||||||||
35,795 | (2,600 | ) | 1,471 | (32 | ) | 38 | 36,875 | 6,951 | 43,826 | |||||||||||||||||||||||
86 | 86 | |||||||||||||||||||||||||||||||
(367 | ) | (367 | ) | |||||||||||||||||||||||||||||
7,574 | 7,574 | |||||||||||||||||||||||||||||||
(4,626 | ) | (4,626 | ) | |||||||||||||||||||||||||||||
20,003 | 20,003 | |||||||||||||||||||||||||||||||
(1,961 | ) | (1,961 | ) | |||||||||||||||||||||||||||||
(176 | ) | (176 | ) | |||||||||||||||||||||||||||||
(423 | ) | (423 | ) | |||||||||||||||||||||||||||||
(16 | ) | (16 | ) | (361 | ) | (377 | ) | |||||||||||||||||||||||||
28 | 28 | |||||||||||||||||||||||||||||||
0 | 1,618 | 1,618 | ||||||||||||||||||||||||||||||
0 | 12 | 12 | ||||||||||||||||||||||||||||||
0 | (141 | ) | (141 | ) | ||||||||||||||||||||||||||||
(21,292 | ) | (3,709 | ) | (1,124 | ) | 1,659 | (24,465 | ) | (77 | ) | (24,542 | ) | ||||||||||||||||||||
14,487 | (6,309 | ) | 347 | 1,627 | 38 | 32,531 | 8,002 | 40,533 | ||||||||||||||||||||||||
63 | 63 | |||||||||||||||||||||||||||||||
(476 | ) | (476 | ) | |||||||||||||||||||||||||||||
2,592 | 2,592 | |||||||||||||||||||||||||||||||
(1,268 | ) | (1,268 | ) | |||||||||||||||||||||||||||||
10,599 | 10,599 | |||||||||||||||||||||||||||||||
291 | 291 | |||||||||||||||||||||||||||||||
1 | 1 | |||||||||||||||||||||||||||||||
(87 | ) | (87 | ) | |||||||||||||||||||||||||||||
0 | (849 | ) | (849 | ) | ||||||||||||||||||||||||||||
44 | 44 | |||||||||||||||||||||||||||||||
0 | (7 | ) | (7 | ) | ||||||||||||||||||||||||||||
0 | 3 | 3 | ||||||||||||||||||||||||||||||
0 | (13 | ) | (13 | ) | ||||||||||||||||||||||||||||
(2,736 | ) | (136 | ) | 17 | (421 | ) | (3,276 | ) | 484 | (2,792 | ) | |||||||||||||||||||||
11,751 | (6,445 | ) | 364 | 1,206 | 38 | 41,013 | 7,620 | 48,633 | ||||||||||||||||||||||||
Financial information |
259
Total equity | ||||||||||||||||||||||||||||
Foreign currency | Financial investments | Cash flow | attributable to | Non-controlling | ||||||||||||||||||||||||
Retained earnings | translation | available-for-sale | hedges | UBS shareholders | interests | Total equity | ||||||||||||||||||||||
35,795 | (2,600 | ) | 1,471 | (32 | ) | 36,875 | 6,951 | 43,826 | ||||||||||||||||||||
86 | 86 | |||||||||||||||||||||||||||
(367 | ) | (367 | ) | |||||||||||||||||||||||||
7,574 | 7,574 | |||||||||||||||||||||||||||
(4,626 | ) | (4,626 | ) | |||||||||||||||||||||||||
20,003 | 20,003 | |||||||||||||||||||||||||||
(1,961 | ) | (1,961 | ) | |||||||||||||||||||||||||
(176 | ) | (176 | ) | |||||||||||||||||||||||||
(423 | ) | (423 | ) | |||||||||||||||||||||||||
(16 | ) | (16 | ) | (361 | ) | (377 | ) | |||||||||||||||||||||
28 | 28 | |||||||||||||||||||||||||||
0 | 1,618 | 1,618 | ||||||||||||||||||||||||||
0 | 12 | 12 | ||||||||||||||||||||||||||
0 | (141 | ) | (141 | ) | ||||||||||||||||||||||||
(21,292 | ) | (3,709 | ) | (1,124 | ) | 1,659 | (24,465 | ) | (77 | ) | (24,542 | ) | ||||||||||||||||
14,487 | (6,309 | ) | 347 | 1,627 | 32,531 | 8,002 | 40,533 | |||||||||||||||||||||
63 | 63 | |||||||||||||||||||||||||||
(476 | ) | (476 | ) | |||||||||||||||||||||||||
2,592 | 2,592 | |||||||||||||||||||||||||||
(1,268 | ) | (1,268 | ) | |||||||||||||||||||||||||
10,599 | 10,599 | |||||||||||||||||||||||||||
291 | 291 | |||||||||||||||||||||||||||
1 | 1 | |||||||||||||||||||||||||||
(87 | ) | (87 | ) | |||||||||||||||||||||||||
0 | (849 | ) | (849 | ) | ||||||||||||||||||||||||
44 | 44 | |||||||||||||||||||||||||||
0 | (7 | ) | (7 | ) | ||||||||||||||||||||||||
0 | 3 | 3 | ||||||||||||||||||||||||||
0 | (13 | ) | (13 | ) | ||||||||||||||||||||||||
(2,736 | ) | (136 | ) | 17 | (421 | ) | (3,276 | ) | 484 | (2,792 | ) | |||||||||||||||||
11,751 | (6,445 | ) | 364 | 1,206 | 41,013 | 7,620 | 48,633 | |||||||||||||||||||||
27 | 27 | |||||||||||||||||||||||||||
(1,574 | ) | (1,574 | ) | |||||||||||||||||||||||||
1,960 | 1,960 | |||||||||||||||||||||||||||
(43 | ) | (43 | ) | |||||||||||||||||||||||||
(27 | ) | (27 | ) | |||||||||||||||||||||||||
(104 | ) | (104 | ) | |||||||||||||||||||||||||
(8 | ) | (8 | ) | |||||||||||||||||||||||||
(113 | ) | (113 | ) | |||||||||||||||||||||||||
0 | (305 | ) | (305 | ) | ||||||||||||||||||||||||
(52 | ) | (52 | ) | |||||||||||||||||||||||||
0 | (1,529 | ) | (1,529 | ) | ||||||||||||||||||||||||
(136 | ) | 6 | (130 | ) | ||||||||||||||||||||||||
0 | (264 | ) | (264 | ) | ||||||||||||||||||||||||
7,534 | (909 | ) | (607 | ) | (143 | ) | 5,875 | (484 | ) | 5,391 | ||||||||||||||||||
19,285 | (7,354 | ) | (243 | ) | 1,063 | 46,820 | 5,043 | 51,863 | ||||||||||||||||||||
269
Financial information
Consolidated financial statements
Statement of changes in equity (continued)
Statement of changes in equity (continued) | ||||||||||||||||||||||||
Preferred securities1 | Preferred securities1 | Preferred securities1 | ||||||||||||||||||||||
For the year ended | For the year ended | |||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.10 | 31.12.09 | 31.12.08 | ||||||||||||||||||
Balance at the beginning of the year | 7,381 | 6,381 | 5,633 | 7,254 | 7,381 | 6,381 | ||||||||||||||||||
Issuances | 1,618 | 996 | 1,618 | |||||||||||||||||||||
Redemptions | (7 | ) | (1,529 | ) | (7 | ) | ||||||||||||||||||
Foreign currency translation | (120 | ) | (618 | ) | (248 | ) | (818 | ) | (120 | ) | (618 | ) | ||||||||||||
Balance at the end of the year | 7,254 | 7,381 | 6,381 | 4,907 | 7,254 | 7,381 |
For the year ended | % change from | For the year ended | % change from | |||||||||||||||||||||||||||||
Number of shares | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.08 | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | ||||||||||||||||||||||||
Shares issued | ||||||||||||||||||||||||||||||||
Balance at the beginning of the year | 2,932,580,549 | 2,073,547,344 | 2,105,273,286 | 41 | 3,558,112,753 | 2,932,580,549 | 2,073,547,344 | 21 | ||||||||||||||||||||||||
Issuance of share capital | 625,532,204 | 859,033,205 | 1,294,058 | (27 | ) | |||||||||||||||||||||||||||
Cancellation of second trading line treasury shares | (33,020,000 | ) | ||||||||||||||||||||||||||||||
Issuance of shares | 272,727,760 | 625,532,204 | 859,033,205 | (56 | ) | |||||||||||||||||||||||||||
Balance at the end of the year | 3,558,112,753 | 2,932,580,549 | 2,073,547,344 | 21 | 3,830,840,513 | 3,558,112,753 | 2,932,580,549 | 8 | ||||||||||||||||||||||||
Treasury shares | ||||||||||||||||||||||||||||||||
Balance at the beginning of the year | 61,903,121 | 158,105,524 | 164,475,699 | (61 | ) | 37,553,872 | 61,903,121 | 158,105,524 | (39 | ) | ||||||||||||||||||||||
Acquisitions | 33,566,097 | 13,398,118 | 102,074,942 | 151 | 105,824,816 | 33,566,097 | 13,398,118 | 215 | ||||||||||||||||||||||||
Disposals | (57,915,346 | ) | (109,600,521 | ) | (75,425,117 | ) | 47 | (104,486,657 | ) | (57,915,346 | ) | (109,600,521 | ) | (80 | ) | |||||||||||||||||
Cancellation of second trading line treasury shares | (33,020,000 | ) | ||||||||||||||||||||||||||||||
Balance at the end of the year | 37,553,872 | 61,903,121 | 158,105,524 | (39 | ) | 38,892,031 | 37,553,872 | 61,903,121 | 4 |
Shares issued
On 25 June 2009, UBS increased its share capital by issuing 293,258,050 new registered shares. The shares were placed with a small number of large institutional investors. The shares were issued out of authorized capital which had been approved at5 March 2010, the Annual General Meeting of shareholders (AGM) on 15 April 2009.
Conditional share capital
On 31 December 2009, a maximum of 29,3502010, 149,920,712 shares could have been issued against the future exercise of options from former PaineWebber employee option plans and 149,994,296 shares could have been issuedwere available for issue to fund UBS’s employee share option programs. In addition, conditional capital of up to 277,750,000100,000,000 shares was available for the UBS share delivery obligation due to the issuance of the March 2008 mandatory convertible notes (MCNs) and conditional capital of up to 100,000,000 shares is available in connection with the transaction with the Swiss National Bank (SNB). transaction. Furthermore, on 14 April 2010 the Annual General Meeting of UBS AG approved the creation of conditional capital up to a maximum amount of 380,000,000 shares for conversion rights/warrants granted in connection with the issuance of bonds or similar financial instruments. These sharespositions are shown as conditional share capital in the UBS AG (Parent Bank) disclosure.
260270
Financial information |
Statement of cash flows
Statement of cash flows | ||||||||||||
For the year ended | ||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | |||||||||
Cash flow from/(used in) operating activities | ||||||||||||
Net profit | (2,125 | ) | (20,724 | ) | (4,708 | ) | ||||||
Adjustments to reconcile net profit to cash flow from/(used in) operating activities | ||||||||||||
Non-cash items included in net profit and other adjustments: | ||||||||||||
Depredation of property and equipment | 1,048 | 1,241 | 1,253 | |||||||||
Impairment of goodwill/amortization of intangible assets | 1,323 | 554 | 282 | |||||||||
Credit loss expense/(recovery) | 1,832 | 2,996 | 238 | |||||||||
Share of net profits of associates | (37 | ) | 6 | (120 | ) | |||||||
Deferred tax expense/(benefit) | (960 | ) | (7,020 | ) | (371 | ) | ||||||
Net loss/(gain) from investing activities | 425 | (797 | ) | (4,085 | ) | |||||||
Net loss/(gain) from financing activities | 8,355 | (47,906 | ) | 3,779 | ||||||||
Net (increase)/decrease in operating assets: | ||||||||||||
Net due from/to banks | (57,328 | ) | (16,561 | ) | (60,762 | ) | ||||||
Reverse repurchase agreements and cash collateral on securities borrowed | 162,822 | 236,497 | 173,433 | |||||||||
Trading portfolio, net replacement values and financial assets designated at fair value | 11,118 | 350,099 | 60,729 | |||||||||
Loans/due to customers | (23,705 | ) | (183,476 | ) | 36,168 | |||||||
Accrued income, prepaid expenses and other assets | 2,214 | 7,512 | (2,408 | ) | ||||||||
Net increase/(decrease) in operating liabilities: | ||||||||||||
Repurchase agreements, cash collateral on securities lent | (41,351 | ) | (220,935 | ) | (271,060 | ) | ||||||
Accrued expenses, deferred income and other liabilities | (8,629 | ) | (23,592 | ) | 19,217 | |||||||
Income taxes paid | (505 | ) | (887 | ) | (3,663 | ) | ||||||
Net cash flow from/fused in) operating activities | 54,497 | 77,007 | (52,078 | ) | ||||||||
Cash flow from/(used in) investing activities | ||||||||||||
Purchase of subsidiaries and associates | (42 | ) | (1,502 | ) | (2,337 | ) | ||||||
Disposal of subsidiaries and associates | 296 | 1,686 | 885 | |||||||||
Purchase of property and equipment | (854 | ) | (1,217 | ) | (1,910 | ) | ||||||
Disposal of property and equipment | 163 | 69 | 134 | |||||||||
Net (investment in)/divestment of financial investments available-for-sale | (20,127 | ) | (712 | ) | 5,981 | |||||||
Net cash flow from/(used in) investing activities | (20,563 | ) | (1,676 | ) | 2,753 | |||||||
Cash flow from/(used in) financing activities | ||||||||||||
Net money market papers issued/(repaid) | (60,040 | ) | (40,637 | ) | 32,672 | |||||||
Net movements in treasury shares and own equity derivative activity | 673 | 623 | (2,771 | ) | ||||||||
Capital issuance | 3,726 | 23,135 | 0 | |||||||||
Dividends paid | 0 | 0 | (4,275 | ) | ||||||||
Issuance of long-term debt, including financial liabilities designated at fair value | 67,062 | 103,087 | 110,874 | |||||||||
Repayment of long-term debt, including financial liabilities designated at fair value | (65,024 | ) | (92,894 | ) | (62,407 | ) | ||||||
Increase in minority interests1 | 3 | 1,661 | 1,094 | |||||||||
Dividends paid to/decrease in minority interests | (583 | ) | (532 | ) | (619 | ) | ||||||
Net cash flow from/(used in) financing activities | (54,183 | ) | (5,557 | ) | 74,568 | |||||||
Effects of exchange rate differences | 5,529 | (39,186 | ) | (12,228 | ) | |||||||
Net increase/(decrease) in cash and cash equivalents | (14,721 | ) | 30,588 | 13,015 | ||||||||
Cash and cash equivalents at the beginning of the year | 179,693 | 149,105 | 136,090 | |||||||||
Cash and cash equivalents at the end of the year | 164,973 | 179,693 | 149,105 | |||||||||
Cash and cash equivalents comprise: | ||||||||||||
Cash and balances with central banks | 20,899 | 32,744 | 18,793 | |||||||||
Money market papers2 | 98,432 | 86,732 | 77,215 | |||||||||
Due from banks with original maturity of less than three months | 45,642 | 60,217 | 53,097 | |||||||||
Total | 164,973 | 179,693 | 149,105 | |||||||||
For the year ended | ||||||||||||
CHF million | 31.12.10 | 31.12.09 | 31.12.08 | |||||||||
Cash flow from / (used in) operating activities | ||||||||||||
Net profit | 7,838 | (2,125 | ) | (20,724 | ) | |||||||
Adjustments to reconcile net profit to cash flow from / (used in) operating activities | ||||||||||||
Non-cash items included in net profit and other adjustments: | ||||||||||||
Depreciation of property and equipment | 918 | 1,048 | 1,241 | |||||||||
Impairment of goodwill / amortization of intangible assets | 117 | 1,323 | 554 | |||||||||
Credit loss expense / (recovery) | 66 | 1,832 | 2,996 | |||||||||
Share of net profits of associates | (81 | ) | (37 | ) | 6 | |||||||
Deferred tax expense / (benefit) | (605 | ) | (960 | ) | (7,020 | ) | ||||||
Net loss / (gain) from investing activities | (531 | ) | 425 | (797 | ) | |||||||
Net loss / (gain) from financing activities | 1,125 | 8,355 | (47,906 | ) | ||||||||
Net (increase) / decrease in operating assets: | ||||||||||||
Net due from / to banks | 9,022 | (41,766 | ) | (41,589 | ) | |||||||
Reverse repurchase agreements and cash collateral on securities borrowed | (25,048 | ) | 162,822 | 236,497 | ||||||||
Trading portfolio, net replacement values and financial assets designated at fair value | 21,212 | 11,118 | 350,099 | |||||||||
Loans / due to customers | (3,429 | ) | (316 | ) | (156,486 | ) | ||||||
Accrued income, prepaid expenses and other assets | 608 | (4,208 | ) | 31,871 | ||||||||
Net increase / (decrease) in operating liabilities: | ||||||||||||
Repurchase agreements, cash collateral on securities lent | 9,277 | (41,351 | ) | (220,935 | ) | |||||||
Net cash collateral on derivative instruments | (988 | ) | (11,916 | ) | 6,316 | |||||||
Accrued expenses, deferred income and other liabilities | (7,039 | ) | (29,242 | ) | (56,232 | ) | ||||||
Income taxes paid, net of refunds | (498 | ) | (505 | ) | (887 | ) | ||||||
Net cash flow from / (used in) operating activities | 11,963 | 54,497 | 77,007 | |||||||||
Cash flow from / (used in) investing activities | ||||||||||||
Purchase of subsidiaries and associates | (75 | ) | (42 | ) | (1,502 | ) | ||||||
Disposal of subsidiaries and associates | 307 | 296 | 1,686 | |||||||||
Purchase of property and equipment | (541 | ) | (854 | ) | (1,217 | ) | ||||||
Disposal of property and equipment | 242 | 163 | 69 | |||||||||
Net (investment in) / divestment of financial investments available-for-sale | (25,631 | ) | (20,127 | ) | (712 | ) | ||||||
Net cash flow from / (used in) investing activities | (25,698 | ) | (20,563 | ) | (1,676 | ) | ||||||
Cash flow from / (used in) financing activities | ||||||||||||
Net money market papers issued / (repaid) | 4,459 | (60,040 | ) | (40,637 | ) | |||||||
Net movements in treasury shares and own equity derivative activity | (1,456 | ) | 673 | 623 | ||||||||
Capital issuance | (113 | ) | 3,726 | 23,135 | ||||||||
Issuance of long-term debt, including financial liabilities designated at fair value | 78,418 | 67,062 | 103,087 | |||||||||
Repayment of long-term debt, including financial liabilities designated at fair value | (77,497 | ) | (65,024 | ) | (92,894 | ) | ||||||
Increase in non-controlling interests1 | 6 | 3 | 1,661 | |||||||||
Dividends paid to / decrease in non-controlling interests | (2,053 | ) | (583 | ) | (532 | ) | ||||||
Net cash flow from / (used in) financing activities | 1,764 | (54,183 | ) | (5,557 | ) | |||||||
Effects of exchange rate differences | (12,181 | ) | 5,529 | (39,186 | ) | |||||||
Net increase / (decrease) in cash and cash equivalents | (24,151 | ) | (14,721 | ) | 30,588 | |||||||
Cash and cash equivalents at the beginning of the year | 164,973 | 179,693 | 149,105 | |||||||||
Cash and cash equivalents at the end of the year | 140,822 | 164,973 | 179,693 | |||||||||
Cash and cash equivalents comprise: | ||||||||||||
Cash and balances with central banks | 26,939 | 20,899 | 32,744 | |||||||||
Money market papers2 | 77,998 | 98,432 | 86,732 | |||||||||
Due from banks with original maturity of less than three months3 | 35,885 | 45,642 | 60,217 | |||||||||
Total | 140,822 | 164,973 | 179,693 | |||||||||
261271
Financial information
Consolidated financial statements
Statement of cash flows (continued)
Statement of cash flows (continued) | ||||||||||||
For the year ended | ||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | |||||||||
Additional information | ||||||||||||
Cash received as interest | 23,844 | 68,232 | 103,828 | |||||||||
Cash paid as interest | 19,597 | 62,284 | 97,489 | |||||||||
Cash received as dividends on equities (incl. associates) | 1,090 | 2,779 | 5,313 | |||||||||
Significant non-cash investing and financing activities | ||||||||||||
For the year ended | ||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | |||||||||
Deconsolidation of UBS Pactual | ||||||||||||
Financial investments available -for-sale | 14 | |||||||||||
Property and equipment | 31 | |||||||||||
Goodwill and intangible assets | 731 | |||||||||||
Debt issued | 1,393 | |||||||||||
Deconsolidation of private equity investments | ||||||||||||
Property and equipment | 33 | 24 | ||||||||||
Goodwill and intangible assets | 22 | |||||||||||
Acquisition of Caisse Centrale de Réescompte Group (CCR) | ||||||||||||
Property and equipment | 5 | |||||||||||
Goodwill and intangible assets | 405 | |||||||||||
Debt issued | 114 | |||||||||||
Acquisition of VermogensGroep | ||||||||||||
Property and equipment | 2 | |||||||||||
Goodwill and intangible assets | 173 | |||||||||||
Acquisition of McDonald Investments branch network | ||||||||||||
Property and equipment | 3 | |||||||||||
Goodwill and intangible assets | 262 | |||||||||||
Acquisition of Daehan Investment Trust Management Company | ||||||||||||
Property and equipment | 2 | |||||||||||
Goodwill and intangible assets | 224 | |||||||||||
Minority interests | 60 | |||||||||||
For the year ended | ||||||||||||
CHF million | 31.12.10 | 31.12.09 | 31.12.08 | |||||||||
Additional information | ||||||||||||
Cash received as interest | 17,344 | 23,844 | 68,232 | |||||||||
Cash paid as interest | 12,606 | 19,597 | 62,284 | |||||||||
Cash received as dividends on equities (incl. associates) | 1,395 | 1,090 | 2,779 | |||||||||
262Significant non-cash investing and financing activities
There were no significant items in 2010.
For the year ended | ||||||||
CHF million | 31.12.09 | 31.12.08 | ||||||
Deconsolidation of UBS Pactual | ||||||||
Financial investments available-for-sale | 14 | |||||||
Property and equipment | 31 | |||||||
Goodwill and intangible assets | 731 | |||||||
Debt issued | 1,393 | |||||||
Deconsolidation of private equity investments | ||||||||
Property and equipment | 33 | |||||||
Goodwill and intangible assets | 22 | |||||||
Acquisition of Caisse Centrale de Réescompte Group (CCR) | ||||||||
Property and equipment | 5 | |||||||
Goodwill and intangible assets | 405 | |||||||
Debt issued | 114 | |||||||
Acquisition of VermogensGroep | ||||||||
Property and equipment | 2 | |||||||
Goodwill and intangible assets | 173 | |||||||
272
Financial information |
Financial information
Notes to the consolidated financial statements
Notes to the consolidated financial statements
Note 1 Summary of significant accounting policies
a) Significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
1) Basis of accounting
2) Use of estimates in the preparation of the Financial Statements
3) Subsidiaries
operating policiespolicies. This is generally accompanyingaccompanied by a shareholding of more than one-half of the voting rights. Subsidiaries, including special purpose entities,SPEs that are directly or indirectly controlled by the Group, are consolidated from the date on which control is transferred to the Group. Subsidiaries to be divested are consolidated up to the date of disposal (i.e. loss of control).
Equity attributable to non-controlling interests (formerly minority interestsinterests) is presented inon the consolidated balance sheet within equity, separatelyand is separate from equity attributable to UBS shareholders.Net profit attributable to minoritynon-controlling interestsis shown separately in the income statement.
– | the activities of the SPE are being conducted on behalf of UBS according to its specific business needs so that UBS obtains benefits from the SPE’s operations; |
263
Financial informationNotes to the consolidated financial statements
– | UBS has the decision-making powers to obtain the majority of the benefits of the activities of the SPE or, by setting up an “autopilot” mechanism, UBS has delegated these | |
– | UBS has rights to obtain the majority of the benefits of the SPE and therefore may be exposed to risks | |
– | UBS retains the majority of the residual or ownership risks related to the SPE or its assets in order to obtain benefits from its activities. |
SPEs that are used to allow clients to hold investmentsare structures that allow one or more clients to invest in specific risk and reward profiles or assets. Typically, UBS will receive service and commission fees for the creation of the SPE, or because UBS acts as investment manager, custodian or in some other function. Some of these SPEs are single-investor or family trusts while others allow a large number of investors to invest in a diversified asset base through a single share, note or certificate. The majority of UBS’s SPEs are created for client investment purposes and are not consolidated. However, UBS consolidates SPEs in certain cases, in which UBS absorbs the majority of the risks and rewards or has unilateral liquidation rights.
273
Financial information
Notes to the consolidated financial statements
Note 1 Summary of significant accounting policies (continued)
UBS does not consolidate SPEs for securitization if it has no control over the assets and if it no longer retains any significant exposure (for gain or loss) to the income or investment returns on the assets sold to the SPE or the proceeds of their liquidation. This type of SPE is known as a bankruptcy-remote entity: if UBS were to go bankrupt, the holders of the securities would clearly be owners of the asset, while if the SPE were to go bankrupt, the securities holders would have no recourse against UBS.
in the fair value of the contingent consideration which is deemed to be an asset or liability will be recognized either in profit or loss. If the contingent consideration is classified as equity, it is not remeasured until it is finally settled within equity.
– | Transaction costs directly attributable to the acquisition formed part of the acquisition costs. | |
– | The non-controlling interest was measured as a proportion of the acquiree’s identifiable net assets. | |
– | Contingent consideration was recognized if, and only if, UBS had a present obligation, economic outflow was likely and a reliable estimate was determinable. Subsequent adjustments to the contingent consideration were recognized as part of goodwill. |
Assets and liabilities of subsidiaries are classified as “held for sale” if their carrying amount will be recovered principally through a sale transaction rather than through continuing use - -– see partsitems 19) and 28). Major lines of business and subsidiaries that were acquired exclusively withfor the intent forpurpose of resale are presented as discontinued operationsoperations. This information is presented in the statement of comprehensive income infor the period when the sale occurred oroccurred. It may also be presented when it becomes highly probable that a sale will occur within 12 months – see partitem 28).
4) Associates and jointly controlled entities
274
Financial information |
Note 1 Summary of significant accounting policies (continued)
Investments in associates and interests in jointly controlled entities are classified as “held for sale” if their carrying amount will be recovered principally through a sale transaction rather than through continuing use – see partsitems 19) and 28).
5) Recognition and derecognition of financial instruments
Financial assets
Financial liabilities
264
tions. These assets and income arising therefrom are excluded from UBS’s financial statements, as they are not assets of UBS, provided the recognition criteria are not satisfied.
6) Determination of fair value
7) Trading portfolio assets and liabilities
transaction is consummated (settlement date), a resulting financial asset is recognized on the balance sheet at the fair value of the consideration given or received plus or minus the change in fair value of the contract since the trade date. When the Group becomes party to a sales contract of
275
Financial information
Notes to the consolidated financial statements
Note 1 Summary of significant accounting policies (continued)
a financial asset classified in its trading portfolio, unrealized profits and losses are no longer recognized from the date the sales transaction is entered into (trade date) and it derecognizes the asset on the day of its transfer (settlement date).
8) Financial assets and Financial liabilities designated at fair value through profit or loss (“Fair Value Option”)
a) | they are hybrid instruments which consist of a debt host and an embedded derivative component, or | |
b) | they are items that are part of a portfolio which is risk managed on a fair value basis and reported to senior management on that basis, or | |
c) | the application of the fair value option reduces or eliminates an accounting mismatch that would otherwise arise. |
265
Financial informationNotes to the consolidated financial statements
– | Credit-linked:bonds, notes linked to the performance (coupon |
– | Equity-linked:bonds, notes that are linked to a single stock, a basket of stocks or an equity index. |
– | Rates-linked:bonds, notes linked to a reference interest rate, interest rate spread or formula. |
Besides hybrid instruments, the fair value option is also applied to certain loans and loan commitments which are substantially hedged with credit derivatives. The application of the fair value option to these instruments reduces an accounting mismatch, as loans would have been otherwise accounted for at amortized cost or as financial investments available-for-sale (refer to partitem 9)), whereas the hedging credit protection is accounted for as a derivative instrument at fair value through profit or loss.
bilities designated at fair value through profit or loss are included inInterest income on financial assets designated at fair valueorInterest on financial liabilities designated at fair value.value. Refer to Note 3.
9) Financial investments available-for-sale
276
Financial information |
Note 1 Summary of significant accounting policies (continued)
cant financial difficulty of the issuer or counterparty, default or delinquency in interest or principal payments or probability that the borrower will enter bankruptcy or financial re-organization. If a financial investment available-for-sale is determined to be impaired, the related cumulative net unrealized loss previously recognized inEquityis included inNet profitfor the periodand reported as a deduction fromOther income. To the extent impairments of financial investments available-for-sale are covered by fair value decreases of the current year-to-date period, impairments areincome. Any further loss is directly recognized in the income statement. To the extent impairments relate to fair value decreases of previous periods, amounts are released from other comprehensive income to the income statement and separately presented in the statement of comprehensive income.
10) Loans and receivablesFor an overview of financial assets and financial liabilities accounted for as,refer to the measurement categories presented in Note 29.
266
– | originated loans where money is provided directly to the borrower, participation in a loan from another lender and purchased loans (certain purchased non-performing loans are also classified as financial investment available-for-sale at inception) initially classified as | |
– | securities initially classified as | |
– | reclassified | |
For an overview of financial assets and financial liabilities accounted for as “Loans and receivables”, refer to the measurement categories presented in Note 29.
Renegotiated loans
mentsarrangements and agreeing to new loan conditions. Once the terms have been renegotiated, any impairment is measured using the effective interest rate (EIR)EIR as calculated before the modification of terms and the loan is not considered as past due. Management continuously reviews renegotiated loans to ensure that all criteria are met and that future payments are likely to occur. The loans continue to be subject to impairment assessment, calculated using the loan’s original EIR. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current EIR.
Commitments
11) Allowance and provision for credit losses
277
Financial information
Notes to the consolidated financial statements
Note 1 Summary of significant accounting policies (continued)
267
Financial informationNotes to the consolidated financial statements
future cash flows, including amounts that may result from restructuring or the liquidation of collateral. Impairment is measured and allowances for credit losses are established for the difference between the carrying amount and the estimated recoverable amount.
commenced against the firm, or obligations have been restructured on concessionary terms.
future cash receipts as a result of increased recoverability are recognized as an adjustment to the effective interest rateEIR on the loan from the date of change.
12) Securitization structures set up by UBS
278
Financial information |
Note 1 Summary of significant accounting policies (continued)
are primarily recorded inTrading portfolio assetsand carried at fair value. Gains or losses on securitization are recognized inNet trading income,which is generally when the derecognition criteria are satisfied. Typically, the Group seeks to exit its risk in retained interests shortly after close of the securitization. Synthetic securitization structures typically involve derivative financial instruments for which the principles set out in partitem 15) apply.
13) Securities borrowing and lending
268
derunder standard agreements employed by financial market participants and are undertaken with counterparties subject to UBS’s normal credit risk control processes. UBS monitors the market value of the securities received or delivered on a daily basis and requests or provides additional collateral or returns or recalls surplus collateral in accordance with the underlying agreements.
14) Repurchase and reverse repurchase transactions
mentsagreements are not recognized on or derecognized from the balance sheet, unless the risks and rewards of ownership are obtained or relinquished. In repurchase agreements where UBS transfers owned securities and where the recipient is granted the right to resell or repledge them, the securities are reclassified in the balance sheet fromTrading portfolioassetstoTrading portfolio assets pledged as collateral.collateral. Securities received in a reverse repurchase agreement are disclosed as off-balance sheet items if UBS has the right to resell or repledge them, with securities that UBS has actually resold or repledged also disclosed separately (see Note 24). Additionally, the sale of securities received in reverse repurchase transactions triggers the recognition of a trading liability (short sale).
15) Derivative instruments and hedge accounting
279
Financial information
Notes to the derivative is consolidated financial statements
Note 1 Summary of significant accounting policies (continued)
designated and effective as a hedging instrument, in which eventinstruments. If designated as hedging instruments, the timingmethod of the recognition in profitrecognizing gains or losslosses depends on the nature of the hedge relationship.risk being hedged.
Hedge accounting
269
Financial informationNotes to the consolidated financial statements
to interest rate, foreign currency and credit risks, including exposures arising from forecast transactions. The Group applies eitherIf derivative and non-derivative instruments meet certain criteria specified below, they are designated as hedging instruments in hedges of the change in fair value of recognized assets or liabilities (‘fair value hedges’); hedges of the variability in future cash flows attributable to a recognized asset or liability, or a highly probable forecast transaction (‘cash flow hedge accounting when transactions meet the specified criteria to obtain hedge accounting treatment.hedges’); or hedges of a net investment in a foreign operation (‘net investment hedges’).
discontinues hedge accounting when it determines that a derivativehedging instrument is not, or has ceased to be, highly effective as a hedge; when the derivative expires or is sold, terminated or exercised; when the hedged item matures, is sold or repaid; or when a forecast transaction is no longer deemed highly probable.
Fair value hedges
value adjustment”) is in the case of interest-bearing instruments, amortized to the income statement over the remaining term of the original hedge, while for non-interest-bearing instruments that amount is immediately recognized in earnings.until maturity. If the hedged item isinterest-bearing instruments are derecognized, e.g. due to sale or repayment, the unamortized fair value adjustment is recognized immediately in profit or loss.
Cash flow hedges
Hedges of net investments in foreign operations
280
Financial information |
Note 1 Summary of significant accounting policies (continued)
Economic hedges which do not qualify for hedge accounting
Embedded derivatives
270
loss, if (a) the host contract is not carried at fair value with changes in fair value reported in the income statement, (b) the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract, and (c) the embedded derivative actually meets the definition of a derivative. Bifurcated embedded derivatives are presented on the same balance sheet line as the host contract, and are shown in Note 29 in the“Held “Held for trading”category, reflecting the measurement and recognition principles applied.
16) Loan commitments
– | Derivative loan commitments |
– | Loan commitments designated at fair value through profit and loss (“Fair value option”) |
– | Below market loan commitments.Below market loan commitments are recognized at fair value and subsequently measured at the higher of the initially recognized liability at fair value less cumulative amortization and a provision (refer to |
– | Other loan commitments.Other loan commitments are not recorded in the balance sheet. However, a provision is recognized if it is probable that a loss has been incurred and a reliable estimate of the amount of the obligation can be made (refer to |
17) Cash and cash equivalents
18) Physical commodities
19) Property and equipment
Classification for own-used property
281
Financial information
Notes to the consolidated financial statements
Note 1 Summary of significant accounting policies (continued)
includes a portion that is own-used and another portion that is held to earn rental income or for capital appreciation, the classification is based on whether or not these portions can be sold separately. If the portions of the property can be sold separately, they are separately accounted for as own-used property and investment property. If the portions cannot be sold separately, the whole property is classified as own-used property unless the portion used by the Group is minor. The classification of property is reviewed on a regular basis to account for major changes in its usage.
Investment property
Leasehold improvements
SoftwareSoftware development costs are capitalized when they meet certain criteria relating to identifiability, it is probable that future economic benefits will flow to the enterprise, and the cost can be measured reliably. Internally developed software meeting these criteria and purchased software are classified within IT, software and communication.
271
Financial informationNotes to the consolidated financial statements
Property held for sale
Investment propertyInvestment property is carried ator fair value with changes in fair value recognized inless cost to sell.
Software
Estimated useful life of property and equipment
Properties, excluding land | Not exceeding 50 years | |
Leasehold improvements | Residual lease term, | |
but not exceeding 10 years | ||
Other machines and equipment | Not exceeding 10 years | |
IT, software and communication | Not exceeding 5 years | |
20) Goodwill and intangible assets
ally,Generally, all identified intangible assets of UBS have a definite useful life. At each balance sheet date, intangible assets are reviewed for indications of impairment or changes in estimated future benefits. If such indications exist, the intangible assets are analyzed to assess whether their carrying amount is fully recoverable. An impairment loss is recognized if the carrying amount exceeds the recoverable amount.
21) Income taxes
282
Financial information |
Note 1 Summary of significant accounting policies (continued)
272
22) Debt issued
Money Market paperMoney market paper issued is initially measured at fair value, which is the consideration received, net of transaction costs incurred. Subsequent measurement is at amortized cost, using the effective interest rate method to amortize cost at inception to the redemption value over the life of the debt.
Debt without embedded derivativederivatives
Debt with embedded derivatives (related to UBS AG shares)
Debt with embedded derivatives(not (not related to UBS AG shares)
host contract and accounted for as a standalone derivative if the criteria for separation are met. The host contract is subsequently measured at amortized cost. The fair value option is not applied to certain hybrid instruments which contain bifurcatable embedded derivatives with references to foreign exchange rates and precious metal prices and which are not hedged by derivative instruments. Those hybrids are still subject to bifurcation of the embedded derivative.
23) Post-employment benefitsPension and other post-employment benefit plans
Defined benefit plans
283
Financial information
Notes to the consolidated financial statements
Note 1 Summary of significant accounting policies (continued)
value of economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. UBS applies the projected unit credit method to determine the present value of its defined benefit obligation and the related current service cost and, where applicable, past service cost. These amounts are calculated annually by independent actuaries. The principal actuarial assumptions used are set out in Note 30.
a) 10% of the present value of the defined benefit obligation at that date (before deducting the fair value of plan assets); and | ||
b) 10% of the fair value of any plan assets at that date. | ||
273
Financial informationNotes to the consolidated financial statements
The unrecognized actuarial gains and losses exceeding the greater of these two values are recognized in the income statement over the expected average remaining working lives of the employees participating in the plans.
Defined contribution plans
A defined contribution plan is a pension plan under which UBS pays fixed contributions into a separate entity. UBS has no legal or constructive obligation to pay further contributions if the plan does not hold sufficient assets to pay employees the benefits relating to employee service in the current and prior periods. UBS’s contributions are expensed when the employees have rendered services in exchange for such contributions; this is generally in the year of contribution. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.
Other post-retirement benefits
UBS also provides post-retirement medical and life insurance benefits to certain retirees in the US and the UK. The expected costs of these benefits are recognized over the period of employment using the same accounting methodology used for the defined benefit plans.
24) Equity participation and other compensation plans
Equity participation plans
UBS has established several equity participation plans in the form of share plans, option plans and share-settled stock appreciation right (SAR) plans. UBS’s equity participation plans are mandatory, discretionary, or voluntary plans. UBS recognizes the fair value of share, option and SAR awards, determined at the date of grant,
as compensation expense over the period that the employee is required to provide active services in order to earn the award.
been received. Forfeiture events occurring before the grant date result in the reversal of compensation expense.
Other compensation plans
UBS has established other fixed and variable deferred cash compensation plans, the value of which is not linked to UBS’s own equity. UBS’s deferred cash compensation plans are either mandatory or discretionary plans.
284
Financial information |
Note 1 Summary of significant accounting policies (continued)
is distributed. Forfeiture of these awards results in the reversal of expense. Refer to Note 31 for further details on equity participation and other compensation plans.
274
25) Amounts due under unit-linked investment contracts
UBS’s financial liabilities from unit-linked contracts are presented asOther liabilities(refer to Note 20) on the balance sheet. These contracts allow investors to invest in a pool of assets through investment units issued by a UBS subsidiary. The unit holders receive all rewards and bear all risks associated with the reference asset pool. The financial liability represents the amount due to unit holders and is equal to the fair value of the reference asset pool.
26) Provisions
Provisions are recognized when UBS has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are reflected underOther liabilitieson the balance sheet. Refer to Note 21.
27) Equity, treasury shares and contracts on UBS shares
Transaction costs related to share issuances
Incremental costs directly attributable to the issue of new shares or contracts with physical settlement (classified as equity instruments) are recognized inEquityas “transaction costs related to share issuances, net of tax” and are a deduction fromEquity.
Non-controlling interests
Net profitandEquityare presented including non-controlling interests.Net profitis split intoNet profit attributable to UBS shareholdersandNet profit attributable to non-controlling interests. Equity is split intoEquity attributable to UBS shareholdersandEquity attributable to non-controlling interests.
UBS AG shares held (“treasury shares”)
UBS AG shares held by the Group are classified inEquityas Treasury sharesand accounted for at cost. Treasury shares are deducted from total shareholders’ equity until they are cancelled or reissued. The difference between the proceeds from sales ofTreasury sharesand their weighted average cost (net of tax, if any) is reported asShare premium.premium.
Contracts with gross physical settlement
(except physically settled written put options and
forward share purchase contracts)
Contracts that require gross physical settlement in UBS AG shares are classified inEquityasShare premium(provided a fixed amount of shares areis exchanged against a fixed amount of cash) and accounted for at cost. They are added to or deducted from equity until settlement of such contracts. Upon settlement of such contracts, the difference between the proceeds received and their cost (net of tax, if any) are reported asShare premium.premium.
Transaction cost related to share issuance of equity instrumentsIncremental costs directly attributable to the issue of new shares or contracts with physical settlement (classified as eq-
uity instruments) are shown in equity as “transaction cost related to share issuance” and are a deduction of equity, net of tax, from the proceeds.
Contracts with net cash settlement or net cash settlement option
Contracts on UBS AG shares that require net cash settlement, or provide the counterparty or UBS with a settlement option which includes a choice of settling net in cash, are classified as trading instruments, with changes in fair value reported in the income statement as “netNet trading income”income, except for written put options and forward share purchase contracts.
Physically settled written put options and forward share
purchase contracts
Physically settled written put options and forward share purchase contracts, including contracts where physical settlement is a settlement alternative, result in the recognition of a financial liability. At the inception of the contract, the present value of the obligation to purchase own shares in exchange for cash is transferred out ofEquityand recognized as a liability. The liability is subsequently accreted, using the effective interest rateEIR method, over the life of the contract to the nominal purchase obligation by recognizing interest expense. Upon settlement of the contract, the liability is derecognized, and the amount of equity originally recognized as a liability is reclassified withinEquitytoTreasury shares.shares. The premium received for writing put options is recognized directly inShare premium.premium.
Minority interestsNet profit and Equity arepresented including minority interests.Net profitis split intoNet profitattributable to UBS shareholders andNet profit attributable to minority interests. Equity is split intoEquityattributable to UBS shareholders andEquityattributable to minority interests.
Trust preferred securities issued
UBS has issued trust preferred securities through consolidated preferred funding trusts which hold debt issued by UBS. UBS AG has fully and unconditionally guaranteed all of these securities. UBS’s obligations under these guarantees are subordinated to the fully prior payment in full of the deposit liabilities of UBS and all other liabilities of UBS. The trust preferred securities represent equity instruments which are held by third parties and treated as minoritynon-controlling interests in UBS’s consolidated financial statements. The full dividend payment obligation on these trust preferred securities issued is reclassified fromEquityto a corresponding liability onceOnce a coupon payment becomes mandatory, i.e. when it is triggered by a contractually determined event. In the income statement the full dividend payment is reclassified fromNet profitattributable to UBS shareholders toNet profitattributable to minor-trig-
275285
Financial information
Notes to the consolidated financial statements
Note 1 Summary of significant accounting policies (continued)
itygered by a contractually defined event, the full dividend payment obligation on these trust preferred securities issued is reclassified fromEquity to a corresponding liability. In the income statement the full dividend payment is reclassified fromNet profit attributable to UBS shareholderstoNet profit attributable to non-controlling interestsat that time. UBS bonds held by preferred funding trusts are eliminated in consolidation.
28) Discontinued operations and non-current assets held for sale
UBS classifies individual non-current non-financial assets and disposal groups as held for sale if such assets or disposal groups are available for immediate sale in their present condition subject to terms that are usual and customary for sales of such assets or disposal groups and their sale is considered highly probable. For a sale to be highly probable, management ismust be committed to a plan to sell such assets and is actively looking for a buyer,buyer. Furthermore, the assets are beingmust be actively marketed at a reasonable sales price in relation to their fair value and the sale is expected to be completed within one year, and their sale is considered highly probable.year. These assets (and liabilities in the case of disposal groups) are measured at the lower of their carrying amount and fair value less costs to sell and presented inOther assetsandOther liabilities(see Notes 17 and 20). Netting of assets and liabilities is not permitted.
29) Leasing
UBS enters into lease contracts, predominantly of premises and equipment, as a lessor and a lessee. The terms and conditions of these contracts are assessed and the leases are classified as operating leases or finance leases according to their economic substance. When making such an assessment, the Group focuses on the following aspects: a) transfer of ownership of the asset to the lessee at the end of the lease term; b) existence of a bargain purchase option held by the lessee; c) whether the lease term is for the major part of the economic life of the asset; d) whether the present value of the minimum lease payments is substantially equal to the fair value of the leased asset at inception of the lease
term; and e) whether the asset is of a specialized nature that only the lessee can use without major modifications being made. If one or more of the conditions are met, the lease is generally classified as a
finance lease, while the non-existence of such conditions normally leads to a classification as an operating lease.
30) Fee income
UBS earns fee income from a diverse range of services it provides to its customers.clients. Fee income can be divided into two broad categories: income earned from services that are provided over a certain period of time for which customers are generally billed on an annual or semi-annual basis, and income earned from providing transaction-type services. Fees earned from services that are provided over a certain period of time are recognized ratably over the service period.period with the exception of performance-linked fees or fee components which are recognized when the performance criteria are fulfilled. Fees earned from providing transaction-type services are recognized when the service has been completed. Performance-linked fees or fee components are recognized when the recognition criteria are fulfilled. Loan commitment fees on lending arrangements where the initial expectation is that the loan will be drawn down at some point are deferred until the loan is drawn down and then recognized as an adjustment to the effective yield over the life of the loan. If the commitment expires and the loan is not drawn down, the fees are recognized as revenue on expiry.
31) Foreign currency translation
Transactions denominated in foreign currency are translated into the functional currency of the reporting unit at the spot exchange rate on the date of the transaction. At the balance sheet date, all assets and liabilities denominated in foreign currency, except for non-monetary items, are translated using the closing exchange rate. Non-monetary items measured in terms ofat historical cost are translated at the exchange rate aton the date of the transaction. Resulting foreign exchange differences are recognized inNet trading income, except for non-monetary financial investments available-for-sale. Foreign exchange differences from non-monetary finan-
286
Financial information |
Note 1 Summary of significant accounting policies (continued)
cial investments available-for-sale which are recorded directly inEquityuntil the asset is sold or becomes impaired.
276
impaired, unless the non-monetary financial investment is subject to a fair value hedge of foreign exchange risk, in which case changes in fair value attributable to the hedged risk are reported inNet trading income.
Upon consolidation, assets and liabilities of foreign operations are translated into Swiss francs (CHF) – UBS’s presentation currency – at the closing exchange rate aton the balance sheet date, and income and expense items are translated at the average rate for the period. Differences resulting from the use of different exchange rates are recognized directly inForeign currency translation withinEquity. Upon disposal
32) Earnings per share (EPS)
33) Segment reportingIn 2009,
chief operating decision maker, the financial information about the fourfive reportable segments and the Corporate Center was separately presented. This internal management view was the basis for the external segment reporting.
287
Financial information
Notes to the consolidated financial statements
Note 1 Summary of significant accounting policies (continued)
ments are used for the allocation of customer revenues where several business divisionsreportable segments are involved in the value-creation chain.
34) Netting
277b) Changes in accounting policies, comparability and other adjustments
Wealth Management & Swiss Bank reorganization
– | “Wealth Management”, encompassing all wealth management business conducted out of Switzerland and in the Asian and European booking centers; |
– | “Retail & Corporate”, including services provided to Swiss retail private clients, small and medium enterprises and corporate and institutional clients. |
Allocation of additional Corporate Center costs to reportable segments
policy has been applied prospectively and prior year numbers have not been restated.
Cash collateral from derivative transactions and Prime brokerage receivables and payables
Corporate Center cost allocation impact on 2009 figures | ||||||||||||||||||||||||||||
Wealth | Total | |||||||||||||||||||||||||||
Wealth Management & | Management | Global Asset | Investment | business | Corporate | |||||||||||||||||||||||
Swiss Bank | Americas | Management | Bank | divisions | Center | |||||||||||||||||||||||
Wealth | Retail & | |||||||||||||||||||||||||||
CHF million | Management | Corporate | ||||||||||||||||||||||||||
Estimated increase in 2009 operating expenses and decrease in performance before tax | 128 | 96 | 84 | 44 | 288 | 640 | (640 | ) | ||||||||||||||||||||
288
Financial information |
Note 1 Summary of significant accounting policies (continued)
For 2009 and 2008, the following reclassifications were made:
Cash collateral from derivative transactions and Prime brokerage receivables and payables | ||||||||||||||||||||||||
31.12.09 – before | 31.12.09 – after | 31.12.08 – before | 31.12.08 – after | |||||||||||||||||||||
CHF million | reclassification | Reclassification | reclassification | reclassification | Reclassification | reclassification | ||||||||||||||||||
Due from banks | 46,574 | (29,770 | ) | 16,804 | 64,451 | (46,757 | ) | 17,694 | ||||||||||||||||
Cash collateral receivables on derivatives | 0 | 53,774 | 53,774 | 0 | 85,703 | 85,703 | ||||||||||||||||||
instruments | ||||||||||||||||||||||||
Loans | 306,828 | (40,351 | ) | 266,477 | 340,308 | (48,852 | ) | 291,456 | ||||||||||||||||
Other assets | 7,336 | 16,347 | 23,682 | 9,931 | 9,906 | 19,837 | ||||||||||||||||||
Due to banks | 65,166 | (33,244 | ) | 31,922 | 125,628 | (48,806 | ) | 76,822 | ||||||||||||||||
Cash collateral payables on derivatives instruments | 0 | 66,097 | 66,097 | 0 | 92,937 | 92,937 | ||||||||||||||||||
Due to customers | 410,475 | (71,212 | ) | 339,263 | 465,741 | (103,102 | ) | 362,639 | ||||||||||||||||
Other liabilities | 33,986 | 38,359 | 72,344 | 42,998 | 58,971 | 101,969 | ||||||||||||||||||
Equity and Other comprehensive income
In 2010, UBS reviewed certain components of its equity and made adjustments to correct immaterial misstatements that relate to periods several years back. The following paragraphs describe the impacts of the changes on UBS’s financial statements as of 31 December 2010.
Personnel expenses
In 2010, UBS reclassified certain elements ofOther personnel expensestoVariable compensation – other in order to align the presentation with the new FINMA definition of variable compensation.
Furthermore, UBS reclassified the pension costs related to bonus toPension and other post-employment benefit plans.Previously, those amounts were reported underSocial security.Prior period amounts have been adjusted accordingly. The change in the presentation did not impact UBS’s personnel expenses. The related amounts are disclosed in the footnotes to Note 6.
Fair value hierarchy of financial instruments
From 2010 onwards, UBS considers input data observable and classifies the respective financial instrument as level 2 in the fair value hierarchy when there is an equally offsetting transaction. An offsetting transaction constitutes evidence of an observable market transaction, when it can be demonstrated that the offsetting transactions nullifies substantially all the price risk of the proportion of the offset instrument and the proportion is significant. In cases such as derivatives, where the counterparty’s credit risk is also based on observable inputs, then it can be concluded that all input data are observable. Refer to Note 27b) for more details.
Effective 2010
Improvements to IFRSs 2009
The IASB issued amendments to twelve IFRS standards as part of its annual improvements project in April 2009. UBS adopted the Improvements to IFRSs 2009 on 1 January 2010. The adoption of the amendments did not have a significant impact on UBS’s financial statements.
Amendments to IAS 39 Financial Instruments:
289
Financial information
Notes to the consolidated financial statements
b) Changes inNote 1 Summary of significant accounting policies comparability and other adjustments(continued)
Restatements madements to the financial statements 2008
UBS has restated its 2008 financial statements to correct identified accounting errors related to the 2008 financial statements. These errors were not material to the annual or quarterly 2008 financial statements, but related corrections would have been material to first quarter 2009 financial statements. On 21 May 2009, UBS re-filed its US Form 20-F for the year 2008, which included the restated 2008 financial statements. The restatement comprises three items in excess of CHF 100 million as follows:
IFRS 3 Business Combinations, IAS 27 Consolidated and Separate Financial Statements, and IAS 21 The Effects of Changes in Foreign Exchange Rates
The most significant changes under revised IFRS 3 are as follows: |
– | Contingent consideration should be recognized at fair value as part of the consideration transferred at the acquisition date. Previously, contingent consideration was recognized if, and only if, UBS had a present obligation, the economic outflow was more likely than not and a reliable estimate was determinable. | |
– | Non-controlling interests in an acquiree that are present ownership interests and provide entitlement to a proportionate share of the net assets in the event of liquidation should either be measured at fair value or as the non-controlling interest’s proportionate share of the fair value of net identifiable assets of the entity acquired. All other components of the non-controlling interests are measured at their acquisition-date fair values. The option is available on a transaction-by-transaction basis. | |
– | Transaction costs incurred by the acquirer should be expensed as incurred. |
The amendments to IAS 27 and the abovementioned items, a number of misstatements individually below CHF 65 million were adjusted. The aggregate net effect of these items on net profit attributableconsequential amendments to UBS shareholders was an increase of net profit attributable to shareholders of CHF 79 million.
Effective in 2009 and earlier
IAS 1 (revised) Presentation of Financial Statements
Effective 1 January 2009, the revised International Accounting Standard (IAS) 1 affected the presentation of owner changes in equity and of comprehensive income. UBS continued to present owner changes in equity in the “statement of changes in equity”, but detailed information relating to non-owner changes in equity, such as foreign exchange translation, cash flow hedges and financial investments available-for-sale, were presented in the “Statement“statement of comprehensive income”.
IAS 1 (revised) Presentation of Financial Statements, andIAS 32 (revised) Financial Instruments: PresentationThe IASB issued a further amendment to IAS 1 and an amendment to IAS 32 regarding puttable financial instruments and obligations arising on liquidation. The IAS 32 amendment clarifies under which circumstances puttable financial instruments and obligations arising on liquidation have to be treated as equity instruments.
IFRS 8 Operating Segments
Effective as of 1 January 2009, UBS adopted IFRS 8Operating Segmentswhich replaced IAS 14Segment Reporting.Reporting. Under the requirements of the new standard, UBS’s external segmental reporting is now based on the internal management reporting to the Group Executive Board (or the “chief operating decision maker”), which makes decisions on the allocation of resources and assesses the performance of the reportable segments.
278
Asset Management and Investment Bank. While the Corporate Center does not meet the requirements of an operating segment, it is also shown separately. Segment information from prior periods in Note 2a has been restated to conform to the requirements of this new standard. In addition, goodwill and intangible assets presented in Note 16 have also been reallocated in order to reflect the revised segment reporting structure.
IFRS 7 (revised) Financial Instruments: Disclosures
This standard was revised in March 2009 when the International Accounting Standards Board (IASB) published the amendment “Improving Disclosures about Financial Instruments”. Effective 1 January 2009, the amendment requires enhanced disclosures about fair value measurements and liquidity risk.
Reassessment of Embedded DerivativesThe International Financial Reporting Interpretations Committee (IFRIC) issued in March 2009 the supplement Embedded Derivatives: Amendments to IFRIC 9 and IAS 39. This guidance amends IFRIC 9 Reassessment of Embedded Derivatives, and IAS 39 Financial Instruments: Recognition and Measurement. The amendments clarify that on reclassification of a financial asset out of the“Held for trading”category, all embedded derivatives have to be assessed and, if necessary, separately accounted for in the financial statements. The application of this guidance did not materially impact UBS’s financial statements.
IFRIC 15 Agreements for the Construction of Real EstateIFRIC 15 was issued on 3 July 2008 and is effective for annual periods beginning on or after 1 January 2009. IFRIC 15 provides guidance on the accounting for agreements for the construction of real estate where entities enter into agreements with buyers before construction has been completed and the timing of revenue recognition. The application of this guidance did not materially impact UBS’s financial statements.
IFRIC 16 Hedges of a Net Investment in a Foreign Operation
IFRIC 16 was issued on 1 October 2008 and became effective on 1 January 2009. IFRIC 16 provides guidance in identifying the foreign currency risks that qualify as a hedged risk in the hedge of a net investment in a foreign operation; where, within a group, hedging instruments that are hedges of a net investment in a foreign operation can be held to qualify for hedge accounting, and how an entity should determine the amounts to be reclassifiedreclassi-
290
Financial information |
Note 1 Summary of significant accounting policies (continued)
fied from equity to profit or loss for both the hedging instrument and the hedged item. The impact of this interpretation on UBS’s financial statements was immaterial.
IAS 24 Related Party Disclosures
In November 2009, the IASB amended IAS 24Related Party Disclosureswith latest possible effective date 1 January 2011. UBS has early adopted the revised requirements in its annual financial statements 2009. The revised standard amends the definition of related parties, in particular, the relationship between UBS and associated companies of UBS’s key management personnel or their close family members. Transactions between UBS and associated companies of UBS key management personnel over which UBS key management personnel does not have control or joint control are no longer considered related partyrelated-party transactions. Due to the application of the revised guidance, related party transactions disclosed in Note 32e of the annual financial statements 2008 have been significantly reduced. Balances and movements of loans to related parties have been reduced by CHF 668 million atas of 31 December 2008 and CHF 530 million at 31 December 2007; and fees received for services provided by UBS have been reduced by CHF 11 million in 2008 and CHF 10 million in 2007.
Allocation of Shared Services Costs in Segment DisclosuresFrom 2009 onwards, ITI and Group Off-shoring costs managed by the Corporate Center are allocated to the direct cost lines personnel expenses, general and administrative expenses, and depreciation, in the respective business division income statements, based on appropriate internally determined allocation keys. In the Corporate Center income statement, costs allocated to the business divisions are deducted from the respective cost lines. In previous reports, these costs were presented as an expense on the line“Services (to)/from other business divisions”within each
279
Financial informationNotes to the consolidated financial statements2008.
Impact on income statement lines
For the comparative 12-month period in 2008, the following allocations were made:
Wealth | Wealth | |||||||||||||||||||
Management & | Management | Global Asset | Investment | Corporate | ||||||||||||||||
CHF million | Swiss Bank | Americas | Management | Bank | Center | |||||||||||||||
Personnel expenses | 228 | 85 | 20 | 300 | (633 | ) | ||||||||||||||
General and administrative expenses | 328 | 121 | 28 | 431 | (909 | ) | ||||||||||||||
Depreciation of property and equipment | 163 | 60 | 15 | 216 | (455 | ) | ||||||||||||||
Services (to)/from other business divisions | (719 | ) | (267 | ) | (62 | ) | (949 | ) | 1,997 | |||||||||||
business division and an offsetting corresponding amount on that line in the Corporate Center. The new presentation format provides greater transparency by allocating shared service costs to direct cost lines in divisional income statements. Comparative periods have been adjusted.
Unit-linked Investment ContractsIn fourth quarter 2009, UBS decided to present Wealth Management & Swiss Banking’s obligations under unit-linked investment contracts underOther liabilitiesin order to align the treatment with similar contracts issued by Global Asset Management. In the past, the respective obligations of Wealth Management & Swiss Banking have been reported underDue to customers.UBS has retrospectively applied this change in presentation. The change in presentation resulted in the following effects on the balance sheet for 1 January 2008 and 31 December 2008: a decrease ofDue to customersand a corresponding increase in amounts due underOther liabilitieson the balance sheet (unit-linked investment contracts) of CHF 11,787 million and CHF 9,033 million, respectively. The change in presentation did not impact UBS’s total liabilities, income statements or earnings per share for these periods.
Effective in 2008 and earlier
IFRS 2 Share-based Payment:
Vesting Conditions and Cancellations
On 1 January 2008, UBS adopted an amendment to IFRS 2Share-based Payment: Vesting Conditions and Cancellationsand fully restated the two comparative prior years. The amended standard clarifies the definition of vesting conditions and the accounting treatment of cancellations. Under the amended standard, UBS is required to distinguish between vesting conditions (such as service and performance conditions) and non-vesting conditions.
Post-vesting sale and hedge restrictions and non-vesting conditions are considered when determining grant date fair value. The effect of the restatement on the opening balance sheet at 1 January 2006 was as follows: reduction of retained earnings by approximately CHF 2.3 billion, increase of share premium by approximately CHF 2.3 billion, increase
of liabilities (including deferred tax liabilities) by approximately CHF 0.5 billion, and increase of deferred tax assets by approximately CHF 0.5 billion.Net profitattributable to UBS shareholders declined by CHF 863 million in 2007 and by CHF 730 million in 2006. Additional compensation expenses of CHF 797 million and CHF 516 million waswere recognized in 2007 and 2006, respectively. These additional compensation expenses include awards granted in 2008 for the performance year 2007. The impact of the restatement on total equity as of 31 December 2007 was a decrease of CHF 366 million. Retained earnings atas of 31 December 2007 decreased by approximately CHF 3.9 billion, share premium increased by approximately CHF 3.5 billion, liabilities (including deferred tax liabilities) increased by approximately CHF 0.6 billion and deferred tax assets increased by approximately CHF 0.2 billion. The restatement decreased basic and diluted earnings per share for the year ended 31 December 2007 by CHF 0.40 each and for the year ended 31 December 2006 by CHF 0.33 and CHF 0.31, respectively. In order to provide comparative information, these amounts also reflect the retrospective adjustments to shares outstanding in 2007 due to the capital increase and the share dividend paid in 2008.
Reclassifications of Financial Assets
The International Accounting Standards Board published an amendment to International Accounting Standard 39 (IAS 39Financial Instruments: Recognition and Measurement)Measurement) on 13 October 2008, under which eligible financial assets, subject to certain conditions being met, may be reclassified out of the“Held for trading”tradingcategory if the firm had the intent and ability to hold them for the foreseeable future or until maturity.
280
Although the amendment could have been applied retrospectively from 1 July 2008, UBS decided at the end of October 2008 to apply the amendment with effect from 1 October 2008 following an assessment of the implications on its financial statements. Refer to Note 29b for further details on reclassification of financial assets.
Changes to segment reportingUBS has continuously reduced its private equity business in Industrial Holdings over the last three years. The business no longer includes consolidated industrial private equity investments. Starting first quarter 2008, UBS presented the remaining activities from this business, mainly financial investments available-for-sale, under Corporate Center.
Effective in 2010
Improvements to IFRS 2009The International Accounting Standards Board issued amendments to twelve IFRS standards as part of its annual improvements project in April 2009. The adoption of the amendments could result in accounting changes for presentation, recognition or measurement purposes. The improvements to IFRS 2009 will be adopted by UBS as of 1 January 2010. UBS does not expect these amendments to have a significant impact on UBS’s financial statements.
Amendments to IAS 39 Financial Instruments: Recognitionand Measurement – Eligible Hedged ItemsThe amendment to IAS 39 was issued in July 2008. The amendments provide additional guidance on the designation of a hedged item. The amendment clarifies how the existing principles underlying hedge accounting should be applied in two particular situations: a) a one-sided risk in a hedged item and b) inflation in a financial hedged item. The amendments to IAS 39 will be adopted by UBS as of 1 January 2010. UBS does not expect the amendments to have a significant impact on UBS’s financial statements.
IFRS 3 Business Combinations and IAS 27 Consolidated andSeparate Financial StatementsIn January 2008, the IASB issued a revised Standard of IFRS 3Business Combinationsand amendments to IAS 27Consolidated and Separate Financial Statements.The most significant changes under revised IFRS 3 are as follows:
Effective in 2011 and later, if not adopted early
IFRS 9 Financial InstrumentsIn November 2009, the IASB issued IFRS 9Financial instruments,which includes revised guidance on the classification and measurement of financial assets. The publication of IFRS 9 represents the completion of the first part of a multi-stage project to replace IAS 39Financial instruments: recognition and measurement.Under the revised guidance, a financial asset is to be accounted for at amortized cost only if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Non-traded equity instruments may be accounted for at fair value through equity, but the subsequent release of amounts booked directly to equity into the income state-
281291
Financial information
Notes to the consolidated financial statements
Note 1 Summary of significant accounting policies (continued)
c) International Financial Reporting Standards and Interpretations to be adopted in 2011 and later
ment is no longer permitted. All other financial assets are measured at fair value through profit or loss.Effective in 2011
Improvements to IFRSs 2010
In May 2010, the IASB issued amendments to seven standards as part of its annual improvements project. UBS is currently assessingwill adopt the improvements to IFRSs 2010 as of 1 January 2011. The amendments will not have a material impact of the new standard on itsUBS’s financial statements. It is likely that a number of financial assets currently accounted for at amortized cost will be accounted for at fair value through profit or loss under the new standard because a) their contractual cash flows do not comprise solely payments of principal and interest on the principal, and/or b) UBS does not hold the assets with the intention to collect contractual cash flows they generate. Certain debt securities currently classified as available-for-sale may satisfy the criteria for “amortized cost” accounting; debt securities available-for-sale failing these criteria will be accounted for at fair value. The effective date for mandatory adoption is 1 January 2013, with early
adoption permitted. UBS did not adopt IFRS 9 for the year ended 31 December 2009.
IFRIC 14 Prepayments of a Minimum Funding Requirement
In November 2009, the IASB issued the amended IFRIC 14The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction, which itself is an interpretation of IAS 19Employee Benefits.Benefits. The amendment applies in the limited circumstances when an entity is subject to minimum funding requirements and makes an early payment of contributions to cover those requirements. The amendment permits an entity to treat the benefit of such an early payment as an asset. The amendment is effective onfrom 1 January 2011. Early application is permitted. UBS doesis not expectaffected by this amendment.
Effective in 2012 and later, if not adopted early
IFRS 9 Financial Instruments
In November 2009, the IASB issued IFRS 9Financial instruments, which includes revised guidance on the classification and measurement of financial assets. In October 2010, the IASB updated IFRS 9 to include guidance on financial liabilities and derecognition of financial instruments and amended IFRS 7 to include disclosures about transferred financial assets. The publication of IFRS 9 represents the completion of the first part of a multi-stage project to replace IAS 39Financial instruments: recognition and measurement.
There is no subsequent recycling of realized gains or losses from OCI to profit or loss. All other financial assets are measured at fair value through profit or loss.
Amendments to IAS 12 Income Taxes
In December 2010, the IASB issued amendments to IAS 12Income Taxesto clarify guidance related to the measurement of deferred taxes. IAS 12 requires an entity to measure the deferred tax related to an asset based on whether the entity expects to recover the carrying amount of the asset principally through use or sale. The guidance establishes a rebuttable presumption that recovery of the carrying amount will normally be through sale. As a result of the amendments, SIC-21,Income Taxes – Recovery of Revalued Non-Depreciable Assets, would no longer apply to investment properties carried at fair value. The amendments provide a practical approach for measuring deferred tax liabilities and deferred tax assets when investment property is measured using the fair value model. The amendments also incorporate the guidance contained in SIC-21, which is now withdrawn. The amendments are effective for annual periods beginning on or after 1 January 2012, with early adoption permitted. UBS is currently assessing the impact of the revised standard on its financial statements.
282292
Financial information |
Note 2a Segment reporting
In 2009, UBS’s businesses were reorganized on a worldwide basis intoUBS AG is the parent company of the UBS Group (Group). The operational structure of the Group comprises the Corporate Center and four business divisions and the Corporate Center. The business divisionsdivisions: Wealth Management & Swiss Bank, Wealth Management Americas, Global Asset Management and the Investment Bank. In 2010, for the purpose of segment reporting, the business division Wealth Management & Swiss Bank constitute one segment each. In total,was split into two separate reportable segments, namely Wealth Management and Retail & Corporate. As a result of the split, UBS reportsnow presents five reportable segments compared with only four businessreportable segments and the Corporate Center in 2009. The Corporate Center includes all corporate functions, elimination items as well as the remaining industrial holdings activities and is not considered a business segment. The “Corporate Center” column of the table in Note 2a “Segment reporting” has been renamed “Treasury activities and other corporate items”. Refer to Note 1a) 33) “Segment reporting” for more details.
Wealth Management & Swiss Bank
Wealth Management & Swiss Bank focuses on delivering comprehensive financial services to high net worth and ultra high net worth individuals around the world – except to those served by Wealth Management Americas – as well as private and corporate clients in Switzerland. UBSOur Wealth Management business unit provides clients in over 40 countries, including Switzerland, with financial advice, products and tools to fit their individual needs. UBS hasOur Retail & Corporate business unit provides individual and business clients with an array of banking services, such as deposits and lending, and maintains a leading position across allits client segments in Switzerland.
Wealth Management Americas
Wealth Management Americas provides advice-based relationshipssolutions through financial advisors who deliver a fully integrated set of products and services specifically designed to address the needs
of ultra high net worth, high net worth and core affluent individuals and families. It includes the former Wealthdomestic United States business (Wealth Management US business unit, as well asUS), the domestic Canadian business and the international business booked in the United States.
Global Asset Management
Global Asset Management is a large-scale asset manager with wellbusinesses diversified businesses across regions, capabilities and distribution channels. It offers investment capabilities and investment styles across all major traditional and alternative asset classes. These includeclasses including equities, fixed income, currency, hedge fund, real estate infrastructure and private equity investment capabilitiesinfrastructure that can also be combined ininto multi-asset strategies. The fund services unit provides legal fund set-up and accounting and reporting for retail and institutional funds.
Investment Bank
The Investment Bank provides securities and other financial products and research in equities, fixed income, rates, foreign exchange and precious metals.commodities. It also provides advisory services and access to the world’s capital markets for corporate and institutional intermediaryclients, sovereign and governmental bodies, financial intermediaries, alternative asset management clients.managers and private investors.
Corporate Center
The Corporate Center seeks to ensure that the business divisions operate as a coherentprovides and effective whole by providing and managingmanages support and control functions for the business divisions and the Group in areas such areas as risk control, finance, legal and compliance, funding, capital and balance sheet management, management of foreign currencies,non-trading risk, communication and branding, human resources, information technology, real estate, procurement, corporate development and service centres. Most costs and personnel of the Corporate Center are allocated to the business divisions.
283
Financial information
Notes to the consolidated financial statements
Note 2a Segment reporting (continued)
Internal chargesTransactions between the reportable segments are carried out at internally agreed rates or at arm’s length and transfer pricing adjustments are reflected in the performance of each business.segment. Revenue-sharing agreements are used to allocate external customerclient revenues to a segment and cost-allocation agreements are used to allocate shared costs between the segments.
Treasury | ||||||||||||||||||||||||||||
Wealth | activities and | |||||||||||||||||||||||||||
Wealth Management & | Management | Global Asset | Investment | other corporate | ||||||||||||||||||||||||
Swiss Bank | Americas | Management | Bank | items | UBS | |||||||||||||||||||||||
Wealth | Retail & | |||||||||||||||||||||||||||
CHF million | Management | Corporate | ||||||||||||||||||||||||||
For the year ended 31 December 2010 | ||||||||||||||||||||||||||||
Net interest income | 1,737 | 2,422 | 695 | (17 | ) | 2,235 | (858 | ) | 6,215 | |||||||||||||||||||
Non-interest income | 5,608 | 1,524 | 4,870 | 2,075 | 9,775 | 1,993 | 25,845 | |||||||||||||||||||||
Income1 | 7,345 | 3,946 | 5,565 | 2,058 | 12,010 | 1,135 | 32,060 | |||||||||||||||||||||
Credit loss (expense) / recovery | 11 | (76 | ) | (1 | ) | 0 | 0 | 0 | (66 | ) | ||||||||||||||||||
Total operating income2 | 7,356 | 3,870 | 5,564 | 2,058 | 12,010 | 1,135 | 31,994 | |||||||||||||||||||||
Personnel expenses | 3,153 | 1,625 | 4,225 | 1,096 | 6,743 | 78 | 16,920 | |||||||||||||||||||||
General and administrative expenses | 1,264 | 836 | 1,223 | 400 | 2,693 | 168 | 6,585 | |||||||||||||||||||||
Services to / from other business divisions | 449 | (509 | ) | (6 | ) | (5 | ) | 64 | 8 | 0 | ||||||||||||||||||
Depreciation of property and equipment | 163 | 146 | 198 | 43 | 278 | 89 | 918 | |||||||||||||||||||||
Amortization of intangible assets3 | 19 | 0 | 55 | 8 | 34 | 0 | 117 | |||||||||||||||||||||
Total operating expenses4 | 5,049 | 2,098 | 5,694 | 1,542 | 9,813 | 343 | 24,539 | |||||||||||||||||||||
Performance from continuing operations before tax | 2,308 | 1,772 | (130 | ) | 516 | 2,197 | 793 | 7,455 | ||||||||||||||||||||
Performance from discontinued operations before tax | 0 | 0 | 0 | 0 | 0 | 2 | 2 | |||||||||||||||||||||
Performance before tax | 2,308 | 1,772 | (130 | ) | 516 | 2,197 | 795 | 7,457 | ||||||||||||||||||||
Tax expense / (benefit) on continuing operations | (381 | ) | ||||||||||||||||||||||||||
Tax expense / (benefit) on discontinued operations | 0 | |||||||||||||||||||||||||||
Net profit | 7,838 | |||||||||||||||||||||||||||
Additional information5 | ||||||||||||||||||||||||||||
Total assets | 94,056 | 153,101 | 50,071 | 15,894 | 966,945 | 37,180 | 1,317,247 | |||||||||||||||||||||
Additions to non-current assets | 25 | 12 | 48 | 8 | 32 | 467 | 593 | |||||||||||||||||||||
294
Financial information |
Note 2a Segment reporting (continued)
Transactions between business divisionsthe reportable segments are conductedcarried out at internally agreed transfer pricesrates or at arm’s length.length and are reflected in the performance of each segment. Revenue-sharing agreements are used to allocate external client revenues to a segment and cost-allocation agreements are used to allocate shared costs between the segments.
Wealth | Wealth | |||||||||||||||||||||||
Management & | Management | Global Asset | Investment | Corporate | ||||||||||||||||||||
CHF million | Swiss Bank | Americas | Management | Bank | Center | UBS | ||||||||||||||||||
For the year ended 31 December 2009 | ||||||||||||||||||||||||
Net interest income1 | 4,533 | 800 | 2 | 2,339 | (1,229 | ) | 6,446 | |||||||||||||||||
Non-interest income | 6,989 | 4,746 | 2,134 | 2,494 | 1,623 | 17,987 | ||||||||||||||||||
Income2 | 11,523 | 5,546 | 2,137 | 4,833 | 394 | 24,433 | ||||||||||||||||||
Credit loss (expense)/recovery | (133 | ) | 3 | 0 | (1,698 | ) | (5 | ) | (1,832 | ) | ||||||||||||||
Total operating income | 11,390 | 5,550 | 2,137 | 3,135 | 389 | 22,601 | ||||||||||||||||||
Personnel expenses | 5,197 | 4,231 | 996 | 5,568 | 551 | 16,543 | ||||||||||||||||||
General and administrative expenses | 2,017 | 1,017 | 387 | 2,628 | 199 | 6,248 | ||||||||||||||||||
Services to/from other business divisions | (90 | ) | 4 | (74 | ) | (147 | ) | 306 | 0 | |||||||||||||||
Depreciation of property and equipment | 289 | 170 | 36 | 360 | 193 | 1,048 | ||||||||||||||||||
Impairment of goodwill3 | 0 | 34 | 340 | 749 | 0 | 1,123 | ||||||||||||||||||
Amortization of intangible assets3 | 67 | 62 | 13 | 59 | 0 | 200 | ||||||||||||||||||
Total operating expenses | 7,480 | 5,518 | 1,698 | 9,216 | 1,250 | 25,162 | ||||||||||||||||||
Performance from continuing operations before tax | 3,910 | 32 | 438 | (6,081 | ) | (860 | ) | (2,561 | ) | |||||||||||||||
Performance from discontinued operations before tax | 0 | 0 | 0 | 0 | (7 | ) | (7 | ) | ||||||||||||||||
Performance before tax4 | 3,910 | 32 | 438 | (6,081 | ) | (867 | ) | (2,569 | ) | |||||||||||||||
Tax expense on continuing operations | (443 | ) | ||||||||||||||||||||||
Tax expense on discontinued operations | 0 | |||||||||||||||||||||||
Net profit | (2,125 | ) | ||||||||||||||||||||||
Additional information5 | ||||||||||||||||||||||||
Total assets | 248,140 | 53,197 | 20,238 | 991,964 | 26,999 | 1,340,538 | ||||||||||||||||||
Additions to non-current assets | 43 | 59 | 11 | 81 | 745 | 939 | ||||||||||||||||||
Wealth | Treasury activities | |||||||||||||||||||||||||||
Wealth Management & | Management | Global Asset | and other | |||||||||||||||||||||||||
Swiss Bank | Americas | Management | Investment Bank | corporate items | UBS | |||||||||||||||||||||||
Wealth | Retail & | |||||||||||||||||||||||||||
CHF million | Management | Corporate | ||||||||||||||||||||||||||
For the year ended 31 December 2009 | ||||||||||||||||||||||||||||
Net interest income | 1,853 | 2,681 | 800 | 2 | 2,339 | (1,229 | ) | 6,446 | ||||||||||||||||||||
Non-interest income | 5,574 | 1,415 | 4,746 | 2,134 | 2,494 | 1,623 | 17,987 | |||||||||||||||||||||
Income1 | 7,427 | 4,096 | 5,546 | 2,137 | 4,833 | 394 | 24,433 | |||||||||||||||||||||
Credit loss (expense) / recovery | 45 | (178 | ) | 3 | 0 | (1,698 | ) | (5 | ) | (1,832 | ) | |||||||||||||||||
Total operating income | 7,471 | 3,918 | 5,550 | 2,137 | 3,135 | 389 | 22,601 | |||||||||||||||||||||
Personnel expenses | 3,360 | 1,836 | 4,231 | 996 | 5,568 | 551 | 16,543 | |||||||||||||||||||||
General and administrative expenses | 1,182 | 835 | 1,017 | 387 | 2,628 | 199 | 6,248 | |||||||||||||||||||||
Services to / from other business divisions | 428 | (518 | ) | 4 | (74 | ) | (147 | ) | 306 | 0 | ||||||||||||||||||
Depreciation of property and equipment | 154 | 136 | 170 | 36 | 360 | 193 | 1,048 | |||||||||||||||||||||
Impairment of goodwill2 | 0 | 0 | 34 | 340 | 749 | 0 | 1,123 | |||||||||||||||||||||
Amortization of intangible assets2 | 67 | 0 | 62 | 13 | 59 | 0 | 200 | |||||||||||||||||||||
Total operating expenses3 | 5,191 | 2,289 | 5,518 | 1,698 | 9,216 | 1,250 | 25,162 | |||||||||||||||||||||
Performance from continuing operations before tax | 2,280 | 1,629 | 32 | 438 | (6,081 | ) | (860 | ) | (2,561 | ) | ||||||||||||||||||
Performance from discontinued operations before tax | 0 | 0 | 0 | 0 | 0 | (7 | ) | (7 | ) | |||||||||||||||||||
Performance before tax | 2,280 | 1,629 | 32 | 438 | (6,081 | ) | (867 | ) | (2,569 | ) | ||||||||||||||||||
Tax expense / (benefit) on continuing operations | (443 | ) | ||||||||||||||||||||||||||
Tax expense / (benefit) on discontinued operations | 0 | |||||||||||||||||||||||||||
Net profit | (2,125 | ) | ||||||||||||||||||||||||||
Additional information4 | ||||||||||||||||||||||||||||
Total assets | 109,627 | 138,513 | 53,197 | 20,238 | 991,964 | 26,999 | 1,340,538 | |||||||||||||||||||||
Additions to non-current assets | 13 | 30 | 59 | 11 | 81 | 745 | 939 | |||||||||||||||||||||
284295
Financial information
Note 2a Segment reporting (continued)
Internal chargesTransactions between the reportable segments are carried out at internally agreed rates or at arm’s length and transfer pricing adjustments are reflected in the performance of each business.segment. Revenue-sharing agreements are used to allocate external customerclient revenues to a business division on a reasonable basis. Transactionssegment and cost-allocation agreements are used to allocate shared costs between business divisions are conducted at internally agreed transfer prices or at arm’s length.the segments.
Wealth | Treasury activities | |||||||||||||||||||||||||||||||||||||||||||||||||||
Wealth Management & | Management | Global Asset | and other | |||||||||||||||||||||||||||||||||||||||||||||||||
Wealth | Wealth | Swiss Bank | Americas | Management | Investment Bank | corporate items | UBS | |||||||||||||||||||||||||||||||||||||||||||||
Management & | Management | Global Asset | Investment | Corporate | Wealth | Retail & | ||||||||||||||||||||||||||||||||||||||||||||||
CHF million | Swiss Bank | Americas | Management | Bank | Center | UBS | Management | Corporate | ||||||||||||||||||||||||||||||||||||||||||||
For the year ended 31 December 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest income | 5,424 | 938 | (2 | ) | 2,007 | (2,375 | ) | 5,992 | 2,217 | 3,207 | 938 | (2 | ) | 2,007 | (2,375 | ) | 5,992 | |||||||||||||||||||||||||||||||||||
Non-interest income | 9,989 | 5,340 | 2,906 | (23,808 | ) | 3,373 | (2,200 | ) | 8,285 | 1,704 | 5,340 | 2,906 | (23,808 | ) | 3,373 | (2,200 | ) | |||||||||||||||||||||||||||||||||||
Income1 | 15,413 | 6,278 | 2,905 | (21,800 | ) | 998 | 3,792 | 10,502 | 4,911 | 6,278 | 2,905 | (21,800 | ) | 998 | 3,792 | |||||||||||||||||||||||||||||||||||||
Credit loss (expense)/recovery | (392 | ) | (29 | ) | 0 | (2,575 | ) | 0 | (2,996 | ) | ||||||||||||||||||||||||||||||||||||||||||
Credit loss (expense) / recovery | (388 | ) | (4 | ) | (29 | ) | 0 | (2,575 | ) | 0 | (2,996 | ) | ||||||||||||||||||||||||||||||||||||||||
Total operating income | 15,021 | 6,249 | 2,904 | (24,375 | ) | 998 | 796 | 10,114 | 4,907 | 6,249 | 2,904 | (24,375 | ) | 998 | 796 | |||||||||||||||||||||||||||||||||||||
Personnel expenses | 5,430 | 4,271 | 946 | 5,182 | 433 | 16,262 | 3,503 | 1,927 | 4,271 | 946 | 5,182 | 433 | 16,262 | |||||||||||||||||||||||||||||||||||||||
General and administrative expenses | 3,295 | 2,558 | 462 | 3,830 | 353 | 10,498 | 2,357 | 938 | 2,558 | 462 | 3,830 | 353 | 10,498 | |||||||||||||||||||||||||||||||||||||||
Services to/from other business divisions | (73 | ) | 16 | 88 | 41 | (73 | ) | 0 | ||||||||||||||||||||||||||||||||||||||||||||
Services to / from other business divisions | 409 | (482 | ) | 16 | 88 | 41 | (73 | ) | 0 | |||||||||||||||||||||||||||||||||||||||||||
Depreciation of property and equipment | 323 | 162 | 44 | 447 | 265 | 1,241 | 181 | 142 | 162 | 44 | 447 | 265 | 1,241 | |||||||||||||||||||||||||||||||||||||||
Impairment of goodwill2 | 0 | 0 | 0 | 341 | 0 | 341 | ||||||||||||||||||||||||||||||||||||||||||||||
Impairment of goodwill | 0 | 0 | 0 | 0 | 341 | 0 | 341 | |||||||||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets2 | 33 | 65 | 33 | 83 | 0 | 213 | ||||||||||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets | 33 | 0 | 65 | 33 | 83 | 0 | 213 | |||||||||||||||||||||||||||||||||||||||||||||
Total operating expenses | 9,008 | 7,072 | 1,572 | 9,925 | 979 | 28,555 | ||||||||||||||||||||||||||||||||||||||||||||||
Total operating expenses2 | 6,483 | 2,524 | 7,072 | 1,572 | 9,925 | 979 | 28,555 | |||||||||||||||||||||||||||||||||||||||||||||
Performance from continuing operations before tax | 6,013 | (823 | ) | 1,333 | (34,300 | ) | 19 | (27,758 | ) | 3,631 | 2,382 | (823 | ) | 1,333 | (34,300 | ) | 19 | (27,758 | ) | |||||||||||||||||||||||||||||||||
Performance from discontinued operations before tax | 0 | 0 | 0 | 0 | 198 | 198 | 0 | 0 | 0 | 0 | 0 | 198 | 198 | |||||||||||||||||||||||||||||||||||||||
Performance before tax | 6,013 | (823 | ) | 1,333 | (34,300 | ) | 217 | (27,560 | ) | 3,631 | 2,382 | (823 | ) | 1,333 | (34,300 | ) | 217 | (27,560 | ) | |||||||||||||||||||||||||||||||||
Tax expense on continuing operations | (6,837 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Tax expense / (benefit) on continuing operations | (6,837 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Tax expense on discontinued operations | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Tax expense / (benefit) on discontinued operations | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net profit | (20,724 | ) | (20,724 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Additional information3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | 251,487 | 39,039 | 24,640 | 1,680,257 | 19,392 | 2,014,815 | 96,777 | 154,710 | 39,039 | 24,640 | 1,680,257 | 19,392 | 2,014,815 | |||||||||||||||||||||||||||||||||||||||
Additions to non-current assets | 275 | 135 | 430 | 809 | 961 | 2,609 | 241 | 34 | 135 | 430 | 809 | 961 | 2,609 |
285
Financial informationNotes to the consolidated financial statements
Note 2a Segment reporting (continued)
Internal charges and transfer pricing adjustments are reflected in the performance of each business. Revenue-sharing agreements are used to allocate external customer revenues to a business division on a reasonable basis. Transactions between business divisions are conducted at internally agreed transfer prices or at arm’s length.
Wealth | Wealth | |||||||||||||||||||||||
Management & | Management | Global Asset | Investment | Corporate | ||||||||||||||||||||
CHF million | Swiss Bank | Americas | Management | Bank | Center1 | UBS | ||||||||||||||||||
For the year ended 31 December 2007 | ||||||||||||||||||||||||
Net interest income | 5,600 | 824 | (76 | ) | 209 | (1,220 | ) | 5,337 | ||||||||||||||||
Non-interest income | 12,089 | 6,329 | 4,170 | (747 | ) | 4,782 | 26,622 | |||||||||||||||||
Income2 | 17,689 | 7,153 | 4,094 | (538 | ) | 3,562 | 31,959 | |||||||||||||||||
Credit loss (expense)/recovery | 30 | (2 | ) | 0 | (266 | ) | (0 | ) | (238 | ) | ||||||||||||||
Total operating income | 17,718 | 7,151 | 4,094 | (804 | ) | 3,562 | 31,721 | |||||||||||||||||
Personnel expenses | 6,356 | 5,060 | 1,883 | 11,633 | 583 | 25,515 | ||||||||||||||||||
General and administrative expenses | 2,514 | 1,209 | 593 | 3,800 | 312 | 8,429 | ||||||||||||||||||
Services to/from other business divisions | (43 | ) | 28 | 73 | (171 | ) | 114 | 0 | ||||||||||||||||
Depreciation of property and equipment | 334 | 163 | 72 | 4313 | 243 | 1,243 | ||||||||||||||||||
Amortization of intangible assets4 | 15 | 70 | 19 | 172 | 0 | 276 | ||||||||||||||||||
Total operating expenses | 9,176 | 6,530 | 2,640 | 15,865 | 1,252 | 35,463 | ||||||||||||||||||
Performance from continuing operations before tax | 8,543 | 621 | 1,454 | (16,669 | ) | 2,310 | (3,742 | ) | ||||||||||||||||
Performance from discontinued operations before tax | 0 | 0 | 0 | 0 | 145 | 145 | ||||||||||||||||||
Performance before tax | 8,543 | 621 | 1,454 | (16,669 | ) | 2,455 | (3,597 | ) | ||||||||||||||||
Tax expense on continuing operations | 1,369 | |||||||||||||||||||||||
Tax expense on discontinued operations | (258 | ) | ||||||||||||||||||||||
Net profit | (4,708 | ) | ||||||||||||||||||||||
Additional information5 | ||||||||||||||||||||||||
Total assets | 256,738 | 34,730 | 43,500 | 1,922,815 | 17,109 | 2,274,891 | ||||||||||||||||||
Additions to non-current assets | 223 | 416 | 553 | 1,111 | 1,927 | 4,230 | ||||||||||||||||||
286296
Financial information |
Note 2b Segment reporting by geographic location
The geographic analysis of operating income and non-current assets is based on the location of the entity in which the transactions and assets are recorded. The divisions of the Group are managed on an autonomous basis worldwide with a focus on cross-divisional collaboration and the interest of UBS’sour clients to yield the maximum possible profitability by product line for the Group. The geographical analysis of operating income and non-current assets is provided in order to comply with IFRS.
For the year ended 31 December 2010 | ||||||||||||||||
Total operating income | Total non-current assets | |||||||||||||||
CHF million | Share % | CHF million | Share % | |||||||||||||
Switzerland | 12,670 | 40 | 4,922 | 31 | ||||||||||||
United Kingdom | 2,791 | 9 | 594 | 4 | ||||||||||||
Rest of Europe | 1,514 | 5 | 1,078 | 7 | ||||||||||||
United States | 10,752 | 34 | 8,673 | 54 | ||||||||||||
Asia Pacific | 3,796 | 12 | 394 | 2 | ||||||||||||
Rest of the world | 470 | 1 | 418 | 3 | ||||||||||||
Total | 31,994 | 100 | 16,080 | 100 | ||||||||||||
For the year ended 31 December 2009 | ||||||||||||||||
Total operating income | Total non-current assets | |||||||||||||||
CHF million | Share % | CHF million | Share % | |||||||||||||
Switzerland | 11,939 | 53 | 5,137 | 28 | ||||||||||||
United Kingdom | (3,999 | ) | (18 | ) | 743 | 4 | ||||||||||
Rest of Europe | 1,264 | 6 | 1,266 | 7 | ||||||||||||
United States | 9,333 | 41 | 9,928 | 55 | ||||||||||||
Asia Pacific | 3,770 | 17 | 451 | 3 | ||||||||||||
Rest of the world | 294 | 1 | 565 | 3 | ||||||||||||
Total | 22,601 | 100 | 18,090 | 100 | ||||||||||||
For the year ended 31 December 2008 | ||||||||||||||||
Total operating income | Total non-current assets | |||||||||||||||
CHF million | Share % | CHF million | Share % | |||||||||||||
Switzerland | 11,564 | 1,453 | 5,207 | 25 | ||||||||||||
United Kingdom | (9,219 | ) | (1,158 | ) | 805 | 4 | ||||||||||
Rest of Europe | 6,132 | 770 | 1,337 | 7 | ||||||||||||
United States | (10,519 | ) | (1,321 | ) | 10,505 | 51 | ||||||||||
Asia Pacific | 3,122 | 392 | 495 | 2 | ||||||||||||
Rest of the world | (284 | ) | (36 | ) | 2,184 | 11 | ||||||||||
Total | 796 | 100 | 20,533 | 100 | ||||||||||||
For the year ended 31 December 2007 | ||||||||||||||||
Total operating income | Total non-current assets | |||||||||||||||
CHF million | Share % | CHF million | Share % | |||||||||||||
Switzerland | 18,787 | 59 | 5,355 | 22 | ||||||||||||
United Kingdom | (1,671 | ) | (5 | ) | 2,336 | 10 | ||||||||||
Rest of Europe | 2,541 | 8 | 1,006 | 4 | ||||||||||||
United States | 880 | 3 | 11,686 | 49 | ||||||||||||
Asia Pacific | 6,393 | 20 | 388 | 2 | ||||||||||||
Rest of the world | 4,791 | 15 | 2,980 | 13 | ||||||||||||
Total | 31,721 | 100 | 23,751 | 100 | ||||||||||||
287297
Financial information
Notes to the consolidated financial statements
Income statement notes
Note 3 Net interest and trading income
Accounting standards require separate disclosure of“Net interest income”incomeand“Net trading income”income (see(see the tables on this and the next page). This required disclosure, however, does not take into account that net interest and trading income are generated by a range of different businesses. In many cases, a particular business can generate both net interest and trading income. Fixed income trading activity, for example, generates both trading profits and coupon income. UBS considers it to be more meaningful to analyze net interest and trading income according to the businesses that drive
it. The second table below (“Breakdown(Breakdown by busi-
nesses”)businesses) provides information that corresponds to this view: “NetNet income from trading businesses”businesses includes both interest and trading income generated by the Investment Bank, including its lending activities, and trading income generated by the other business divisions; “NetNet income from interest margin businesses”businesses comprises interest income from the loan portfolios of Wealth Management & Swiss Bank and Wealth Management Americas; “NetNet income from treasury activities and other”other reflects all income from the Group’s centralized treasury function.
For the year ended | % change from | For the year ended | % change from | ||||||||||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.08 | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | |||||||||||||||||||||||||
Net interest and trading income | |||||||||||||||||||||||||||||||||
Net interest income | 6,446 | 5,992 | 5,337 | 8 | 6,215 | 6,446 | 5,992 | (4 | ) | ||||||||||||||||||||||||
Net trading income | (324 | ) | (25,820 | ) | (8,353 | ) | 99 | 7,471 | (324 | ) | (25,820 | ) | |||||||||||||||||||||
Total net interest and trading income | 6,122 | (19,828 | ) | (3,016 | ) | 13,686 | 6,122 | (19,828 | ) | 124 | |||||||||||||||||||||||
Breakdown by businesses | |||||||||||||||||||||||||||||||||
Net income from trading businesses1 | 382 | (27,203) | (10,658 | ) | 7,508 | 382 | (27,203 | ) | |||||||||||||||||||||||||
Net income from interest margin businesses | 5,053 | 6,160 | 6,230 | (18 | ) | 4,624 | 5,053 | 6,160 | (8 | ) | |||||||||||||||||||||||
Net income from treasury activities and other | 687 | 1,214 | 1,412 | (43 | ) | 1,554 | 687 | 1,214 | 126 | ||||||||||||||||||||||||
Total net interest and trading income | 6,122 | (19,828 | ) | (3,016 | ) | 13,686 | 6,122 | (19,828 | ) | 124 | |||||||||||||||||||||||
Net interest income2 | |||||||||||||||||||||||||||||||||
Interest income | |||||||||||||||||||||||||||||||||
Interest earned on loans and advances3 | 13,202 | 20,213 | 21,263 | (35 | ) | ||||||||||||||||||||||||||||
Interest earned on loans and advances3, 4 | 10,603 | 13,202 | 20,213 | (20 | ) | ||||||||||||||||||||||||||||
Interest earned on securities borrowed and reverse repurchase agreements | 2,629 | 22,521 | 48,274 | (88 | ) | 1,436 | 2,629 | 22,521 | (45 | ) | |||||||||||||||||||||||
Interest and dividend income from trading portfolio | 7,150 | 22,397 | 39,101 | (68 | ) | 6,015 | 7,150 | 22,397 | (16 | ) | |||||||||||||||||||||||
Interest income on financial assets designated at fair value | 316 | 404 | 298 | (22 | ) | 262 | 316 | 404 | (17 | ) | |||||||||||||||||||||||
Interest and dividend income from financial investments available-for-sale | 164 | 145 | 176 | 13 | 557 | 164 | 145 | 240 | |||||||||||||||||||||||||
Total | 23,461 | 65,679 | 109,112 | (64 | ) | 18,872 | 23,461 | 65,679 | (20 | ) | |||||||||||||||||||||||
Interest expense | |||||||||||||||||||||||||||||||||
Interest on amounts due to banks and customers | 3,873 | 18,150 | 29,318 | (79 | ) | ||||||||||||||||||||||||||||
Interest on amounts due to banks and customers5 | 1,984 | 3,873 | 18,150 | (49 | ) | ||||||||||||||||||||||||||||
Interest on securities lent and repurchase agreements | 2,179 | 16,123 | 40,581 | (86 | ) | 1,282 | 2,179 | 16,123 | (41 | ) | |||||||||||||||||||||||
Interest and dividend expense from trading portfolio | 3,878 | 9,162 | 15,812 | (58 | ) | 3,794 | 3,878 | 9,162 | (2 | ) | |||||||||||||||||||||||
Interest on financial liabilities designated at fair value | 2,855 | 7,298 | 7,659 | (61 | ) | 2,392 | 2,855 | 7,298 | (16 | ) | |||||||||||||||||||||||
Interest on debt issued | 4,231 | 8,954 | 10,405 | (53 | ) | 3,206 | 4,231 | 8,954 | (24 | ) | |||||||||||||||||||||||
Total | 17,016 | 59,687 | 103,775 | (71 | ) | 12,657 | 17,016 | 59,687 | (26 | ) | |||||||||||||||||||||||
Net interest income | 6,446 | 5,992 | 5,337 | 8 | 6,215 | 6,446 | 5,992 | (4 | ) |
288298
Financial information |
Financial information
Note 3 Net interest and trading income (continued) | ||||||||||||||||
Net trading income1 | ||||||||||||||||
For the year ended | % change from | |||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.08 | ||||||||||||
Investment Bank equities | 2,462 | 4,694 | 9,048 | (48 | ) | |||||||||||
Investment Bank fixed income, currencies and commodities | (5,455 | ) | (35,040 | ) | (21,424 | ) | 84 | |||||||||
Other business divisions | 2,668 | 4,525 | 4,023 | (41 | ) | |||||||||||
Net trading income | (324 | ) | (25,820 | ) | (8,353 | ) | 99 | |||||||||
of which: net gains/(losses) from financial assets designated at fair value | 678 | (974 | ) | (30 | ) | |||||||||||
of which: net gains/(losses) from financial liabilities designated at fair value2 | (6,741 | ) | 44,284 | (3,779 | ) | |||||||||||
For the year ended | % change from | |||||||||||||||
CHF million | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | ||||||||||||
Net trading income1 | ||||||||||||||||
Investment Bank equities | 2,356 | 2,462 | 4,694 | (4 | ) | |||||||||||
Investment Bank fixed income, currencies and commodities | 2,000 | (5,455 | ) | (35,040 | ) | |||||||||||
Other business divisions2 | 3,115 | 2,668 | 4,525 | 17 | ||||||||||||
Net trading income | 7,471 | (324 | ) | (25,820 | ) | |||||||||||
of which: net gains / (losses) from financial assets designated at fair value | 465 | 678 | (974 | ) | (31 | ) | ||||||||||
of which: net gains / (losses) from financial liabilities designated at fair value3 | (1,001 | ) | (6,741 | ) | 44,284 | 85 | ||||||||||
Significant impacts on net trading income
Net trading incomein 2009 includes2010 included a lossgain of CHF 0.80.7 billion from credit valuation adjustments for monoline credit protection (CHF 8.20.8 billion loss in 2008); refer to the “Risk management and control” section of this report for more information on exposure to monolines. Additional losses2009). 2010Net trading income also included a gain of CHF 23.7 billion related to positions previously considered risk concentrations were included in 2008.
The SNB transaction resulted in gains of CHF 0.10.7 billion from the valuation of UBS’s
option to acquire the SNB StabFund’s equity and losses of CHF 0.2 billion due to price adjustments for positions transferred to the fund (losses of CHF 5.2 billion in 2008).
è | Refer to the “Risk management and control” section of this report for more information on exposure to monolines and the option to acquire equity of the SNB StabFund |
Note 4 Net fee and commission income
For the year ended | % change from | For the year ended | % change from | |||||||||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.08 | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | ||||||||||||||||||||||||
Equity underwriting fees | 1,590 | 1,138 | 2,564 | 40 | 1,157 | 1,590 | 1,138 | (27 | ) | |||||||||||||||||||||||
Debt underwriting fees | 796 | 818 | 1,178 | (3 | ) | 755 | 796 | 818 | (5 | ) | ||||||||||||||||||||||
Total underwriting fees | 2,386 | 1,957 | 3,742 | 22 | 1,912 | 2,386 | 1,957 | (20 | ) | |||||||||||||||||||||||
M&A and corporate finance fees | 881 | 1,662 | 2,768 | (47 | ) | 857 | 881 | 1,662 | (3 | ) | ||||||||||||||||||||||
Brokerage fees1 | 6,217 | 8,209 | 10,211 | (24 | ) | 4,930 | 5,400 | 7,150 | (9 | ) | ||||||||||||||||||||||
Investment fund fees | 4,000 | 5,583 | 7,422 | (28 | ) | 3,898 | 4,000 | 5,583 | (3 | ) | ||||||||||||||||||||||
Portfolio management and advisory fees2 | 5,863 | 7,667 | 9,454 | (24 | ) | |||||||||||||||||||||||||||
Portfolio management and advisory fees | 5,959 | 5,863 | 7,667 | 2 | ||||||||||||||||||||||||||||
Insurance-related and other fees | 264 | 317 | 423 | (17 | ) | 361 | 264 | 317 | 37 | |||||||||||||||||||||||
Total securities trading and investment activity fees | 19,611 | 25,394 | 34,020 | (23 | ) | 17,918 | 18,794 | 24,335 | (5 | ) | ||||||||||||||||||||||
Credit-related fees and commissions | 339 | 273 | 279 | 24 | 448 | 339 | 273 | 32 | ||||||||||||||||||||||||
Commission income from other services | 878 | 1,010 | 1,017 | (13 | ) | 850 | 878 | 1,010 | (3 | ) | ||||||||||||||||||||||
Total fee and commission income | 20,827 | 26,677 | 35,316 | (22 | ) | 19,216 | 20,010 | 25,618 | (4 | ) | ||||||||||||||||||||||
Brokerage fees paid1 | 1,748 | 1,763 | 2,540 | (1 | ) | 1,093 | 1,231 | 1,164 | (11 | ) | ||||||||||||||||||||||
Other | 1,368 | 1,984 | 2,142 | (31 | ) | |||||||||||||||||||||||||||
Other1 | 964 | 1,068 | 1,524 | (10 | ) | |||||||||||||||||||||||||||
Total fee and commission expense | 3,116 | 3,748 | 4,682 | (17 | ) | 2,057 | 2,299 | 2,689 | (11 | ) | ||||||||||||||||||||||
Net fee and commission income | 17,712 | 22,929 | 30,634 | (23 | ) | 17,160 | 17,712 | 22,929 | (3 | ) | ||||||||||||||||||||||
of which: net brokerage fees | 4,469 | 6,445 | 7,671 | (31 | ) | |||||||||||||||||||||||||||
of which: net brokerage fees1 | 3,837 | 4,169 | 5,985 | (8 | ) |
289299
Financial information
Notes to the consolidated financial statements
Note 5 Other income
For the year ended | % change from | For the year ended | % change from | |||||||||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.08 | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | ||||||||||||||||||||||||
Associates and subsidiaries | ||||||||||||||||||||||||||||||||
Net gains from disposals of consolidated subsidiaries1 | 96 | (184 | ) | (70 | ) | (7 | ) | 96 | (184 | ) | ||||||||||||||||||||||
Net gains from disposals of investments in associates | (1 | ) | 199 | 28 | ||||||||||||||||||||||||||||
Net gains from disposals of investments in associates2 | 256 | (1 | ) | 199 | ||||||||||||||||||||||||||||
Share of net profits of associates | 37 | (6 | ) | 145 | 81 | 37 | (6 | ) | 119 | |||||||||||||||||||||||
Total | 133 | 9 | 103 | 331 | 133 | 9 | 149 | |||||||||||||||||||||||||
Financial investments available-for-sale | ||||||||||||||||||||||||||||||||
Net gains from disposals | 110 | 615 | 2 | 3,338 | 3 | (82 | ) | 204 | 110 | 615 | 3 | 85 | ||||||||||||||||||||
Impairment charges | (349 | )4 | (202 | ) | (71 | ) | (73 | ) | (72 | ) | (349 | )4 | (202 | ) | 79 | |||||||||||||||||
Total | (239 | ) | 413 | 3,267 | 132 | (239 | ) | 413 | ||||||||||||||||||||||||
Net income from investments in property5 | 72 | 88 | 108 | (18 | ) | |||||||||||||||||||||||||||
Net income from properties5 | 53 | 72 | 88 | (26 | ) | |||||||||||||||||||||||||||
Net gains from investment properties6 | (39 | ) | 0 | 31 | 8 | �� | (39 | ) | 0 | |||||||||||||||||||||||
Other income from Industrial Holdings | 0 | 0 | 689 | |||||||||||||||||||||||||||||
Other | 672 | 7 | 183 | 143 | 267 | |||||||||||||||||||||||||||
Other7 | 690 | 672 | 183 | 3 | ||||||||||||||||||||||||||||
Total other income | 599 | 692 | 4,341 | (13 | ) | 1,214 | 599 | 692 | 103 |
Note 6 Personnel expenses
For the year ended | % change from | |||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.08 | ||||||||||||
Salaries and variable compensation | 12,801 | 12,207 | 20,715 | 5 | ||||||||||||
Contractors | 275 | 423 | 630 | (35 | ) | |||||||||||
Insurance and social security contributions | 851 | 706 | 1,290 | 21 | ||||||||||||
Contribution to retirement plans | 941 | 926 | 922 | 2 | ||||||||||||
Other personnel expenses | 1,675 | 2,000 | 1,958 | (16 | ) | |||||||||||
Total personnel expenses | 16,543 | 16,262 | 25,515 | 2 | ||||||||||||
of which: share-based personnel expense | 913 | (94 | ) | 3,173 | ||||||||||||
For the year ended | % change from | |||||||||||||||||||
CHF million | Note | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | |||||||||||||||
Salaries | 7,033 | 7,383 | 7,775 | (5 | ) | |||||||||||||||
Variable compensation – discretionary bonus | 31 | 4,082 | 2,809 | 1,674 | 45 | |||||||||||||||
Variable compensation – other1 | 31 | 310 | 830 | 1,025 | (63 | ) | ||||||||||||||
Contractors | 232 | 275 | 423 | (16 | ) | |||||||||||||||
Social security2 | 826 | 804 | 660 | 3 | ||||||||||||||||
Pension and other post-employment benefit plans2 | 30 | 724 | 988 | 972 | (27 | ) | ||||||||||||||
Wealth Management Americas: financial advisor compensation3 | 31 | 2,667 | 2,426 | 2,435 | 10 | |||||||||||||||
Other personnel expenses1 | 1,047 | 1,027 | 1,298 | 2 | ||||||||||||||||
Total personnel expenses | 16,920 | 16,543 | 16,262 | 2 | ||||||||||||||||
Note 7 General and administrative expenses
For the year ended | % change from | For the year ended | % change from | |||||||||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.08 | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | ||||||||||||||||||||||||
Occupancy | 1,420 | 1,516 | 1,569 | (6 | ) | 1,252 | 1,420 | 1,516 | (12 | ) | ||||||||||||||||||||||
Rent and maintenance of IT and other equipment | 623 | 669 | 701 | (7 | ) | 555 | 623 | 669 | (11 | ) | ||||||||||||||||||||||
Telecommunications and postage | 697 | 888 | 948 | (22 | ) | 664 | 697 | 888 | (5 | ) | ||||||||||||||||||||||
Administration | 695 | 926 | 991 | (25 | ) | 669 | 695 | 926 | (4 | ) | ||||||||||||||||||||||
Marketing and public relations | 225 | 408 | 585 | (45 | ) | 339 | 225 | 408 | 51 | |||||||||||||||||||||||
Travel and entertainment | 412 | 728 | 1,029 | (43 | ) | 466 | 412 | 728 | 13 | |||||||||||||||||||||||
Professional fees | 830 | 1,085 | 1,106 | (24 | ) | 754 | 830 | 1,085 | (9 | ) | ||||||||||||||||||||||
Outsourcing of IT and other services | 836 | 1,029 | 1,233 | (19 | ) | 1,078 | 836 | 1,029 | 29 | |||||||||||||||||||||||
Other | 512 | 3,249 | 1 | 267 | (84 | ) | ||||||||||||||||||||||||||
Other1 | 807 | 512 | 3,249 | 2 | 58 | |||||||||||||||||||||||||||
Total general and administrative expenses | 6,248 | 10,498 | 8,429 | (40 | ) | 6,585 | 6,248 | 10,498 | 5 |
290300
Financial information |
Note 8 Earnings per share (EPS) and shares outstanding
As of or for the year ended | % change from | |||||||||||||||
31.12.10 | 31.12.09 | 31.12.08 | 31.12.09 | |||||||||||||
Basic earnings (CHF million) | ||||||||||||||||
Net profit attributable to UBS shareholders | 7,534 | (2,736 | ) | (21,292 | ) | |||||||||||
from continuing operations | 7,533 | (2,719 | ) | (21,442 | ) | |||||||||||
from discontinued operations | 1 | (17 | ) | 150 | ||||||||||||
Diluted earnings (CHF million) | ||||||||||||||||
Net profit attributable to UBS shareholders | 7,534 | (2,736 | ) | (21,292 | ) | |||||||||||
Less: (profit) / loss on equity derivative contracts | (2 | ) | (5 | ) | (28 | ) | 60 | |||||||||
Net profit attributable to UBS shareholders for diluted EPS | 7,532 | (2,741 | ) | (21,320 | ) | |||||||||||
from continuing operations | 7,531 | (2,724 | ) | (21,470 | ) | |||||||||||
from discontinued operations | 1 | (17 | ) | 150 | ||||||||||||
Weighted average shares outstanding | ||||||||||||||||
Weighted average shares outstanding for basic EPS | 3,789,732,938 | 3,661,086,266 | 2,792,023,098 | 4 | ||||||||||||
Potentially dilutive ordinary shares resulting from unvested exchangeable shares, in-the-money options and warrants outstanding1 | 48,599,111 | 754,948 | 1,151,556 | |||||||||||||
Weighted average shares outstanding for diluted EPS | 3,838,332,049 | 3,661,841,214 | 2,793,174,654 | 5 | ||||||||||||
Potential ordinary shares from unexercised employee shares and in-the-money options not considered due to the anti-dilutive effect | 0 | 20,166,373 | 27,909,964 | (100 | ) | |||||||||||
Earnings per share (CHF) | ||||||||||||||||
Basic | 1.99 | (0.75 | ) | (7.63 | ) | |||||||||||
from continuing operations | 1.99 | (0.74 | ) | (7.68 | ) | |||||||||||
from discontinued operations | 0.00 | 0.00 | 0.05 | |||||||||||||
Diluted | 1.96 | (0.75 | ) | (7.63 | ) | |||||||||||
from continuing operations | 1.96 | (0.74 | ) | (7.69 | ) | |||||||||||
from discontinued operations | 0.00 | 0.00 | 0.05 | |||||||||||||
Shares outstanding | ||||||||||||||||
Ordinary shares issued | 3,830,840,513 | 3,558,112,753 | 2,932,580,549 | 8 | ||||||||||||
Treasury shares | 38,892,031 | 37,553,872 | 61,903,121 | 4 | ||||||||||||
Shares outstanding | 3,791,948,482 | 3,520,558,881 | 2,870,677,428 | 8 | ||||||||||||
Retrospective adjustment for capital increase2 | 23,252,487 | |||||||||||||||
Mandatory convertible notes and exchangeable shares3 | 580,261 | 273,264,461 | 605,547,748 | (100 | ) | |||||||||||
Shares outstanding for EPS | 3,792,528,743 | 3,793,823,342 | 3,499,477,663 | 0 | ||||||||||||
As of or for the year ended | % change from | |||||||||||||||
31.12.09 | 31.12.08 | 31.12.07 | 31.12.08 | |||||||||||||
Basic earnings (CHF million) | ||||||||||||||||
Net profit attributable to UBS shareholders | (2,736 | ) | (21,292 | ) | (5,247 | ) | 87 | |||||||||
from continuing operations | (2,719 | ) | (21,442 | ) | (5,650 | ) | 87 | |||||||||
from discontinued operations | (17 | ) | 150 | 403 | ||||||||||||
Diluted earnings (CHF million) | ||||||||||||||||
Net profit attributable to UBS shareholders | (2,736 | ) | (21,292 | ) | (5,247 | ) | 87 | |||||||||
Less: (profit)/loss on equity derivative contracts | (5 | ) | (28 | ) | (16 | ) | 82 | |||||||||
Net profit attributable to UBS shareholders for diluted EPS | (2,741 | ) | (21,320 | ) | (5,263 | ) | 87 | |||||||||
from continuing operations | (2,724 | ) | (21,470 | ) | (5,666 | ) | 87 | |||||||||
from discontinued operations | (17 | ) | 150 | 403 | ||||||||||||
Weighted average shares outstanding | ||||||||||||||||
Weighted average shares outstanding for basic EPS | 3,661,086,266 | 2,792,023,098 | 2,182,836,078 | 31 | ||||||||||||
Potentially dilutive ordinary shares resulting from unvested exchangeable shares, in-the-money options and warrants outstanding1 | 754,948 | 1,151,556 | 1,467,326 | 2 | (34 | ) | ||||||||||
Weighted average shares outstanding for diluted EPS | 3,661,841,214 | 2,793,174,654 | 2,184,303,404 | 31 | ||||||||||||
Potential ordinary shares from unexercised employee shares and in-the-money options not considered due to the anti-dilutive effect | 20,166,373 | 27,909,964 | 53,668,047 | (28 | ) | |||||||||||
Earnings per share (CHF) | ||||||||||||||||
Basic | (0.75 | ) | (7.63 | ) | (2.40 | ) | 90 | |||||||||
from continuing operations | (0.74 | ) | (7.68 | ) | (2.59 | ) | 90 | |||||||||
from discontinued operations | 0.00 | 0.05 | 0.18 | (100 | ) | |||||||||||
Diluted | (0.75 | ) | (7.63 | ) | (2.41 | ) | 90 | |||||||||
from continuing operations | (0.74 | ) | (7.69 | ) | (2.59 | ) | 90 | |||||||||
from discontinued operations | 0.00 | 0.05 | 0.18 | (100 | ) | |||||||||||
Shares outstanding | ||||||||||||||||
Ordinary shares issued | 3,558,112,753 | 2,932,580,549 | 2,073,547,344 | 21 | ||||||||||||
Treasury shares | 37,553,872 | 61,903,121 | 158,105,524 | (39 | ) | |||||||||||
Shares outstanding | 3,520,558,881 | 2,870,677,428 | 1,915,441,820 | 23 | ||||||||||||
Retrospective adjustments for stock dividend3 | 95,772,091 | |||||||||||||||
Retrospective adjustments for rights issue2 | 141,850,917 | |||||||||||||||
Retrospective adjustment for capital increase4 | 23,252,487 | 17,439,825 | ||||||||||||||
Mandatory convertible notes and exchangeable shares5 | 273,264,461 | 605,547,748 | 518,711 | (55 | ) | |||||||||||
Shares outstanding for EPS | 3,793,823,342 | 3,499,477,663 | 2,171,023,364 | 8 | ||||||||||||
291301
Financial information
Notes to the consolidated financial statements
Balance sheet notes: assets
Note 9a Due from banks and loans (held at amortized cost) | ||||||||
CHF million | 31.12.09 | 31.12.08 | ||||||
By type of exposure | ||||||||
Banks, gross | 46,606 | 64,473 | ||||||
Allowance for credit losses | (32 | ) | (22 | ) | ||||
Net due from banks | 46,574 | 64,451 | ||||||
Loans, gross | ||||||||
Residential mortgages | 121,031 | 121,811 | ||||||
Commercial mortgages | 19,970 | 21,270 | ||||||
Other loans1 | 141,237 | 173,812 | ||||||
Securities2 | 27,237 | 26,320 | ||||||
Subtotal | 309,475 | 343,213 | ||||||
Allowance for credit losses | (2,648 | ) | (2,905 | ) | ||||
of which: related to securities | (179 | ) | (126 | ) | ||||
Net loans | 306,828 | 340,308 | ||||||
Net due from banks and loans (held at amortized cost) | 353,402 | 404,759 | ||||||
By geographical region (based on the location of the borrower) | ||||||||
Switzerland | 163,397 | 166,798 | ||||||
United Kingdom | 24,038 | 30,540 | ||||||
Rest of Europe | 35,482 | 47,724 | ||||||
United States | 85,411 | 105,907 | ||||||
Asia Pacific | 19,531 | 23,279 | ||||||
Rest of the world | 32,231 | 38,590 | ||||||
Subtotal | 360,090 | 412,838 | ||||||
Allowance for credit losses | (2,680 | ) | (2,927 | ) | ||||
Net due from banks, loans (held at amortized cost) and loans designated at fair value3 | 357,410 | 409,911 | ||||||
By type of collateral | ||||||||
Secured by real estate | 142,617 | 145,491 | ||||||
Collateralized by securities | 56,783 | 56,312 | ||||||
Guarantees and other collateral | 75,589 | 113,032 | ||||||
Unsecured | 85,101 | 98,003 | ||||||
Subtotal | 360,090 | 412,838 | ||||||
Allowance for credit losses | (2,680 | ) | (2,927 | ) | ||||
Net due from banks, loans (held at amortized cost) and loans designated at fair value3 | 357,410 | 409,911 | ||||||
CHF million | 31.12.10 | 31.12.09 | ||||||
By type of exposure | ||||||||
Banks, gross | 17,158 | 16,836 | ||||||
Allowance for credit losses | (24 | ) | (32 | ) | ||||
Net due from banks | 17,133 | 16,804 | ||||||
Loans, gross | ||||||||
Residential mortgages | 122,499 | 121,031 | ||||||
Commercial mortgages | 20,362 | 19,970 | ||||||
Current accounts and loans | 99,710 | 100,887 | ||||||
Securities1 | 21,392 | 27,237 | ||||||
Subtotal | 263,964 | 269,124 | ||||||
Allowance for credit losses | (1,087 | ) | (2,648 | ) | ||||
of which: related to securities1 | (273 | ) | (179 | ) | ||||
Net loans | 262,877 | 266,477 | ||||||
Net due from banks and loans (held at amortized cost) | 280,010 | 283,281 | ||||||
By geographical region (based on the location of the borrower) | ||||||||
Switzerland | 161,109 | 159,990 | ||||||
United Kingdom | 7,376 | 9,681 | ||||||
Rest of Europe | 22,142 | 25,360 | ||||||
United States | 52,097 | 60,520 | ||||||
Asia Pacific | 16,984 | 13,659 | ||||||
Rest of the world | 24,672 | 20,759 | ||||||
Subtotal | 284,381 | 289,969 | ||||||
Allowance for credit losses | (1,111 | ) | (2,680 | ) | ||||
Net due from banks, loans (held at amortized cost) and loans designated at fair value2 | 283,270 | 287,289 | ||||||
By type of collateral | ||||||||
Secured by real estate | 144,403 | 142,617 | ||||||
Collateralized by securities | 46,565 | 39,463 | ||||||
Guarantees and other collateral | 30,890 | 39,439 | ||||||
Unsecured | 62,523 | 68,450 | ||||||
Subtotal | 284,381 | 289,969 | ||||||
Allowance for credit losses | (1,111 | ) | (2,680 | ) | ||||
Net due from banks, loans (held at amortized cost) and loans designated at fair value2 | 283,270 | 287,289 | ||||||
292
302
Financial information |
Note 9b Allowances and provisions for credit losses
Note 9b Allowances and provisions for credit losses | ||||||||||||||||||||||||||||||||
Specific | Collective loan | Specific | ||||||||||||||||||||||||||||||
allowances and | loss allowances | allowances and | Collective loan | |||||||||||||||||||||||||||||
CHF million | provisions | and provisions | Total 31.12.09 | Total 31.12.08 | provisions | loss allowances | Total 31.12.10 | Total 31.12.09 | ||||||||||||||||||||||||
Balance at the beginning of the year | 3,047 | 23 | 3,070 | 1,164 | 2,771 | 49 | 2,820 | 3,070 | ||||||||||||||||||||||||
Write-offs | (2,046 | ) | 0 | (2,046 | ) | (868 | ) | (1,505 | ) | 0 | (1,505 | ) | (2,046 | ) | ||||||||||||||||||
Recoveries | 52 | 0 | 52 | 44 | 79 | 0 | 79 | 52 | ||||||||||||||||||||||||
Increase/(decrease) in credit loss allowances and provisions recognized in the income statement | 1,806 | 26 | 1,832 | 2,996 | ||||||||||||||||||||||||||||
Increase / (decrease) in credit loss allowances and provisions recognized in the income statement | 67 | (2 | ) | 66 | 1,832 | |||||||||||||||||||||||||||
Disposals | (51 | ) | 0 | (51 | ) | (223 | ) | 0 | 0 | 0 | (51 | ) | ||||||||||||||||||||
Foreign currency translation and other adjustments | (37 | ) | 0 | (37 | ) | (43 | ) | (173 | ) | 0 | (173 | ) | (37 | ) | ||||||||||||||||||
Balance at the end of the year | 2,771 | 1 | 49 | 2,820 | 3,070 | 1,239 | 1 | 47 | 1,287 | 2,820 | ||||||||||||||||||||||
Specific | Collective loan | |||||||||||||||||||||||||||||||
allowances and | loss allowances | |||||||||||||||||||||||||||||||
CHF million | provisions | and provisions | Total 31.12.09 | Total 31.12.08 | ||||||||||||||||||||||||||||
As a reduction of due from banks | 32 | 0 | 32 | 22 | ||||||||||||||||||||||||||||
As a reduction of loans1 | 2,598 | 49 | 2,648 | 2,905 | ||||||||||||||||||||||||||||
As a reduction of securities borrowed | 51 | 0 | 51 | 112 | ||||||||||||||||||||||||||||
Subtotal | 2,681 | 49 | 2,730 | 3,039 | ||||||||||||||||||||||||||||
Included in other liabilities related to provisions for contingent claims | 90 | 0 | 90 | 31 | ||||||||||||||||||||||||||||
Total allowances and provisions for credit losses | 2,771 | 49 | 2,820 | 3,070 | ||||||||||||||||||||||||||||
Specific | ||||||||||||||||
allowances and | Collective loan | |||||||||||||||
CHF million | provisions | loss allowances | Total 31.12.10 | Total 31.12.09 | ||||||||||||
As a reduction of due from banks | 24 | 0 | 24 | 32 | ||||||||||||
As a reduction of loans1 | 1,039 | 47 | 1,087 | 2,648 | ||||||||||||
As a reduction of securities borrowed | 46 | 0 | 46 | 51 | ||||||||||||
Subtotal | 1,109 | 47 | 1,157 | 2,730 | ||||||||||||
Included in other liabilities related to provisions for contingent claims | 130 | 0 | 130 | 90 | ||||||||||||
Total allowances and provisions for credit losses | 1,239 | 47 | 1,287 | 2,820 | ||||||||||||
Note 10 Cash collateral on securities borrowed and lent, reverse repurchase and reverse repurchase agreements, and derivative instruments
The Group enters into collateralized reverse repurchase and repurchase agreements, and securities borrowing and securities lending transactions and derivative transactions that may result in credit exposure in the event that the counterparty to the transaction is unable to fulfill its contractual obligations. The Group controls credit
credit risk associated with these activities by monitoring counterparty credit exposure and collateral values on a daily basis and requiring additional collateral to be deposited with or returned to the Group when deemed necessary.
Balance sheet assets | Balance sheet assets | Balance sheet assets | ||||||||||||||||||||||||||||||||||
Cash collateral on | Reverse repurchase | Cash collateral on | Reverse repurchase | Cash collateral | Cash collateral | |||||||||||||||||||||||||||||||
securities borrowed | agreements | securities borrowed | agreements | |||||||||||||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.09 | 31.12.08 | 31.12.08 | ||||||||||||||||||||||||||||||||
By counterparty | ||||||||||||||||||||||||||||||||||||
Banks | 17,143 | 71,051 | 17,523 | 110,254 | ||||||||||||||||||||||||||||||||
Customers | 46,364 | 45,638 | 105,374 | 114,393 | ||||||||||||||||||||||||||||||||
Total | 63,507 | 116,689 | 122,897 | 224,648 | ||||||||||||||||||||||||||||||||
Balance sheet liabilities | ||||||||||||||||||||||||||||||||||||
Cash collateral | Reverse | receivables | Reverse | receivables | ||||||||||||||||||||||||||||||||
Cash collateral on | Repurchase | Cash collateral on | Repurchase | on securities | repurchase | on derivative | Cash collateral on | repurchase | on derivative | |||||||||||||||||||||||||||
securities lent | agreements | securities lent | agreements | borrowed | agreements | instruments | securities borrowed | agreements | instruments | |||||||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.09 | 31.12.08 | 31.12.08 | 31.12.10 | 31.12.10 | 31.12.10 | 31.12.09 | 31.12.09 | 31.12.09 | ||||||||||||||||||||||||||
By counterparty | ||||||||||||||||||||||||||||||||||||
Banks | 7,268 | 26,167 | 12,181 | 36,088 | 20,302 | 91,788 | 20,230 | 17,143 | 71,051 | 29,705 | ||||||||||||||||||||||||||
Customers | 727 | 38,008 | 1,881 | 66,473 | 42,153 | 51,002 | 17,841 | 46,364 | 45,638 | 24,069 | ||||||||||||||||||||||||||
Total | 7,995 | 64,175 | 14,063 | 102,561 | 62,454 | 142,790 | 38,071 | 63,507 | 116,689 | 53,774 |
Balance sheet liabilities | ||||||||||||||||||||||||
Cash collateral | Cash collateral | |||||||||||||||||||||||
payables | payables | |||||||||||||||||||||||
Cash collateral on | Repurchase | on derivative | Cash collateral on | Repurchase | on derivative | |||||||||||||||||||
securities lent | agreements | instruments | securities lent | agreements | instruments | |||||||||||||||||||
CHF million | 31.12.10 | 31.12.10 | 31.12.10 | 31.12.09 | 31.12.09 | 31.12.09 | ||||||||||||||||||
By counterparty | ||||||||||||||||||||||||
Banks | 5,820 | 28,201 | 34,930 | 7,268 | 26,167 | 32,932 | ||||||||||||||||||
Customers | 831 | 46,595 | 23,994 | 727 | 38,008 | 33,165 | ||||||||||||||||||
Total | 6,651 | 74,796 | 58,924 | 7,995 | 64,175 | 66,097 | ||||||||||||||||||
293303
Financial information
Notes to the consolidated financial statements
Note 11 Trading portfolio
The Group trades in debt instruments (including money market paperspaper and tradeabletradable loans), equity instruments, precious metals, other commodities and derivatives to meet the financial needs of its clientscustomers and to generate revenue. Non-derivative traded instruments are included in the table
below. For derivative instruments, referRefer to “Note 23 DerivativeDeriva-
tive instruments and hedge accounting”. The table below represents an IFRSa pure accounting view. It does not reflect hedges and other risk mitigating factors and the amounts must therefore may not be reflective forconsidered risk exposures.
31.12.09 | 31.12.08 | |||||||||||||||||||||||||||
CHF million | Level 1 | Level 2 | Level 3 | Total | 31.12.10 | 31.12.09 | ||||||||||||||||||||||
Trading portfolio assets | ||||||||||||||||||||||||||||
Trading portfolio assets by counterparty | ||||||||||||||||||||||||||||
Debt instruments | ||||||||||||||||||||||||||||
Government and government agencies | 59,731 | 21,656 | 742 | 82,129 | 115,696 | |||||||||||||||||||||||
Government and government agencies1 | 83,952 | 85,483 | ||||||||||||||||||||||||||
of which: Switzerland | 155 | 121 | 13,292 | 3,778 | ||||||||||||||||||||||||
of which: United States | 22,498 | 31,366 | 19,843 | 22,498 | ||||||||||||||||||||||||
of which: Japan | 25,795 | 46,049 | 25,996 | 25,795 | ||||||||||||||||||||||||
Banks | 578 | 13,768 | 678 | 15,024 | 23,175 | |||||||||||||||||||||||
Banks1 | 14,711 | 10,850 | ||||||||||||||||||||||||||
Corporates and other | 3,293 | 28,123 | 10,462 | 41,878 | 85,991 | 35,647 | 39,902 | |||||||||||||||||||||
Total debt instruments | 63,601 | 63,546 | 11,882 | 139,030 | 224,862 | 134,310 | 136,234 | |||||||||||||||||||||
of which: pledged as collateral | 46,348 | 62,153 | ||||||||||||||||||||||||||
of which: pledged as collateral and can be repledged or resold by counterparty | 30,622 | 30,903 | ||||||||||||||||||||||||||
Equity instruments | 61,788 | 14,317 | 258 | 76,364 | 77,258 | 57,506 | 57,541 | |||||||||||||||||||||
of which: pledged as collateral | 18,400 | 15,849 | ||||||||||||||||||||||||||
Financial assets for unit-linked investment contracts | 18,056 | 21,619 | ||||||||||||||||||||||||||
of which: pledged as collateral and can be repledged or resold by counterparty | 13,599 | 9,312 | ||||||||||||||||||||||||||
Financial assets held for trading | 209,873 | 215,393 | ||||||||||||||||||||||||||
Subtotal | 125,389 | 77,864 | 12,141 | 215,393 | 302,120 | |||||||||||||||||||||||
Precious metals and other commodities | 16,864 | 9,934 | ||||||||||||||||||||||||||
Precious metals and other physical commodities | 18,942 | 16,864 | ||||||||||||||||||||||||||
Total trading portfolio assets | 232,258 | 312,054 | 228,815 | 232,258 | ||||||||||||||||||||||||
Trading portfolio liabilities | ||||||||||||||||||||||||||||
Trading portfolio liabilities by counterparty | ||||||||||||||||||||||||||||
Debt instruments | ||||||||||||||||||||||||||||
Government and government agencies | 20,389 | 5,917 | 0 | 26,306 | 34,043 | |||||||||||||||||||||||
Government and government agencies1 | 29,628 | 26,317 | ||||||||||||||||||||||||||
of which: Switzerland | 85 | 129 | 237 | 85 | ||||||||||||||||||||||||
of which: United States | 10,351 | 18,914 | 11,729 | 10,351 | ||||||||||||||||||||||||
of which: Japan | 3,384 | 2,344 | 7,699 | 3,384 | ||||||||||||||||||||||||
Banks | 753 | 2,617 | 102 | 3,472 | 4,354 | |||||||||||||||||||||||
Banks1 | 3,107 | 3,462 | ||||||||||||||||||||||||||
Corporates and other | 298 | 4,989 | 161 | 5,447 | 10,945 | 4,640 | 5,447 | |||||||||||||||||||||
Total debt instruments | 21,441 | 13,523 | 262 | 35,226 | 49,342 | 37,376 | 35,226 | |||||||||||||||||||||
Equity instruments | 12,014 | 70 | 160 | 12,243 | 13,089 | 17,599 | 12,243 | |||||||||||||||||||||
Total trading portfolio liabilities | 33,454 | 13,593 | 422 | 47,469 | 62,431 | 54,975 | 47,469 |
294304
Financial information |
Note 11 Trading portfolio (continued)
31.12.10 | 31.12.09 | |||||||||||||||||||
CHF million | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Trading portfolio assets by product type | ||||||||||||||||||||
Debt instruments | ||||||||||||||||||||
Government bills / bonds | 43,583 | 22,543 | 310 | 66,435 | 67,528 | |||||||||||||||
Corporate bonds, including bonds issued by financial institutions | 1,097 | 42,275 | 3,864 | 47,237 | 49,460 | |||||||||||||||
Loans | 0 | 3,117 | 2,425 | 5,543 | 5,559 | |||||||||||||||
Asset-backed securities | 7,070 | 4,287 | 3,741 | 15,098 | 13,688 | |||||||||||||||
of which: mortgage-backed securities | 7,070 | 2,360 | 925 | 10,355 | 9,202 | |||||||||||||||
Total debt instruments | 51,751 | 72,222 | 10,337 | 134,310 | 136,234 | |||||||||||||||
Equity instruments | ||||||||||||||||||||
Shares | 40,861 | 2,041 | 273 | 43,175 | 43,074 | |||||||||||||||
Investment fund units and other | 5,432 | 8,726 | 174 | 14,331 | 14,467 | |||||||||||||||
Total equity instruments | 46,292 | 10,767 | 446 | 57,506 | 57,541 | |||||||||||||||
Financial assets for unit-linked investment contracts | 18,056 | 0 | 0 | 18,056 | 21,619 | |||||||||||||||
Financial assets held for trading | 116,100 | 82,989 | 10,783 | 209,873 | 215,393 | |||||||||||||||
Precious metals and other physical commodities | 18,942 | 16,864 | ||||||||||||||||||
Total trading portfolio assets | 228,815 | 232,258 | ||||||||||||||||||
Trading portfolio liabilities by product type | ||||||||||||||||||||
Debt instruments | ||||||||||||||||||||
Government bills / bonds | 25,079 | 1,561 | 10 | 26,650 | 22,259 | |||||||||||||||
Corporate bonds, including bonds issued by financial institutions | 864 | 9,544 | 117 | 10,525 | 12,033 | |||||||||||||||
Loans | 0 | 0 | 0 | 0 | 160 | |||||||||||||||
Asset-backed securities | 77 | 97 | 27 | 200 | 774 | |||||||||||||||
of which: mortgage-backed securities | 76 | 47 | 0 | 123 | 515 | |||||||||||||||
Total debt instruments | 26,020 | 11,201 | 154 | 37,376 | 35,226 | |||||||||||||||
Equity instruments | ||||||||||||||||||||
Shares | 15,947 | 419 | 128 | 16,494 | 11,615 | |||||||||||||||
Investment fund units and other | 959 | 146 | 0 | 1,106 | 629 | |||||||||||||||
Total equity instruments | 16,906 | 565 | 128 | 17,599 | 12,243 | |||||||||||||||
Total trading portfolio liabilities | 42,926 | 11,766 | 282 | 54,975 | 47,469 | |||||||||||||||
305
Financial information
Notes to the consolidated financial statements
Note 12 Financial assets designated at fair value
Note 12 Financial assets designated at fair value | ||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.10 | 31.12.09 | ||||||||||||
Loans | 3,052 | 4,500 | 2,331 | 3,052 | ||||||||||||
Structured loans | 957 | 653 | 929 | 957 | ||||||||||||
Reverse repurchase and securities borrowing agreements | ||||||||||||||||
Banks | 3,712 | 4,321 | 2,784 | 3,712 | ||||||||||||
Customers | 1,662 | 2,329 | 1,345 | 1,662 | ||||||||||||
Other financial assets | 840 | 1,079 | 1,115 | 840 | ||||||||||||
Total financial assets designated at fair value | 10,223 | 12,882 | 8,504 | 10,223 |
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 9,383except CHF 856 million atas of 31 December 2010 and CHF 840 million as of 31 December 2009 and CHF 11,803 million at 31 December 2008). reported inOther financial assetswhich are generally comprised of equity investments andthat are not directly exposed to credit risk. The maximum exposure to
31 December 2009 and 31 December 2008 is mitigated by collateral of CHF 4,8453,929 million and CHF 6,3354,845 million, respectively.
CHF million | 31.12.09 | 31.12.08 | 31.12.10 | 31.12.09 | ||||||||||||
Notional amount of loans and structured loans | 4,224 | 6,186 | 4,075 | 4,224 | ||||||||||||
Credit derivatives related to loans and structured loans – notional amounts1 | 2,699 | 4,314 | ||||||||||||||
Credit derivatives related to loans and structured loans – notional amount1 | 1,730 | 2,699 | ||||||||||||||
Credit derivatives related to loans and structured loans – fair value1 | 90 | 547 | (5 | ) | 90 |
Additional Information | Additional Information | Additional Information | ||||||||||||||||||||||||||||||
Cumulative from inception | Cumulative from inception | |||||||||||||||||||||||||||||||
For the year ended | until the year ended | For the year ended | until the year ended | |||||||||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.09 | 31.12.08 | 31.12.10 | 31.12.09 | 31.12.10 | 31.12.09 | ||||||||||||||||||||||||
Change in fair value of loans and structured loans designated at fair value, attributable to changes in credit risk2 | 530 | (668 | ) | (128 | ) | (659 | ) | 100 | 530 | (27 | ) | (128 | ) | |||||||||||||||||||
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 value2 | (435 | ) | 486 | 90 | 547 | (94 | ) | (435 | ) | (5 | ) | 90 |
295306
Financial information |
Note 13 Financial investments available-for-sale
CHF million | 31.12.10 | 31.12.09 | ||||||
Financial investments available-for-sale by counterparty | ||||||||
Debt instruments | ||||||||
Government and government agencies1 | 67,552 | 76,938 | ||||||
of which: Switzerland | 3,206 | 646 | ||||||
of which: United States | 38,070 | 47,282 | ||||||
of which: United Kingdom | 8,303 | 4,741 | ||||||
of which: Japan | 6,541 | 3,950 | ||||||
Banks1 | 5,091 | 2,937 | ||||||
Corporates and other | 765 | 531 | ||||||
Total debt instruments | 73,409 | 80,406 | ||||||
Equity instruments | 1,359 | 1,351 | ||||||
Total financial investments available-for-sale | 74,768 | 81,757 | ||||||
unrealized gains – before tax | 514 | 577 | ||||||
unrealized (losses) – before tax | (662) | 2 | (93 | ) | ||||
Net unrealized gains / (losses) – before tax | (148 | ) | 484 | |||||
Net unrealized gains / (losses) – after tax | (243 | ) | 375 | |||||
31.12.10 | 31.12.09 | |||||||||||||||||||
CHF million | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Financial investments available-for-sale by product | ||||||||||||||||||||
Debt instruments | ||||||||||||||||||||
Government bills / bonds | 52,285 | 5,324 | 32 | 57,642 | 64,908 | |||||||||||||||
Corporate bonds, including bonds issued by financial institutions | 561 | 11,045 | 64 | 11,670 | 14,688 | |||||||||||||||
Asset-backed securities | 6 | 4,078 | 13 | 4,097 | 810 | |||||||||||||||
of which: mortgage-backed securities | 2 | 4,078 | 13 | 4,093 | 807 | |||||||||||||||
Total debt instruments | 52,852 | 20,447 | 110 | 73,409 | 80,406 | |||||||||||||||
Equity instruments | ||||||||||||||||||||
Shares | 80 | 445 | 496 | 1,021 | 862 | |||||||||||||||
Investment fund units | 87 | 23 | 110 | 119 | ||||||||||||||||
Private equity investments | 2 | 1 | 224 | 227 | 370 | |||||||||||||||
Total equity instruments | 82 | 533 | 743 | 1,359 | 1,351 | |||||||||||||||
Total financial investments available-for-sale | 52,935 | 20,980 | 853 | 74,768 | 81,757 | |||||||||||||||
307
Financial information
Notes to the consolidated financial statements
Note 13 Financial investments available-for-sale | |||||||||||||||||||||
31.12.09 | 31.12.08 | ||||||||||||||||||||
CHF million | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
Debt instruments | |||||||||||||||||||||
Government and government agencies | 72,510 | 3,591 | 41 | 76,142 | 2,349 | ||||||||||||||||
of which: Switzerland | 232 | 3 | |||||||||||||||||||
of which: United States | 46,906 | 281 | |||||||||||||||||||
of which: Germany | 7,958 | 0 | |||||||||||||||||||
of which: France | 7,936 | 0 | |||||||||||||||||||
of which: United Kingdom | 4,774 | 2,014 | |||||||||||||||||||
of which: Japan | 3,950 | 0 | |||||||||||||||||||
Banks | 1,748 | 1,981 | 4 | 3,732 | 180 | ||||||||||||||||
Corporates and other | 14 | 95 | 422 | 531 | 1,038 | ||||||||||||||||
Total debt instruments1 | 74,271 | 5,667 | 467 | 80,406 | 3,567 | ||||||||||||||||
Equity instruments | 35 | 405 | 910 | 1,351 | 1,681 | ||||||||||||||||
Total financial investments available-for-sale | 74,307 | 6,073 | 1,378 | 81,757 | 5,248 | ||||||||||||||||
Net unrealized gains (losses) – before tax | 500 | 403 | |||||||||||||||||||
Net unrealized gains (losses) – after tax | 391 | 349 | |||||||||||||||||||
Note 14 Investments in 2009 is mainly related to UBS’s strategic decision to rebalance its liquidity reserve which led to a shift from reverse repurchase agreements and trading portfolio assets into debt instruments available-for-sale. These instruments include high quality liquid short-term securities issued by governments and government-controlled institutions in various currencies, mainly US dollar and euro.
Note 14 Investments in associates | ||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.10 | 31.12.09 | ||||||||||||
Carrying amount at the beginning of the year | 892 | 1,979 | 870 | 892 | ||||||||||||
Additions | 14 | 807 | 19 | 14 | ||||||||||||
Disposals | (38 | ) | (1,307 | ) | (94 | ) | (38 | ) | ||||||||
Transfers | (1 | ) | (422 | ) | 0 | (1 | ) | |||||||||
Income | 42 | 12 | 86 | 42 | ||||||||||||
Impairments | (4 | ) | (18 | ) | (6 | ) | (4 | ) | ||||||||
Dividends paid | (30 | ) | (34 | ) | (29 | ) | (30 | ) | ||||||||
Foreign currency translation | (5 | ) | (125 | ) | (55 | ) | (5 | ) | ||||||||
Carrying amount at the end of the year | 870 | 892 | 790 | 870 |
Significant associated companies of the Group had the following balance sheet and income statement totals on an aggregated basis, not adjusted for the Group’s proportionate interest. Refer to “Note 34 Significant subsidiaries and associates”.
CHF million | 31.12.09 | 31.12.08 | ||||||
Assets | 5,155 | 4,272 | ||||||
Liabilities | 3,248 | 3,448 | ||||||
Revenues | 1,468 | 1,211 | ||||||
Net profit | 319 | 198 | ||||||
296
CHF million | 31.12.10 | 31.12.09 | ||||||
Assets | 6,391 | 5,155 | ||||||
Liabilities | 4,391 | 3,248 | ||||||
Revenues | 1,371 | 1,468 | ||||||
Net profit | 239 | 319 | ||||||
Note 15 Property and equipment
At historical cost less accumulated depreciation | At historical cost less accumulated depreciation | At historical cost less accumulated depreciation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leasehold | IT, software | Other | IT, software | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Own-used | improve- | and com- | machines and | Projects in | Own-used | Leasehold | and com- | Other machines | Projects | |||||||||||||||||||||||||||||||||||||||||||||||
CHF million | properties | ments | munication | equipment | progress | 31.12.09 | 31.12.08 | properties | improvements | munication | and equipment | in progress | 31.12.10 | 31.12.09 | ||||||||||||||||||||||||||||||||||||||||||
Historical cost | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at the beginning of the year | 9,289 | 3,393 | 4,086 | 867 | 317 | 17,952 | 18,723 | 9,468 | 3,227 | 4,150 | 784 | 217 | 17,846 | 17,952 | ||||||||||||||||||||||||||||||||||||||||||
Additions | 259 | 77 | 265 | 24 | 229 | 854 | 1,181 | 33 | 96 | 170 | 41 | 198 | 538 | 854 | ||||||||||||||||||||||||||||||||||||||||||
Additions from acquired companies | 0 | 0 | 0 | 0 | 0 | 0 | 7 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||
Disposals/write-offs1 | (15 | ) | (309 | ) | (346 | ) | (65 | ) | 0 | (736 | ) | (792 | ) | |||||||||||||||||||||||||||||||||||||||||||
Disposals write-offs1 | (36 | ) | (304 | ) | (185 | ) | (77 | ) | (0 | ) | (602 | ) | (736 | ) | ||||||||||||||||||||||||||||||||||||||||||
Reclassifications | (78 | ) | 76 | 132 | (34 | ) | (323 | ) | (227 | ) | (222 | ) | (90 | ) | 31 | 104 | 9 | (186 | ) | (132 | ) | (227 | ) | |||||||||||||||||||||||||||||||||
Foreign currency translation | 13 | (10 | ) | 12 | (7 | ) | (6 | ) | 2 | (945 | ) | (55 | ) | (218 | ) | (237 | ) | (58 | ) | (15 | ) | (583 | ) | 2 | ||||||||||||||||||||||||||||||||
Balance at the end of the year | 9,468 | 3,227 | 4,150 | 784 | 217 | 17,846 | 17,952 | 9,321 | 2,832 | 4,002 | 700 | 213 | 17,068 | 17,846 | ||||||||||||||||||||||||||||||||||||||||||
Accumulated depreciation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at the beginning of the year | 5,272 | 2,031 | 3,612 | 546 | 0 | 11,461 | 11,679 | 5,417 | 2,109 | 3,669 | 555 | 0 | 11,750 | 11,461 | ||||||||||||||||||||||||||||||||||||||||||
Depreciation2 | 247 | 358 | 371 | 72 | 0 | 1,048 | 1,241 | 209 | 286 | 359 | 63 | 0 | 918 | 1,048 | ||||||||||||||||||||||||||||||||||||||||||
Disposals/write-offs1 | (13 | ) | (263 | ) | (325 | ) | (42 | ) | 0 | (644 | ) | (697 | ) | (20 | ) | (280 | ) | (182 | ) | (66 | ) | 0 | (548 | ) | (644 | ) | ||||||||||||||||||||||||||||||
Reclassifications | (94 | ) | 3 | 2 | (14 | ) | 0 | (104 | ) | (164 | ) | (34 | ) | 38 | (0 | ) | 8 | 0 | 12 | (104 | ) | |||||||||||||||||||||||||||||||||||
Foreign currency translation | 6 | (20 | ) | 9 | (7 | ) | 0 | (12 | ) | (598 | ) | (25 | ) | (148 | ) | (220 | ) | (43 | ) | 0 | (437 | ) | (12 | ) | ||||||||||||||||||||||||||||||||
Balance at the end of the year | 5,417 | 2,109 | 3,669 | 555 | 0 | 11,750 | 11,461 | 5,548 | 2,005 | 3,625 | 518 | 0 | 11,695 | 11,750 | ||||||||||||||||||||||||||||||||||||||||||
Net book value at the end of the year3 | 4,051 | 1,118 | 481 | 229 | 217 | 6,096 | 6,491 | 3,773 | 827 | 377 | 182 | 213 | 5,373 | 6,096 |
Investment properties at fair value | Investment properties at fair value | Investment properties at fair value | ||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.10 | 31.12.09 | ||||||||||||
Balance at the beginning of the year | 215 | 189 | 116 | 215 | ||||||||||||
Additions | 0 | 37 | 3 | 0 | ||||||||||||
Sales | (60 | ) | 0 | (23 | ) | (60 | ) | |||||||||
Revaluations | (37 | ) | (6 | ) | 2 | (37 | ) | |||||||||
Reclassifications | 6 | 0 | ||||||||||||||
Foreign currency translation | (2 | ) | (5 | ) | (10 | ) | (2 | ) | ||||||||
Balance at the end of the year | 116 | 215 | 94 | 116 |
297308
Financial informationNotes to the consolidated financial statements
Financial information |
Note 16 Goodwill and intangible assets
Introduction
As of 31 December 2009,2010, the following four segments carried goodwill: Wealth Management & Swiss Bank (CHF 1.51.4 billion), Wealth Management Americas (CHF 3.73.3 billion), Global Asset Management (CHF 1.61.4 billion), and Investment Bank (CHF 3.33.0 billion). For the purpose of testing goodwill for impairment, UBS considers each of thesethe segments as reported in Note 2a as separate cash-generating units, and determines the recoverable amount of a segment on the basis of value in use.
Methodology for goodwill impairment testing
The recoverable amount is determined using a proprietary model based on discounted cash flows,flow model, which has been adapted to give effect to the specialuses inputs that consider features of the banking business and its regulatory environment. The recoverable amount is determinedcalculated by estimating streams of earnings available to shareholders inover the next five years, discounted to their present values. The terminal value reflecting all periods beyond the fifth year is calculated on the basis of the forecast of fifth-year profit, the cost of equity and the long-term growth rate. DuringFor the year 2009,2010 test, the discount rates and long-term growth rates used to calculate the present values were reduced to reflect the
Assumptions
The model used to determine the recoverable amount is most sensitive to changes in the forecast earnings available to shareholders in years one to five, the cost of equity and to changes in the long-term growth rate. The applied long-term growth rate is based on real growth rates and expected inflation. Earnings available to shareholders are estimated based on the basis of forecast results, which take into account business initiatives and planned capital investments, and returns to shareholders, which take into account amounts of capital that could be distributed or used for share buy-backs.investments. Valuation parameters used inwithin the Group’s impairment test model are linked to external market information, where applicable. Management believes that reasonable changes in key assumptions used to determine the recoverable amounts of all segments will not result in an impairment situation.
Discount and growth rates
Discount and growth rates | ||||||||||||||||||||||||||||
Discount rates | Growth rates | Discount rates | Growth rates | |||||||||||||||||||||||||
ln % | 31.12.09 | 31.12.08 | 31.12.09 | 31.12.08 | ||||||||||||||||||||||||
In % | 31.12.10 | 31.12.09 | 31.12.10 | 31.12.09 | ||||||||||||||||||||||||
Wealth Management & Swiss Bank | 9.0 | 9.5 | 1.2 | 1.3 | ||||||||||||||||||||||||
Wealth Management | 9.0 | 9.0 | 1.2 | 1.2 | ||||||||||||||||||||||||
Wealth Management Americas | 9.0 | 11.5 | 2.4 | 2.6 | 9.0 | 9.0 | 2.4 | 2.4 | ||||||||||||||||||||
Global Asset Management | 9.0 | 11.0 | 2.4 | 2.6 | 9.0 | 9.0 | 2.4 | 2.4 | ||||||||||||||||||||
Investment Bank | 11.0 | 13.0 | 2.4 | 2.6 | 11.0 | 11.0 | 2.4 | 2.4 |
309
298
Financial information
Note 16 Goodwill and intangible assets (continued)
Investment Bank/Bank / Wealth Management AmericasOn 31 December 2009,
As in prior years, the assessment of the goodwill of the Investment Bank and Wealth Management Americas continued to be a key focus. Goodwill allocated to the Investment Bank amounted to CHF 3.3 billion at 31 December 2009 (CHF 4.3 billion at 31 December 2008). The reduction is due to the derecognition of CHF 0.9 billion goodwill related to UBS Pactual, of which CHF 749 million was subject to an impairment (refer to Note 38 for details). Goodwill allocated to Wealth Management Americas amounted to CHF 3.7 billion at 31 December 2009 (CHF 3.8 billion at 31 December 2008). In 2009, CHF 40 million goodwill related to UBS Pactual was derecognized, of which CHF 34 million was subject to an impairment (refer to Note 38 for details).
In its review of the year-end 20092010 goodwill balance, UBS considered the performance outlook of its Investment Bank and Wealth Management Americas business divisions and the underlying business operations to resolve whether the recoverable amounts for these units coverscover their carrying amounts, based on the methodology described above. On this basis, UBS concluded that goodwill allocated to the Investment Bank and Wealth Management Americas remained
remains recoverable aton 31 December 2009.2010. The conclusion was reached based on the basis of the current forecast results and the underlying assumption that the economic environmenteconomy will gradually improve over the next three years and reach an average growth level thereafter. The fair value obtained from the model calculation was subject tolevel.
discounted cash flows by one-third and atflow model. The earnings used were based on an economic stress scenario. Under this economic stress scenario, the same time increasingkey macro economic drivers are severely reduced in the discount rate by 3.5 percentage points.near term, with a gradual recovery thereafter. The stressstressed values so obtained coveredexceeded the bookcarrying values of all business divisions, including the Investment Bank and Wealth Management Americas. However, if the regulatory pressure on the banking industry further intensifies and conditions in the financial markets turn out to be worse than anticipated in UBS’sour performance forecasts, the goodwill carried in the Investment Bank and Wealth Management Americasthese business divisions mightmay need to be impaired in future quarters.
periods.
Goodwill | Intangible assets | Goodwill | Intangible assets | |||||||||||||||||||||||||||||||||||||||||||||
Customer | Customer | |||||||||||||||||||||||||||||||||||||||||||||||
relationships, | relationships, | |||||||||||||||||||||||||||||||||||||||||||||||
contractual | contractual | |||||||||||||||||||||||||||||||||||||||||||||||
CHF million | Total | Infrastructure | rights and other | Total | 31.12.09 | 31.12.08 | Total | Infrastructure | rights and other | Total | 31.12.10 | 31.12.09 | ||||||||||||||||||||||||||||||||||||
Historical cost | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance at the beginning of the year | 11,585 | 824 | 1,308 | 2,131 | 13,716 | 15,324 | 10,115 | 787 | 894 | 1,680 | 11,795 | 13,716 | ||||||||||||||||||||||||||||||||||||
Additions and reallocations | 32 | 0 | 38 | 38 | 70 | 585 | 20 | 0 | 14 | 14 | 34 | 70 | ||||||||||||||||||||||||||||||||||||
Disposals | (1,631 | ) | (13 | ) | (546 | ) | (559 | ) | (2,190 | ) | (33 | ) | (3 | ) | 0 | 0 | 0 | (3 | ) | (2,190 | ) | |||||||||||||||||||||||||||
Write-offs1 | 0 | 0 | 0 | 0 | 0 | (472 | ) | 0 | 0 | (1 | ) | (1 | ) | (1 | ) | 0 | ||||||||||||||||||||||||||||||||
Foreign currency translation | 128 | (24 | ) | 95 | 71 | 199 | (1,688 | ) | (1,016 | ) | (77 | ) | (97 | ) | (174 | ) | (1,190 | ) | 199 | |||||||||||||||||||||||||||||
Balance at the end of the year | 10,115 | 787 | 894 | 1,680 | 11,795 | 13,716 | 9,115 | 710 | 809 | 1,519 | 10,634 | 11,795 | ||||||||||||||||||||||||||||||||||||
Accumulated amortization and impairment | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance at the beginning of the year | 0 | 337 | 444 | 781 | 781 | 786 | 0 | 361 | 426 | 787 | 787 | 781 | ||||||||||||||||||||||||||||||||||||
Amortization | 0 | 42 | 102 | 144 | 144 | 193 | 0 | 40 | 65 | 105 | 105 | 144 | ||||||||||||||||||||||||||||||||||||
Impairment of goodwill and intangible assets | 1,1232 | 0 | 57 | 57 | 1,180 | 361 | ||||||||||||||||||||||||||||||||||||||||||
Impairment | 0 | 0 | 12 | 12 | 12 | 1,180 | ||||||||||||||||||||||||||||||||||||||||||
Disposals | (1,199 | ) | (6 | ) | (211 | ) | (217 | ) | (1,416 | ) | (7 | ) | 0 | 0 | 0 | 0 | 0 | (1,416 | ) | |||||||||||||||||||||||||||||
Write-offs1 | 0 | 0 | 0 | 0 | 0 | (472 | ) | 0 | 0 | (1 | ) | (1 | ) | (1 | ) | 0 | ||||||||||||||||||||||||||||||||
Foreign currency translation | 76 | (12 | ) | 34 | 23 | 99 | (80 | ) | 0 | (39 | ) | (52 | ) | (91 | ) | (91 | ) | 99 | ||||||||||||||||||||||||||||||
Balance at the end of the year | 0 | 361 | 426 | 787 | 787 | 781 | 0 | 362 | 450 | 812 | 812 | 787 | ||||||||||||||||||||||||||||||||||||
Net book value at the end of the year | 10,115 | 425 | 468 | 893 | 11,008 | 12,935 | 9,115 | 348 | 359 | 707 | 9,822 | 11,008 |
310
Financial information |
2Note 16 Goodwill and intangible assets (continued) Represents
The following table presents the disclosure of goodwill impairment related to UBS Pactual.and intangible assets by business unit for the year ended 31 December 2010.
Balance at | Foreign | Balance at | ||||||||||||||||||||||||||
the beginning | Additions and | currency | the end of | |||||||||||||||||||||||||
CHF million | of the year | reallocations | Disposals | Amortization | Impairment | translation | the year | |||||||||||||||||||||
Goodwill | ||||||||||||||||||||||||||||
Wealth Management | 1,510 | 20 | (178 | ) | 1,351 | |||||||||||||||||||||||
Wealth Management Americas | 3,655 | (352 | ) | 3,303 | ||||||||||||||||||||||||
Global Asset Management | 1,610 | (161 | ) | 1,448 | ||||||||||||||||||||||||
Investment Bank | 3,341 | (3 | ) | (325 | ) | 3,013 | ||||||||||||||||||||||
UBS | 10,115 | 20 | (3 | ) | (1,016 | ) | 9,115 | |||||||||||||||||||||
Intangible assets | ||||||||||||||||||||||||||||
Wealth Management | 137 | (8 | ) | (12 | ) | (18 | ) | 100 | ||||||||||||||||||||
Wealth Management Americas | 526 | (55 | ) | (46 | ) | 425 | ||||||||||||||||||||||
Global Asset Management | 49 | 3 | (8 | ) | (5 | ) | 40 | |||||||||||||||||||||
Investment Bank | 182 | 10 | (34 | ) | (15 | ) | 143 | |||||||||||||||||||||
UBS | 893 | 14 | (105 | ) | (12 | ) | (83 | ) | 707 | |||||||||||||||||||
299The estimated, aggregated amortization expenses for intangible assets are as follows:
CHF million | Intangible assets | |||
Estimated, aggregated amortization expenses for: | ||||
2011 | 93 | |||
2012 | 88 | |||
2013 | 81 | |||
2014 | 74 | |||
2015 | 73 | |||
2016 and thereafter | 298 | |||
Total | 707 | |||
Note 17 Other assets
CHF million | 31.12.10 | 31.12.09 | ||||||
Settlement and clearing accounts | 708 | 915 | ||||||
VAT and other tax receivables | 275 | 209 | ||||||
Prepaid pension costs | 3,174 | 3,053 | ||||||
Properties held for sale | 302 | 568 | ||||||
Prime brokerage receivables | 16,395 | 16,347 | ||||||
Other receivables | 1,827 | 2,590 | ||||||
Total other assets | 22,681 | 23,682 | ||||||
311
Financial information
Notes to the consolidated financial statements
Note 16 Goodwill and intangible assets (continued)
The following table presents goodwill and intangible assets by business unit for the year ended 31 December 2009.
Balance at | Additions | Foreign | Balance at | |||||||||||||||||||||||||
the beginning | and | currency | the end of | |||||||||||||||||||||||||
CHF million | of the year | reallocations | Disposals | Amortization | Impairment | translation | the year | |||||||||||||||||||||
Goodwill | ||||||||||||||||||||||||||||
Wealth Management & Swiss Bank | 1,523 | 1 | (2 | ) | 0 | 0 | (11 | ) | 1,510 | |||||||||||||||||||
Wealth Management Americas | 3,803 | 1 | (1 | ) | (14 | ) | (34 | ) | (100 | ) | 3,655 | |||||||||||||||||
Global Asset Management | 1,982 | 4 | (130 | ) | (340 | ) | 94 | 1,610 | ||||||||||||||||||||
Investment Bank | 4,277 | 31 | (287 | ) | (749 | ) | 68 | 3,341 | ||||||||||||||||||||
UBS | 11,585 | 32 | (432 | ) | (1,123 | ) | 52 | 10,115 | ||||||||||||||||||||
Intangible assets | ||||||||||||||||||||||||||||
Wealth Management & Swiss Bank | 203 | 1 | 0 | 0 | (11 | ) | (56 | ) | 1 | 137 | ||||||||||||||||||
Wealth Management Americas | 674 | 1 | 0 | (83 | ) | (61 | ) | (1 | ) | (4 | ) | 526 | ||||||||||||||||
Global Asset Management | 186 | 0 | (160 | ) | (13 | ) | 0 | 36 | 49 | |||||||||||||||||||
Investment Bank | 286 | 38 | (99 | ) | (59 | ) | 0 | 15 | 182 | |||||||||||||||||||
UBS | 1,350 | 38 | (342 | ) | (144 | ) | (57 | ) | 48 | 893 | ||||||||||||||||||
The estimated, aggregated amortization expenses for intangible assets are as follows:
CHF million | Intangible assets | |||
Estimated, aggregated amortization expenses for: | ||||
2010 | 105 | |||
2011 | 103 | |||
2012 | 97 | |||
2013 | 89 | |||
2014 | 82 | |||
2015 and thereafter | 417 | |||
Total | 893 | |||
Note 17 Other assets
CHF million | 31.12.09 | 31.12.08 | ||||||
Settlement and clearing accounts | 915 | 1,203 | ||||||
VAT and other tax receivables | 209 | 330 | ||||||
Prepaid pension costs | 3,053 | 2,922 | ||||||
Properties held for sale | 568 | 981 | ||||||
Other receivables | 2,590 | 4,495 | ||||||
Total other assets | 7,336 | 9,931 | ||||||
300
Balance sheet notes: liabilities
Note 18 Due to banks and customers
CHF million | 31.12.09 | 31.12.08 | 31.12.10 | 31.12.09 | ||||||||||||
Due to banks | 65,166 | 125,628 | 41,490 | 31,922 | ||||||||||||
Due to customers in savings and investment accounts | 101,573 | 91,614 | 104,607 | 101,573 | ||||||||||||
Other amounts due to customers | 308,903 | 374,127 | 227,694 | 237,691 | ||||||||||||
Total due to customers | 410,475 | 465,741 | 332,301 | 339,263 | ||||||||||||
Total due to banks and customers | 475,641 | 591,369 | 373,791 | 371,185 |
Note 19 Financial liabilities designated at fair value and debt issued
Financial liabilities designated at fair value | Financial liabilities designated at fair value | Financial liabilities designated at fair value | ||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.10 | 31.12.09 | ||||||||||||
Bonds and compound debt instruments issued | ||||||||||||||||
Equity linked | 54,856 | 46,894 | 54,856 | |||||||||||||
Credit linked | 25,663 | 19,761 | 25,663 | |||||||||||||
Rates linked | 16,367 | 20,439 | 16,367 | |||||||||||||
Other | 2,286 | 949 | 2,286 | |||||||||||||
Total | 99,173 | 92,446 | 1 | 88,043 | 99,173 | |||||||||||
�� | �� | |||||||||||||||
Compound debt instruments – OTC | 13,306 | 7,468 | 12,475 | 13,306 | ||||||||||||
Loan commitments2 | 174 | 1,632 | ||||||||||||||
Repurchase agreements | 93 | 0 | ||||||||||||||
Loan commitments1 | 145 | 174 | ||||||||||||||
Total | 112,653 | 101,546 | 100,756 | 112,653 |
AtAs of 31 December 2010, the contractual redemption amount at maturity ofFinancial liabilities designated at fair valuethrough profit or loss was CHF 11.1 billion higher than the carrying value. As of 31 December 2009, the contractual redemption amount at maturity of Financial liabilities designated at fair value through profit or loss was CHF 7.6 billion higher than the carrying value. At 31 December 2008, the contractual re-
demption amount at maturity of such liabilities was CHF 12.27.6 billion higher than the carrying value. Refer to Note 1a) 8) for details.
Debt issued (held at amortized cost) | Debt issued (held at amortized cost) | Debt issued (held at amortized cost) | ||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.10 | 31.12.09 | ||||||||||||
Money market papers | 51,579 | 111,619 | 56,039 | 51,579 | ||||||||||||
Debt: | ||||||||||||||||
Senior bonds | 57,653 | 67,298 | 54,627 | 57,653 | ||||||||||||
Subordinated bonds | 11,244 | 12,769 | 8,547 | 11,244 | ||||||||||||
Bonds issued by the central bond institutions of the Swiss regional or cantonal banks | 7,909 | 2,418 | 8,455 | 7,909 | ||||||||||||
Medium-term notes | 2,967 | 3,150 | 2,605 | 2,967 | ||||||||||||
Total | 131,352 | 197,254 | 130,271 | 131,352 |
301312
Financial information |
Financial informationNotes to the consolidated financial statements
Note 19 Financial liabilities designated at fair value and debt issued (continued)
The Group uses interest rate and foreign exchange derivatives to manage the risks inherent in certain debt issues (held at amortized cost). In certain cases, the Group applies hedge accounting for interest rate risk as discussed in Note 1 a)1a) 15) and “Note 23 Derivative Instruments and Hedge Accounting”. As a result of applying hedge accounting, atas of 31 December 20092010 and 31 December 2008,2009, the carrying value of debt issued was CHF 600913 million higher and CHF 904600 million higher, respectively, reflecting changes in fair value due to interest rate movements.
Group had CHF 11,2448,547 million and CHF
12,769 11,244 million, respectively, in subordinated debt. Subordinated debt usually pays fixed interest annually or floating ratefloating-rate interest based on three-month or six-month London Interbank Offered Rate (LIBOR) and provides for single principal payments upon maturity.
Contractual maturity dates | Contractual maturity dates | Contractual maturity dates | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | Total | Total | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CHF million, except where indicated | 2010 | 2011 | 2012 | 2013 | 2014 | 2015-2019 | Thereafter | 31.12.09 | 31.12.08 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016–2020 | Thereafter | 31.12.10 | 31.12.09 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
UBS AG (Parent Bank) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior debt | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed rate | 66,450 | 13,600 | 7,839 | 10,609 | 8,132 | 17,517 | 6,209 | 130,356 | 103,579 | 66,270 | 9,108 | 18,435 | 8,010 | 9,061 | 18,044 | 9,839 | 138,767 | 130,356 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rates (range in %)1 | 0 – 10.46 | 0 – 10.00 | 0 – 7.0 | 0 – 9.44 | 0 – 8.84 | 0 – 9.5 | 0 – 8.0 | 0-10.0 | 0-10.0 | 0-10.0 | 0-10.0 | 0-8.4 | 0-9.5 | 0-8.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Floating rate | 16,341 | 11,154 | 10,463 | 5,653 | 4,368 | 8,631 | 11,765 | 68,375 | 81,000 | 14,378 | 11,349 | 6,507 | 5,045 | 6,436 | 5,811 | 9,847 | 59,372 | 68,375 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subordinated debt | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed rate | 0 | 0 | 0 | 0 | 397 | 5,488 | 1,282 | 7,167 | 8,875 | 0 | 0 | 0 | 397 | 1,049 | 3,914 | 1,052 | 6,412 | 7,167 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rates (range in %) | 3.34 | 2.38 – 7.38 | 6.38 – 8.75 | 3.34 | 2.38-7.38 | 3-7.38 | 6.38-8.75 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Floating rate | 0 | 0 | 0 | 0 | 0 | 3,578 | 499 | 4,077 | 3,820 | 0 | 0 | 0 | 0 | 0 | 1,703 | 431 | 2,134 | 4,077 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subtotal | 82,792 | 24,754 | 18,303 | 16,262 | 12,897 | 35,214 | 19,754 | 209,975 | 197,274 | 80,648 | 20,457 | 24,942 | 13,452 | 16,546 | 29,471 | 21,170 | 206,685 | 209,975 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subsidiaries | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior debt | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed rate | 8,335 | 1,012 | 308 | 340 | 180 | 944 | 8,375 | 19,494 | 83,003 | 8,742 | 266 | 315 | 155 | 39 | 869 | 4,009 | 14,396 | 19,494 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rates (range in %)1 | 0 – 9.0 | 0 – 9.49 | 0 – 7.74 | 0 – 9.0 | 0 – 7.63 | 0 – 5.54 | 0 – 12.0 | 0-8.38 | 0-9.62 | 0-2.82 | 0-7.63 | 0-7.4 | 0-8.25 | 0-10.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Floating rate | 1,160 | 1,451 | 1,354 | 1,108 | 713 | 4,650 | 4,102 | 14,537 | 18,449 | 816 | 1,058 | 881 | 818 | 1,423 | 1,587 | 3,363 | 9,947 | 14,537 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subordinated debt | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed rate | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 74 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rates (range in %) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Floating rate | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subtotal | 9,495 | 2,463 | 1,661 | 1,448 | 893 | 5,594 | 12,476 | 34,030 | 101,526 | 9,558 | 1,324 | 1,197 | 973 | 1,462 | 2,456 | 7,372 | 24,342 | 34,030 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 92,287 | 27,217 | 19,964 | 17,710 | 13,789 | 40,808 | 32,230 | 244,005 | 298,800 | 90,206 | 21,781 | 26,139 | 14,424 | 18,008 | 31,928 | 28,542 | 231,027 | 244,005 |
The table above indicates fixed interest rate coupons on the Group’s bonds. The high or low coupons generally relate to structured debt issues prior to the separation of embedded derivatives. As a result, the stated interest rate on such debt issues generally
issues generally does not reflect the effective interest rate the Group is paying to service its debt after the embedded derivative has been separated and, where applicable, the application of hedge accounting.
302313
Financial information
Note 20 Other liabilities
CHF million | Note | 31.12.09 | 31.12.08 | Note | 31.12.10 | 31.12.09 | ||||||||||||||||||
Provisions | 21 | 2,311 | 2,727 | 21 | 1,574 | 2,311 | ||||||||||||||||||
Provisions for contingent claims | 9b | 90 | 31 | 9b | 130 | 90 | ||||||||||||||||||
Current tax liabilities | 1,082 | 1,192 | 750 | 1,082 | ||||||||||||||||||||
Deferred tax liabilities | 22 | 142 | 1,470 | 22 | 97 | 142 | ||||||||||||||||||
VAT and other tax payables | 612 | 1,022 | 579 | 612 | ||||||||||||||||||||
Settlement and clearing accounts | 1,430 | 3,089 | 961 | 1,430 | ||||||||||||||||||||
Amounts due under unit-linked investment contracts | 21,740 | 22,084 | 18,125 | 21,740 | ||||||||||||||||||||
Prime brokerage payables | 36,383 | 38,359 | ||||||||||||||||||||||
Other payables1 | 6,579 | 11,384 | 5,121 | 6,579 | ||||||||||||||||||||
Total other liabilities | 33,986 | 42,998 | 63,719 | 72,344 |
Note 21 Provisions and litigationcontingent liabilities
a) Provisions | a) Provisions | |||||||||||||||||||||||||||||||||||||||||||||||
Total | Total | Total | Total | |||||||||||||||||||||||||||||||||||||||||||||
CHF million | Operational1 | Litigation2 | Restructuring | Other4 | 31.12.09 | 31.12.083 | Operational risks1 | Litigation2 | Restructuring | Other3 | 31.12.10 | 31.12.09 | ||||||||||||||||||||||||||||||||||||
Balance at the beginning of the year | 270 | 1,418 | 183 | 856 | 2,727 | 1,716 | 82 | 1,028 | 488 | 713 | 2,311 | 2,727 | ||||||||||||||||||||||||||||||||||||
Additions from acquired companies | 0 | 0 | 0 | 0 | 0 | 1 | ||||||||||||||||||||||||||||||||||||||||||
Increase in provisions recognized in the income statement | 293 | 265 | 649 | 139 | 1,346 | 4,002 | 86 | 721 | 144 | 106 | 1,056 | 1,346 | ||||||||||||||||||||||||||||||||||||
Release of provisions recognized in the income statement | (94 | ) | (22 | ) | (6 | ) | (187 | ) | (309 | ) | (528 | ) | (22 | ) | (88 | ) | (93 | ) | (58 | ) | (260 | ) | (309 | ) | ||||||||||||||||||||||||
Provisions used in conformity with designated purpose | (352 | ) | (516 | ) | (415 | ) | (92 | ) | (1,375 | ) | (1,381 | ) | (79 | ) | (960 | )4 | (199 | ) | (103 | ) | (1,341 | ) | (1,375 | ) | ||||||||||||||||||||||||
Capitalized reinstatement costs | 0 | 0 | 0 | 3 | 3 | (21 | ) | 0 | 0 | 0 | (24 | ) | (24 | ) | 3 | |||||||||||||||||||||||||||||||||
Disposal of subsidiaries | (32 | ) | (3 | ) | 0 | 0 | (35 | ) | 0 | 0 | 0 | 0 | 0 | 0 | (35 | ) | ||||||||||||||||||||||||||||||||
Reclassifications | 0 | 0 | 92 | (1 | ) | 90 | (979 | ) | 0 | (20 | ) | 1 | 23 | 4 | 90 | |||||||||||||||||||||||||||||||||
Foreign currency translation | (3 | ) | (113 | ) | (14 | ) | (5 | ) | (135 | ) | (83 | ) | (11 | ) | (63 | ) | (60 | ) | (39 | ) | (173 | ) | (135 | ) | ||||||||||||||||||||||||
Balance at the end of the year | 82 | 1,028 | 488 | 713 | 2,311 | 2,727 | 56 | 618 | 281 | 619 | 1,574 | 2,311 |
314
Financial information |
Note 21 Provisions and contingent liabilities (continued)
b) Litigation and regulatory matters
Litigation
1) Municipal Bonds
In November 2006, UBS and others received subpoenas from the Antitrust Division of the US Department of Justice (DOJ) and the US Securities and Exchange Commission (SEC) seeking information relating to the investment of proceeds of municipal bond issuances and associated derivative transactions. In addition, various state Attorneys General have issued subpoenas seeking similar information. The investigations are ongoing, and UBS is cooperating. Several putative class actions also have been filed in Federal District Courts against UBS and numerous other firms. In the SEC investigation, on 4 February 2008, UBS received a “Wells notice” advising that the SEC staff is considering recommending that the SEC bring a civil action against UBS in connection with the bidding of various financial instruments associated with municipal securities. In December 2010, three former UBS employees were indicted in connection with the Federal criminal antitrust
investigation. Discussions with the SEC, DOJ and a number of state Attorneys General are ongoing.
2) Auction Rate Securities
UBS was the subject of an SEC investigation and state regulatory actions relating to the marketing and sale of auction rate securities (ARS) to clients, and to UBS’s role and participation in ARS auctions and underwriting of ARS. UBS was also named in several putative class actions and individual civil suits and arbitrations. The regulatory actions and investigations and the civil proceedings followed the disruption in the markets for these securities and related auction failures since mid-February 2008. At the end of 2008 UBS entered into settlements with the SEC, the New York Attorney General (NYAG) and the Massachusetts Securities Division whereby UBS agreed to offer to buy back ARS from eligible customers within certain time periods, the last of which began on 30 June 2010, and to pay penalties of USD 150 million (USD 75 million to the NYAG, USD 75 million to the other states). UBS’s settlement is largely in line with similar industry regulatory settlements. UBS has settled with the majority of states and is continuing to finalize settlements with the rest. The fines being paid in these state settlements are being charged against the USD 150 million provision that was established in 2008. The SEC continues to investigate individuals affiliated with UBS regarding the trading in ARS and disclosures. During the third quarter of 2010, a claimant alleging consequential damages from the illiquidity of ARS was awarded approximately USD 80 million by an arbitration panel and UBS has booked a provision of CHF 78 million relating to the case. UBS moved in state court to vacate the award and oral argument was heard on that motion in December 2010. UBS is the subject of other pending arbitration and litigation claims by clients and issuers relating to ARS.
3) Inquiries Regarding Cross-Border Wealth Management
Businesses
Following the disclosure and the settlement of the US cross-border matter, tax and regulatory authorities in a number of countries have made inquiries and served requests for information located in their respective jurisdictions relating to the cross-border wealth management services provided by UBS and other financial institutions. UBS is cooperating with these requests within the limits of financial privacy obligations under Swiss and other applicable laws.
4) Matters Related to the Credit Crisis
UBS is responding to a number of governmental inquiries and investigations and is involved in a number of litigations, arbitrations and disputes related to the credit crisis and in particular
303315
Financial information
Notes to the consolidated financial statements
Note 21 Provisions and litigationcontingent liabilities (continued)
mortgage-related securities and other structured transactions and derivatives. In particular, the SEC is investigating UBS’s valuation of super senior tranches of collateralized debt obligations (CDOs) during the third quarter of 2007 and UBS’s reclassification of financial assets pursuant to amendments to IAS 39 during the fourth quarter of 2008. UBS has provided documents and testimony to the SEC and is continuing to cooperate with the SEC in its investigation. UBS has also communicated with and has responded to other inquiries by various governmental and regulatory authorities, including the Swiss Financial Market Supervisory Authority (FINMA), the UK Financial Services Authority (FSA), the SEC, the US Financial Industry Regulatory Authority (FINRA), the Financial Crisis Inquiry Commission (FCIC), the New York Attorney General, and the US Department of Justice, concerning various matters related to the credit crisis. These matters concern, among other things, UBS’s (i) disclosures and write-downs, (ii) interactions with rating agencies, (iii) risk control, valuation, structuring and marketing of mortgage-related instruments, and (iv) role as underwriter in securities offerings for other issuers. 5) Lehman Principal Protection Notes From March 2007 through September 2008, UBS sold approximately USD 1 billion face amount of structured notes issued by Lehman Brothers Holdings Inc. (“Lehman”), a majority of which were referred to as “principal protection notes,” reflecting the fact that while the notes’ return was in some manner linked to market indices or other measures, some or all of the investor’s principal was an unconditional obligation of Lehman as issuer of the notes. UBS has been named along with other defendants in a putative class action alleging materially misleading statements and omissions in the prospectuses relating to these notes and asserting claims under US securities laws. UBS has also been named in numerous individual civil suits and customer arbitrations (some of which have resulted in settlements or adverse judgments), was named in a proceeding brought by the New Hampshire Bureau of Securities, and is responding to investigations by other state regulators and FINRA relating to the sale of these notes to UBS customers. The customer litigations and regulatory investigations relate primarily to whether UBS adequately disclosed the risks of these notes to its customers. 6) Claims Related to Sales of RMBS and Mortgages From 2002 through about 2007, UBS was a substantial underwriter and issuer of US residential mortgage-backed securities (RMBS). UBS has been named as a defendant relating to its role as underwriter and issuer of RMBS in more than 20 lawsuits relating to at least USD 39 billion in original face amount of RMBS underwritten or issued by UBS. Most of the lawsuits are in their early stages. Many have not advanced beyond the motion to dismiss phase; some are in the early stages of discovery. Of the original face amount of RMBS at issue in these cases, approximately USD 4.5 billion was issued in offerings in which a UBS subsidiary transferred underlying loans (the majority of which were purchased from third party originators) into a securitization trust and made representations and warranties about those loans. The remaining USD 34.5 billion of RMBS to which these cases relate was issued in third-party securitizations where UBS acted as underwriter. In connection with most of the claims included in this latter category, UBS currently expects to be indemnified by the issuers against any loss or liability. These RMBS-related claims include cases in which UBS is named as a defendant in litigation by insurers of RMBS seeking recovery of insurance paid to RMBS investors. These insurers allege that UBS and other RMBS underwriters aided and abetted misrepresentations and fraud by RMBS issuers, and claim equitable and contractual subrogation rights. UBS has also been contacted by certain government-sponsored enterprises requesting that UBS repurchase USD 2 billion of securities issued in UBS-sponsored RMBS offerings. As described below under “c) Other contingent liabilities”, UBS also has contractual obligations to repurchase US residential mortgage loans as to which its representations made at the time of transfer prove to have been materially inaccurate. Contested loan repurchase demands relating to loans with an initial principal balance of USD 30 million are the subject of litigation. 7) Claims Related to UBS Disclosure A putative consolidated class action has been filed in | ||
The agreements with the DOJ and SEC did not resolve the “John Doe” summons which the IRS served on UBS in July 2008. In this regard, on 19 February 2009, the Civil Tax Division of the DOJ filed a civil petition for enforcement of this summons in the US Federal District Court for the Southern District of Florida, through which it sought an order directingNew York against UBS, to produce information locateda number of current and former directors and senior officers and certain banks that underwrote UBS’s May 2008 Rights Offering (including UBS Securities LLC) alleging violation of the US securities laws in Switzerland regarding US clients who have maintained accounts with UBS in Switzerland without providing a Form W-9.
On 19 August 2009, UBS executed a settlement agreementconnection with the IRSfirm’s disclosures relating to its positions and losses in mortgage-related securities, its positions and losses in auction rate securities, and its US cross-border business. Defendants have moved to dismiss the complaint for failure to state a claim. UBS, a number of senior officers and employees and various UBS committees have also been sued in a putative consolidated class action for breach of fiduciary duties brought on behalf of current and former participants in two UBS Employee Retirement Income Security Act (ERISA) retirement plans in which there were purchases of UBS stock. Defendants have moved to dismiss the ERISA complaint for failure to state a claim.
8) Madoff
In relation to the Bernard L. Madoff Investment Securities LLC (BMIS) investment fraud, UBS AG, UBS (Luxembourg) SA and certain other UBS subsidiaries have been subject to inquiries by a number of regulators, including FINMA and the DOJ, to resolve the “John Doe” summons litigation (UBS-US Settlement Agreement)Luxembourg Commission de Surveillance du Secteur Financier (CSSF). At the same time, the United States and Switzerland entered into a separate but related agreement (Swiss-US Agreement). Among other things, these agreements provide that: (i) UBS and the IRS would promptly file a stipulation dismissing the “John Doe” summons enforcement action then pending in federal court in Miami, which occurred the same day; (ii) the IRS would submit a request for information regarding accounts of US clients maintained at UBS in Switzerland, on the basis that such clients appear to have committed tax fraud or the like within the meaning of the existing 1996 Swiss-US Double Taxation Treaty, to the Swiss Federal Tax Administration (SFTA), which it did on 31 August 2009; (iii) UBS would send a notice to US accountholders that appear to be within the scope of the treaty request and produce to the SFTA information on the corresponding accounts both in accordance with a specified schedule, which UBS has done in compliance with an order issued by the SFTA on 1 September 2009; and (iv) UBS and the IRS would agree to amend UBS’s Ql Agreement, whereupon the IRS would withdraw the previously disclosed Ql Notice of Default dated 15 May 2008. The UBS-US Settlement Agreement does not call for any monetary payment by UBS.
Because UBS has complied with all of its obligations set forth in the UBS-US Settlement Agreement required to be completed by 31 December 2009, the IRS has withdrawn the summons with prejudice as to all accounts not covered by the treaty request.
Subject to UBS’s compliance with its further notification and information processing obligations set forth in the UBS-US Settlement Agreement, the IRS will withdraw the “John Doe” summons with prejudice as to the remaining accounts – i.e. those subject to the treaty request – no later than 24 August 2010 upon the actual or anticipated delivery to the IRS of information relating to accounts covered by the treaty request that does not differ significantly from the expected results. Alternatively, the summons will be withdrawn with prejudice as to the remaining accounts if at any time on or after 1 January 2010 theThose inquiries concerned two third-party funds established under Lux-
304316
Financial information |
Note 21 Provisions and litigationcontingent liabilities (continued)
305
Financial informationNotesembourg law, substantially all assets of which were with BMIS, as well as certain funds established under offshore jurisdictions with either direct or indirect exposure to BMIS. These funds now face severe losses, and the Luxembourg funds are in liquidation. The last reported net asset value of the two Luxembourg funds before revelation of the Madoff scheme was approximately USD 1.7 billion in the aggregate, although that figure likely includes fictitious profit reported by BMIS. The documentation establishing both funds identifies UBS entities in various roles including custodian, administrator, manager, distributor and promoter, and indicates that UBS employees serve as board members. Between February and May 2009 UBS (Luxembourg) SA responded to criticisms made by the CSSF in relation to its responsibilities as custodian bank and demonstrated to the consolidated financial statementssatisfaction of the CSSF that it has the infrastructure and internal organization in place in accordance with professional standards applicable to custodian banks in Luxembourg. In December 2009 and March 2010 the liquidators of the two Luxembourg funds filed claims on behalf of the funds against UBS entities, non-UBS entities and certain individuals including current and former UBS employees. The amounts claimed are approximately EUR 890 million and EUR 305 million respectively. In addition, a large number of alleged beneficiaries have filed claims against UBS entities (and non-UBS entities) for purported losses relating to the Madoff scheme. The majority of these cases are pending in Luxembourg, where appeals have been filed against the March 2010 decisions of the court in which the claims in a number of test cases were held to be inadmissible. In the US, the BMIS Trustee has filed claims against UBS entities, amongst others, in relation to the two Luxembourg funds and one of the offshore funds. A claim was filed in November 2010 against 23 defendants including UBS entities, the Luxembourg and offshore funds concerned and various individuals, including current and former UBS employees. The total amount claimed against all defendants is no less than USD 2 billion. A second claim was filed in December 2010 against 16 defendants including UBS entities and the Luxembourg fund concerned. The total amount claimed against all defendants is not less than USD 555 million. In Germany, certain clients of UBS are exposed to Madoff-managed positions through third-party funds and funds administered by UBS entities in Germany. A small number of claims have been filed with respect to such funds.
Note 21 Provisions9) Transactions with City of Milan and litigation (continued)Other Italian Public
Sector Entities
the City claims to be objectionable. In the alternative, the City seeks to recover alleged hidden profits allegedasserted to have been made by the banks in thean amount of approximately EUR 88 million (of which UBS Limited is alleged to have received approximately EUR 16 million) together with further damages of not less than EUR 150 million. The claims are made against all of the banks on a joint and several basis. UBS is vigorously defending the claim. In addition, a criminal investigation by a Prosecutor in Milan has been ongoing in relation to the same transactions. In November 2009, the Prosecutor filed a request for committal for trial of two current UBS employees and one former UBS employee, together with employees from other banking institutions. The request alleges thatbanks, a former City officer and a former adviser to the banks’ employees engagedCity, are facing a criminal trial for alleged “aggravated fraud” in criminal conduct in orderrelation to allow the banks to earn allegedly concealed profits on the JuneCity’s 2005 bond issue and the execution, and subsequent restructuring, of certain related derivative transactions. The Prosecutor also requested committal for trial ofprimary allegation is that UBS Limited and the other international banks in relation tofraudulently obtained hidden and / or illegal profits by entering into the derivative contracts with the City of Milan. The banks also face an administrative charge of failing to have in place a business organizationorganizational model to prevent crime. Preliminaryavoid the alleged misconduct by employees, the sanctions for which could include a limitation on activities in Italy. The City has separately asserted claims for damages against UBS Limited and UBS individuals in relation to this alleged failure. A number of transactions with other public entity counterparties in Italy have also been called into question or become the subject of legal proceedings and claims for damages and other awards. These include derivative transactions with the Regions of Calabria, Tuscany, Lombardy and Lazio and the City of Florence. UBS has itself issued proceedings before English courts in connection with a number of derivative transactions with Italian public entities, including some of those mentioned above, aimed at obtaining declaratory judgments as to the legitimacy of UBS’s behavior.
10) HSH Nordbank AG (HSH)
HSH has filed an action against UBS in New York State court hearingsrelating to USD 500 million of notes acquired by HSH in a synthetic CDO transaction known as North Street Referenced Linked Notes, 2002-4 Limited (NS4). The notes were linked through a credit default swap between the NS4 issuer and UBS to a reference pool of corporate bonds and asset-backed securities. HSH alleges that UBS knowingly misrepresented the risk in the transaction, sold HSH notes with “embedded losses”, and improperly profited at HSH’s expense by misusing its right to substitute assets in the reference pool within specified parameters. HSH is seeking USD 500 million in compensatory damages plus pre-judgment interest. The case was initially filed in 2008. Following orders issued in 2008 and 2009, in which the court dismissed most of HSH’s claims and its punitive damages demand and later partially denied a motion to dismiss certain repleaded claims, the claims remaining in the case are taking place through March 2010.for fraud, breach of contract and breach of the implied covenant of good faith and fair dealing. Both sides have appealed the court’s most recent partial dismissal order, and a decision on the appeal is pending.
306317
Financial information
Notes to the consolidated financial statements
Note 21 Provisions and contingent liabilities (continued)
11) Kommunale Wasserwerke Leipzig GmbH (KWL)
In 2006 and 2007, KWL entered into a series of managed Credit Default Swap transactions with bank swap counterparties, including UBS. Under the CDS contracts between KWL and UBS, the last of which were terminated by UBS on 18 October 2010, a net sum of approximately USD 138 million has fallen due from KWL but not been paid. In January 2010, UBS issued proceedings in the English High Court against KWL seeking various declarations from the English court, in order to establish that the swap transaction between KWL and UBS is valid, binding and enforceable as against KWL. On 15 October 2010, the English court dismissed an application by KWL contesting its jurisdiction, and ruled that it has jurisdiction and will hear the proceedings. On 18 October 2010, UBS issued a further claim against KWL in the English court seeking declarations concerning the validity of UBS’s early termination on that date of the remaining CDS with KWL. On 11 November 2010, the English Supreme Court ruled in a case concerning similar jurisdictional issues, but not involving UBS, that certain questions should be referred to the European Court of Justice. Thereafter, KWL was granted permission to appeal certain jurisdictional aspects of its claim, and the court ordered a temporary stay of the proceedings related to UBS’s claim for a declaration as to validity. In March 2010, KWL issued proceedings in Leipzig, Germany, against UBS and other banks involved in these contracts, claiming that the swap transactions are void and not binding on the basis of KWL’s allegation that KWL did not have the capacity or the necessary internal authorization to enter into the transactions and that the banks knew this. UBS is contesting the claims and has also contested the jurisdiction of the Leipzig court. The Leipzig court indicated in August 2010 that it did not have jurisdiction over KWL’s claim. Subsequently, KWL made a further submission in October 2010 making additional allegations including fraudulent collusion by UBS employees. On 15 February 2011, the Leipzig court proposed that the proceedings in Leipzig be stayed against UBS and the other banks pending the outcome of the appeal on the jurisdiction aspects in England.
April 2010, UBS issued separate proceedings in the English High Court against those bank swap counterparties seeking declarations as to the parties’ obligations under those transactions. The aggregate amount that UBS contends is outstanding under those transactions is approximately USD 189 million. These English proceedings are also currently stayed.
12) Puerto Rico
The SEC has been investigating UBS’s secondary market trading and associated disclosures involving shares of closed-end funds managed by UBS Asset Managers of Puerto Rico, principally in 2008 and 2009. In November 2010, the SEC issued a “Wells notice” to two UBS subsidiaries, advising them that the SEC staff is considering whether to recommend that the SEC bring a civil action against them relating to these matters. We believe that the negative financial results, if any, to shareholders of the funds who traded their shares through UBS during the relevant periods were less than USD 5 million in the aggregate. There is, however, no assurance that the SEC’s staff will agree with UBS’s analysis.
13) LIBOR
UBS has received subpoenas from the SEC, the US Commodity Futures Trading Commission and the US Department of Justice in connection with investigations regarding submissions to the British Bankers’ Association, which sets LIBOR rates. UBS understands that the investigations focus on whether there were improper attempts by UBS, either acting on its own or together with others, to manipulate LIBOR rates at certain times. In addition, UBS has received an order to provide information to the Japan Financial Supervisory Agency concerning similar matters. UBS is conducting an internal review and is cooperating with the investigations.
c) Other contingent liabilities
Demands Related to Sales of Mortgages and RMBS
issued. The overall market for privately issued US RMBS during this period was approximately USD 3.9 trillion.
318
Financial information |
Note 21 Provisions and contingent liabilities (continued)
When UBS acted as an RMBS sponsor or mortgage seller, it generally made certain representations relating to the characteristics of the underlying loans. In the event of a material breach of these representations, UBS was in most cases contractually obligated to repurchase the loans to which they related or to indemnify certain parties against losses. UBS has been notified by certain institutional purchasers and insurers of mortgage loans and RMBS that possible breaches of representations may entitle the purchasers to require that UBS repurchase the loans or to other relief. UBS has received relatively few repurchase demands and has repurchased only a small fraction of the underlying loans.
actual repurchases or indemnity payments, because both the submission of anticipated demands and the timing of resolution of such demands are uncertain. We nevertheless expect that most of the repurchases and payments related to the demands received in 2010, excluding any that become the subject of litigation, will occur in 2011.
319
Financial information
Note 22 Income taxes
Note 22 Income taxes | ||||||||||||||||||||||||
For the year ended | For the year ended | |||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.10 | 31.12.09 | 31.12.08 | ||||||||||||||||||
Tax expense from continuing operations | ||||||||||||||||||||||||
Domestic | ||||||||||||||||||||||||
Current | 55 | (336 | ) | 409 | (75 | ) | 55 | (336 | ) | |||||||||||||||
Deferred | 23 | (7,282 | ) | (25 | ) | 668 | 23 | (7,282 | ) | |||||||||||||||
Foreign | ||||||||||||||||||||||||
Current | 462 | 519 | 1,061 | 300 | 462 | 519 | ||||||||||||||||||
Deferred | (983 | ) | 262 | (76 | ) | (1,273 | ) | (983 | ) | 262 | ||||||||||||||
Total income tax expense from continuing operations | (443 | ) | (6,837 | ) | 1,369 | |||||||||||||||||||
Total income tax expense/(benefit) from continuing operations | (381 | ) | (443 | ) | (6,837 | ) | ||||||||||||||||||
Tax expense from discontinued operations | ||||||||||||||||||||||||
Domestic | 0 | 1 | (258 | ) | 0 | 0 | 1 | |||||||||||||||||
Total income tax expense from discontinued operations | 0 | 1 | (258 | ) | 0 | 0 | 1 | |||||||||||||||||
Total income tax expense | (443 | ) | (6,836 | ) | 1,111 | |||||||||||||||||||
Total income tax expense/(benefit) | (381 | ) | (443 | ) | (6,836 | ) |
The deferred tax benefit reflects the recognition of additional deferred tax assets in respect of tax losses and temporary differences in a number of foreign locations including the US (CHF 3731,161 million) and Japan (CHF 12798 million), taking into account updated forecast taxable profit assumptions over the five-year horizon used for recognition purposes. In addition, it reflects the release ofThis was partly offset by a Swiss net deferred tax liabilityexpense as Swiss tax losses for which deferred tax assets have previously been recognized were used against profits for the year (tax expense of CHF 243 million relating to UBS Pactual prior to its sale during the year. 1,409 million), which was itself partly offset by an upwards revaluation of Swiss deferred tax assets taking into account revised forecast profit assumptions (tax benefit of CHF 741 million).
The current tax charge mainlyexpense relates to tax expenses in respect of entities with taxable profits. The currentprofits in the Group partly offset by tax expense for 2009 includes tax costs related to prior yearsbenefits of CHF 50 million.261 million arising from the agreement of prior year positions with tax authorities in various locations. In addition, there was
is a deferred tax benefitexpense of CHF 1163 million relating to prior years in respect of the release of a net deferred tax liability.years. The net tax benefits relating to prior years were therefore CHF 65258 million.
For the year ended | For the year ended | |||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.10 | 31.12.09 | 31.12.08 | ||||||||||||||||||
Operating profit from continuing operations before tax | (2,561 | ) | (27,758 | ) | (3,742 | ) | 7,455 | (2,561 | ) | (27,758 | ) | |||||||||||||
Domestic | 4,871 | 3,269 | 10,337 | 5,999 | 4,871 | 3,269 | ||||||||||||||||||
Foreign | (7,433 | ) | (31,027 | ) | (14,079 | ) | 1,456 | (7,433 | ) | (31,027 | ) | |||||||||||||
Income taxes at Swiss statutory rate of 21.5% for 2009, 22% for 2008 and 2007 | (551 | ) | (6,107 | ) | (823 | ) | ||||||||||||||||||
Income taxes at Swiss statutory rate of 21.5% for 2010 and 2009, 22% for 2008 | 1,603 | (551 | ) | (6,107 | ) | |||||||||||||||||||
Increase/(decrease) resulting from: | ||||||||||||||||||||||||
Applicable tax rates differing from Swiss statutory rate | (1,636 | ) | (7,056 | ) | (3,054 | ) | (49 | ) | (1,636 | ) | (7,056 | ) | ||||||||||||
Tax effects of losses not recognized | 1,188 | 7,412 | 6,327 | 275 | 1,188 | 7,412 | ||||||||||||||||||
Previously unrecorded tax losses now utilized | (79 | ) | (10 | ) | (257 | ) | (1,225 | ) | (79 | ) | (10 | ) | ||||||||||||
Non-taxable and lower taxed income | (932 | ) | (773 | ) | (1,587 | ) | (889 | ) | (932 | ) | (773 | ) | ||||||||||||
Non-deductible goodwill and intangible asset amortization | 7 | 160 | 15 | |||||||||||||||||||||
Non-deductible expenses | 1,005 | 737 | 227 | |||||||||||||||||||||
Non-deductible expenses and additional taxable income | 1,985 | 1,012 | 897 | |||||||||||||||||||||
Adjustments related to prior years | (65 | ) | (490 | ) | (72 | ) | (258 | ) | (65 | ) | (490 | ) | ||||||||||||
Change in deferred tax valuation allowance | 552 | (692 | ) | 279 | ||||||||||||||||||||
Change in deferred tax valuation allowances | (1,820 | ) | 552 | (692 | ) | |||||||||||||||||||
Other items | 69 | (17 | ) | 314 | (3 | ) | 69 | (17 | ) | |||||||||||||||
Income tax expense from continuing operations | (443 | ) | (6,837 | ) | 1,369 | |||||||||||||||||||
Income tax expense/(benefit) from continuing operations | (381 | ) | (443 | ) | (6,837 | ) |
307320
Financial informationNotes to the consolidated financial statements
Financial information |
Note 22 Income taxes (continued)
Significant components of the Group’s deferred income tax assets and liabilities are as follows:
CHF million | 31.12.09 | 31.12.08 | 31.12.10 | 31.12.09 | ||||||||||||||||||||||||||||||||||||||||||||
Valuation | Valuation | Valuation | Valuation | |||||||||||||||||||||||||||||||||||||||||||||
Deferred tax assets | Gross | allowance | Recognized | Gross | allowance | Recognized | Gross | allowance | Recognized | Gross | allowance | Recognized | ||||||||||||||||||||||||||||||||||||
Compensation and benefits | 1,782 | (1,561 | ) | 221 | 1,534 | (1,213 | ) | 321 | ||||||||||||||||||||||||||||||||||||||||
Compensation and benefits1 | 1,993 | (1,791 | ) | 201 | 2,204 | (1,983 | ) | 221 | ||||||||||||||||||||||||||||||||||||||||
Tax loss carry-forwards | 32,505 | (24,259 | ) | 8,246 | 32,834 | (24,708 | ) | 8,126 | ||||||||||||||||||||||||||||||||||||||||
Tax loss carry-forwards1 | 28,474 | (19,546 | ) | 8,929 | 31,945 | (23,699 | ) | 8,246 | ||||||||||||||||||||||||||||||||||||||||
Trading assets | 561 | (403 | ) | 158 | 608 | (365 | ) | 243 | ||||||||||||||||||||||||||||||||||||||||
Trading assets1 | 1,164 | (999 | ) | 165 | 923 | (765 | ) | 158 | ||||||||||||||||||||||||||||||||||||||||
Other | 2,458 | (2,215 | ) | 243 | 258 | (69 | ) | 190 | 2,002 | (1,776 | ) | 226 | 2,458 | (2,215 | ) | 243 | ||||||||||||||||||||||||||||||||
Total deferred tax assets | 37,305 | (28,437 | ) | 8,868 | 35,234 | (26,354 | ) | 8,880 | 33,634 | (24,112 | ) | 9,522 | 37,529 | (28,661 | ) | 8,868 | ||||||||||||||||||||||||||||||||
Deferred tax liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and benefits | 5 | 111 | 0 | 5 | ||||||||||||||||||||||||||||||||||||||||||||
Property and equipment | 1 | 29 | 0 | 1 | ||||||||||||||||||||||||||||||||||||||||||||
Financial investments and associates | 60 | 206 | 25 | 60 | ||||||||||||||||||||||||||||||||||||||||||||
Trading assets | 0 | 244 | 1 | 0 | ||||||||||||||||||||||||||||||||||||||||||||
Goodwill and intangible assets | 61 | 289 | 40 | 61 | ||||||||||||||||||||||||||||||||||||||||||||
Other | 15 | 591 | 31 | 15 | ||||||||||||||||||||||||||||||||||||||||||||
Total deferred tax liabilities | 142 | 1,470 | 97 | 142 |
The change1 As compared to the figures stated in the net oftax note to the 2009 consolidated financial statements, the gross deferred tax assets and liabilitiesvaluation allowance in the comparatives for 31 December 2009 and 2008 does not equalhave each been increased by a net amount of CHF 224 million, resulting in no change in the deferred tax benefit in those years. Thisassets recognized. The net increase is because certainmade up of i) an increase for compensation and benefits of CHF 422 million, ii) an increase for trading assets of CHF 362 million and iii) a decrease for tax loss carry-forwards of CHF 560 million.
Certain deferred tax asset and liability movements are recognized directly in the statement of changes in equity and also becausein the statement of comprehensive income, including the effects of exchange rate changes on tax assets and liabilities denominated in currencies other than Swiss francs.
During the year, deferred tax liabilities of CHF 0.7 billion were offset against In particular, in 2010, deferred tax assets of CHF 318 million were recognized directly inEquityfor the increased recognition of those Swiss tax losses incurred in accordance with IAS 12.
previous years that are of an equity nature for IFRS accounting purposes (2009: CHF 203 million).
income.
assets atas of 31 December 20092010 (CHF 8,4638,773 million atas of 31 December 2008)2009). These deferred tax assets mainly relate to Swiss tax losses (primarily due to the write-down of investments in US subsidiaries in 2007 and 2008) and US tax losses. Swiss tax losses can be carried forward for seven years and US federal tax losses for 20 years.
The deferred tax assets recognized atas of 31 December 20092010 in respect of tax losses have been based on profitability assumptions over athe five-year horizon. The expected future profitability is based on business plan assumptions, as adjusted to take into account the recognition criteria of IAS 12. If the business plan earnings and assumptions in following quartersfuture periods substantially deviate from the current assumptions, the amount of deferred tax assets may need to be adjusted in the future.
At
As of 31 December 2009, there were tax losses of CHF 72,313 million, which were not recognized as deferred tax assets and were available to be offset against future taxable income and potential tax adjustments. The tax losses not recognized reduced during 2010 because of their utilization against profits for the year, the increased recognition of deferred tax assets for losses brought forward, foreign exchange rate effects on the Swiss franc value of overseas losses and a change as of 31 December 2010 as compared to the prior year in terms of presenting the unrecognized tax losses net of any potential tax adjustments.
CHF million | ||||
Within 1 year | ||||
From 2 to | ||||
From 11 to 20 years | 36,943 | |||
No expiry | 11,174 | |||
Total | ||||
321
Financial information
Notes to the consolidated financial statements
Note 22 Income taxes (continued)
In general, Swiss tax losses can be carried forward for seven years, US federal tax losses for 20 years and UK and Jersey tax losses for an unlimited period.
308
Note 23 Derivative instruments and hedge accounting
Derivatives: overview
A derivative is a financial instrument, the value of which is derived from the value of anothersome other variable (“underlying”) financial instrument, an index or some other variable. Typically, the underlying is a share, commodity or bond price, an index value or an. These underlyings may be indices, exchange or interest rate.
rates, or the value of shares, commodities, bonds, or other financial instruments. The majority of derivative contracts are negotiated with respect to notional amounts, as to amount (“notional”),well as tenor, price and how the tradesettlement mechanisms, as is to be settled in the future between UBS and its counterparties, which may becustomary with other professionals or customers (over-the-counter (OTC) contracts).
OTC contracts are usually traded under an International Swaps and Derivatives Association (ISDA) master trading agreement (MTA) between UBS and its counterparties. Other derivative contracts are standardized in terms of their amounts and settlement dates and are bought and sold on organized exchanges (exchange-traded contracts (ETD)). With ETDs, the exchange also acts as a central counterparty. financial instruments.
In 2010, industry norms have resulted in increased use of exchanges in favor of OTC trading and settlement mechanisms, a trend which is expected to continue.
Products which receive this treatment are futures contracts, 100% daily-daily margined exchange tradedexchange-traded options, and interest rate swaps transacted with the London Clearing house (LCH) with daily margining, whichHouse, and certain credit derivative contracts.
Positive replacement values represent the cost to the Group of replacing all transactions with a fair value in the Group’s favor, assuming transactions could be replaced instantaneously. Negative replacement values represent the cost to the Group’s counterparties of replacing all their transactions with the Group with a fair value in their favor.Positive and Negative replacement valueson different transactions are only netted if the transactions are with the same counterparty with a legally enforceable right to set off.Positive and Negative replacement values are denominatedindicate the value at which the Group would extinguish its obligations in respect of the same currency,underlying contract, were it able and the cash flows are intendedrequired to do so. It is not industry standard for derivative contracts to be settled or extinguished before their maturity, as stated in, and governed by, ISDA or the applicable exchange.
Types of derivative instruments
Forwards and futuresare contractual obligations to buy or sell financial instruments or commodities on a future date at a specified price. Forward contracts are tailor-made agreements that are transacted between counterparties on Through the OTC market, whereas futures are standardized contracts transacted on regulated exchanges.
Swapsare transactions in which two parties exchange cash flows on a specified notional amount for a predetermined period. Most swaps are traded OTC. The major typesuse of swap transactions undertaken bythe products listed below the Group is engaged in extensive high volume market making and client facilitation trading referred to as the flow business. Measurement techniques applied to determine the fair value of each product type are as follows:described in Note 27c).
– | Options and warrants: options and warrants are contractual agreements under which, typically, the seller (writer) grants the purchaser the right, but not the obligation, either to buy (call option) or to sell (put option) by or at a set date, a specified |
322
Financial information |
Note 23 Derivative instruments and hedge accounting (continued)
quantity of a financial instrument or commodity at a predetermined price. The purchaser pays a premium to the seller for this right. Options involving more complex payment structures are also transacted. Options may be traded in the OTC market or on a regulated exchange and may be traded in the form of a security (warrant). | ||
– | Swaps: Swaps are transactions in which two parties exchange cash flows on a specified notional amount for a predetermined period. | |
– | Forwards and futures: Forwards and futures are contractual obligations to buy or sell financial instruments or commodities on a future date at a specified price. Forward contracts are tailor-made agreements that are transacted between counterparties in the OTC market, whereas futures are standardized contracts transacted on regulated exchanges. | |
– | Cross-currency:Cross-currency swaps involve the exchange of interest payments based on two different currency principal balances and reference interest rates and generally also entail exchange of principal amounts at the start | |
The main underlying products used by the Group are: | ||
– | Interest rate contracts: Interest rate products include interest rate swaps, swaptions and caps and floors. | |
– | Credit derivatives:Credit default swaps (CDSs) are the most common form of a credit derivative, under which the party buying protection makes one or more payments to the party selling protection in exchange for an undertaking by the seller to make a payment to the buyer following a credit event (as defined in the contract) with respect to a third-party credit entity (as defined in the contract). Settlement following a credit event may be a net cash amount or cash in return for physical delivery of one or more obligations of the credit entity and is made regardless of whether the protection buyer has actually suffered a loss. After a credit event and settlement, the contract is terminated. An elaboration of credit derivatives is included in a separate section below. | |
– | Total | |
– | ||
– | Equity / Index contracts: The Group uses equity derivatives linked to single names, indices and baskets of |
Options and warrantsare contractual agreements under which, typically, the seller (writer) grants the purchaser the right, but not the obligation, either to buy (call option) or to sell (put option) by or at a set date, a specified quantity of a financial instrument or commodity at a predetermined price.
309
Financial informationNotes to the consolidated financial statements
Note 23 Derivative instruments and hedge accounting (continued)
The purchaser pays a premium to the seller for this right. Options involving more complex payment structures are also transacted. Options may be traded OTC or on a regulated exchange and may be traded in the form of a security (warrant).
Credit derivatives
UBS’s credit derivative portfolio consists of credit default swaps, total return swaps and options and warrants. As of 31 December 2009, the total notional value of protection bought was CHF 1,288 billion (CHF 56 billion and CHF 23 billionPositive replacement valuesandNegative replacement values,respectively) and the total notional value of protection sold was CHF 1,187 billion (CHF 23 billion and CHF 47 billionPositive replacement valuesandNegative replacement values, respectively), in 2009. UBS’s credit derivatives are usually traded as OTC contracts. During 2009 a number of initiatives were launched in both the US and Europe to establish centralized clearing solutions for OTC CDS contracts (exchange cleared derivatives), with the aim of reducing counterparty risk. UBS, along with other dealer members, has been an active participant in these initiatives.
A significant portion of UBS’s credit derivatives are traded under an ISDA MTA between UBS and its counterparty. UBS’s CDS trades are also documented using industry standard forms of documentation published by ISDA or equivalent terms documented in a bespoke (i.e. tailored) agreement. Those forms and agreements use standardized terms that form the basis for market conventions related to the types of credit events that would trigger performance (i.e. payment) under a CDS.
The types of credit events that would require UBS to perform under a CDS contract are subject to agreement between the parties at the time of the transaction. However, nearly all transactions are traded using credit events that are applicable under certain market conventions based on the type of reference entity to which the transaction relates. Applicable credit events by market conventions include “bankruptcy”, “failure to pay”, “restructuring”, “obligation acceleration” and “repudiation/moratorium”.
Recourse provisions
UBS uses standardized agreements and forms as the basis for its credit derivative contracts. Those agreements and forms do not contain recourse provisions that would enable UBS to recover from third parties any amounts paid out by UBS (i.e. this is the case where a credit event occurs and UBS is required to make payment under a CDS).
Economic hedges and strategy
UBS actively utilizes CDS to economically hedge specific counterparty credit risks in its banking book loans portfolio (includ-
and indices. The indices used may be based on a standard market index, or may be defined by UBS. The product types traded include vanilla listed derivatives, both options and futures, total return swaps, forwards and exotic OTC contracts. | ||
– | Commodities contracts: The Group has an established commodity derivatives trading business, which includes the commodity index and the recently added flow business. The index business is a client facilitation business trading exchange traded funds, OTC swaps and options on commodity indices. The underlying indices cover third party and UBS defined indices such as the UBS Bloomberg Constant Maturity Commodity Index and the Dow Jones UBS Commodity indices. The flow business is investor led and incorporates both ETD and vanilla OTC products, for which the underlying covers the agriculture, base metals and energy sectors. All of the flow trading is cash settled with no physical delivery of the underlying. | |
– | Precious metals: The Group has a well established precious metals ability in both flow and non-vanilla OTC products incorporating both physical and non-physical trading. The flow business is investor led and products include ETD, vanilla OTCs and certain non-vanilla OTCs. The vanilla OTCs are in forwards, swaps and options. The non-vanilla OTC business relates to cash settled forwards similar in nature to non deliverable forwards, meaning there is no physical delivery of the underlying. |
ing loan commitments) with the aim of reducing concentrations in individual names, sectors or specific portfolios. In addition, UBS actively utilizes CDS to economically hedge specific counterparty credit risks in its OTC derivative portfolios.
UBS is an active dealer in fixed income instruments and CDS and related products with respect to a large number of securities issuers. The primary purpose of these activities is for the benefit of UBS’s clients (market making) and to a lesser extent creating new credit exposures taken for UBS’s own trading purposes (proprietary trading).
Market making activity consists of buying and selling single-name CDS, index CDS, loan CDS and related referenced cash instruments to facilitate client trading activity. Proprietary trading consists of trading in single-name CDS, index CDS and loan CDS to capitalize on pricing discrepancies between various credit instruments (bonds, loans and equities) across investment grade, high-yield and emerging markets.
As a general matter, risk to the relevant issuers arising from fixed income instruments, CDS and related products are reviewed and risk-managed on a net exposure basis (i.e. taking into account all exposures to a particular issuer arising from fixed income instruments, CDS and related products) across market making and proprietary trading activities.
UBS’s strategy with respect to CDS trading was the reduction in scope and scale of the firm’s structured credit, proprietary credit and asset securitization (including synthetic securitization) activities during 2009 and 2008.
Contingent featuresUsage of derivative liabilitiesinstruments at UBS
Based on UBS’s credit ratings as of 31 December 2009, additional collateral or termination payments pursuant to bilateral agreements with certain counterparties of approximately CHF 1.2 billion and CHF 2.8 billion would have been required in the event of a one-notch and two-notch reduction, respectively, in UBS’s long-term credit ratings. In evaluating UBS’s liquidity requirements, UBS considers additional collateral or termination payments that would be required in the event of a reduction in UBS’s long-term credit ratings.
Derivatives transacted for trading purposes
310
Note 23 Derivative instruments and hedge accounting (continued)
mentsmovements in prices, rates or indices. Arbitrage activities involve identifying and profiting from price differentials between the same product in different markets or the same economic factor in different products.
Detailed example: Credit derivatives
323
Financial information
Notes to the consolidated financial statements
Note 23 Derivative instruments and hedge accounting (continued)
consists of trading in single-name CDSs, index CDSs and loan CDSs to capitalize on pricing discrepancies between various credit instruments (bonds, loans and equities) across investment grade, high-yield and emerging markets.
market conventions based on the type of reference entity to which the transaction relates. Applicable credit events by market conventions include “bankruptcy”, “failure to pay”, “restructuring”, “obligation acceleration” and “repudiation / moratorium”.
Credit Derivatives: Recourse provisions
Contingent features of derivative liabilities
Derivatives transactedused for structural hedging purposes
The In addition, the Group has also used equity futures, options and, to a lesser extent, swaps for economically hedging in a variety of equitiesequity trading strategies to offset underlying equity and equity volatility exposure.
The Group has also entered into CDS’sCDSs that provide economic hedges for credit risk exposures (refer to the credit derivatives section).
Fair value changes of derivatives that are part of economic relationships, but do not qualify for hedge accounting treatment, are booked toNet trading income.income.
Fair value hedges
324
Financial information |
Note 23 Derivative instruments and hedge accounting (continued)
fixed-rate instruments (e.g. long-term-fixed ratelong-term fixed-rate debt issues) due to movements in market interest rates. The fair values of outstanding interest rate derivatives designated as fair value hedges
were assets of CHF 1,171 million and liabilities of CHF 46 million as of 31 December 2010 and assets of CHF 526 million and liabilities of CHF 71 millionPositive replacement values andNegative replacement values,respectively, at as of 31 December 2009 and a CHF 883 million net Positive replacement values at2009.
Fair value hedges of interest rate risk | ||||||||||||
For the year ended | ||||||||||||
CHF million | 31.12.10 | 31.12.09 | 31.12.08 | |||||||||
Gains / (losses) on hedging instruments | 402 | (171 | ) | 778 | ||||||||
Gains / (losses) on hedged items attributable to the hedged risk | (383 | ) | 182 | (796 | ) | |||||||
Net gains / (losses) representing ineffective portions of fair value hedges | 19 | 11 | (18 | ) | ||||||||
The Group also hedges foreign exchange exposures arising from certain foreign currency denominated non-monetary financial investments available-for-sale using either the spot component of the forward foreign exchange contracts or debt issued denominated in the same currencies. As of 31 December 2008.
2010 the aggregate notional amount of hedging instruments designated as fair value hedges of foreign currency risk was CHF 393 million (CHF 386 million as of 31 December 2009). The ineffectiveness of these hedges was not material for the financial statements of the Group in the disclosed reporting periods.
Fair value hedges of interest rate risk | ||||||||||||
For the year ended | ||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | |||||||||
Gains/(losses) on hedging instruments | (171 | ) | 778 | 15 | ||||||||
Gains/(losses) on hedged items attributable to the hedged risk | 182 | (796 | ) | (11 | ) | |||||||
Net gains/(losses) representing ineffective portions of fair value hedges | 11 | (18 | ) | 4 | ||||||||
Fair value hedges offor portfolio interest rate risk
value,31 December 2008 was a CHF 765 million netNegative replacement value.
During 2008, UBS expanded the use of Fair Value hedge accounting for portfolio interest rate risk to include other Swiss mortgage loan portfolios. In 2009 no further scope expansion was made.
Fair value hedge of portfolio of interest rate risk1 | ||||||||||||
For the year ended | ||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | |||||||||
Gains/(losses) on hedging instruments | (48 | ) | (644 | ) | (37 | ) | ||||||
Gains/(losses) on hedged items attributable to the hedged risk | 11 | 688 | 30 | |||||||||
Net gains/(losses) representing ineffective portions of fair value hedges | (37 | ) | 44 | (7 | ) | |||||||
Fair value hedge of portfolio of interest rate risk1 | ||||||||||||
For the year ended | ||||||||||||
CHF million | 31.12.10 | 31.12.09 | 31.12.08 | |||||||||
Gains / (losses) on hedging instruments | 35 | (48 | ) | (644 | ) | |||||||
Gains / (losses) on hedged items attributable to the hedged risk | (60 | ) | 11 | 688 | ||||||||
Net gains / (losses) representing ineffective portions of fair value hedges | (25 | ) | (37 | ) | 44 | |||||||
1Hedge effectiveness is calculated on a cumulative basis. |
311
Financial informationNotes to the consolidated financial statements
Note 23 Derivative instruments and hedge accounting (continued)
Cash flow hedges of forecasted transactions
matesestimates of prepayments and
defaults. The aggregate principal balances and interest cash flows across all portfolios over time form the basis for identifying the non-trading interest rate risk of the Group, which is hedged with interest rate swaps, the maximum maturity of which is 1918 years.
Forecasted cash flows | Forecasted cash flows | Forecasted cash flows | ||||||||||||||||||||||||||||||||||||||
CHF billion | < 1 year | 1–3 years | 3–5 years | 5–10 years | over 10 years | < 1 year | 1-3 years | 3-5 years | 5-10 years | over 10 years | ||||||||||||||||||||||||||||||
Cash inflows (assets) | 205 | 352 | 202 | 141 | 20 | |||||||||||||||||||||||||||||||||||
Cash inflows | 215 | 368 | 233 | 180 | 15 | |||||||||||||||||||||||||||||||||||
Cash outflows (liabilities) | 69 | 136 | 96 | 78 | 4 | |||||||||||||||||||||||||||||||||||
Cash outflows | 52 | 87 | 60 | 44 | 1 | |||||||||||||||||||||||||||||||||||
Net cash flows | 136 | 216 | 106 | 63 | 16 | 163 | 281 | 173 | 136 | 14 |
GainsTo the extent the cash flow hedging relationship meets the qualifying criteria, the effective portion of the fair value changes of the designated derivative hedging instruments is recognized in Equity. These gains and losses on the effective portions of derivatives designated as cash flow hedges of forecasted transactions are initially recorded inEquityasNet incomerecognized directly in equity and are transferred from Equity to current period earnings whenin the forecastedsame period in which the hedged cash flows affect
net profit or loss. The gains and losses on ineffective portionsportion of such derivatives arethe fair value changes of the derivative hedging instruments is recognized immediately in the income statement. A CHF 22 million loss, a CHF 183 million loss and a CHF 108 million loss and a CHF 443 million gain waswere recognized in 2010, 2009 and 2008, and 2007, respectively, in Net trading income due to hedge ineffectiveness.
325
Financial information
Notes to the consolidated financial statements
Note 23 Derivative instruments and hedge accounting (continued)
As of 31 December 2009,2010, the fair values of outstanding derivatives designated as cash flow hedges of forecasted transactions were CHF 5,1805,397 million assets and CHF 2,7363,392 millionPositive replacement valuesandNegative replacement values,respectively, liabilities and as of 31 December 20082009 the amount wasamounts were CHF 2,5395,180 million netPositive replacement values.
assets and CHF 2,736 million liabilities.
In 2008, due to reductions in the volume of short-term financial instruments, some of the forecasted cash flows previously included in the hedge relationships were determined to no longer be expected to occur.
Hedges of net investments in foreign operations
Contractual maturities of derivatives designated as hedging instruments in hedge accounting relationships
Derivatives designated in hedge accounting relationships (undiscounted cash flows) | Derivatives designated in hedge accounting relationships (undiscounted cash flows) | Derivatives designated in hedge accounting relationships (undiscounted cash flows) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Due within | Due between | Due between | Due between | Due after | Due within | Due between | Due between | Due between | Due after | |||||||||||||||||||||||||||||||||||||||||||||||
CHF billion | On demand | 1 month | 1 and 3 months | 3 and 12 months | 1 and 5 years | 5 years | Total | On demand | 1 month | 1 and 3 months | 3 and 12 months | 1 and 5 years | 5 years | Total | ||||||||||||||||||||||||||||||||||||||||||
Interest rate swaps1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash inflows | 0 | 0 | 0 | 1 | 3 | 17 | 21 | |||||||||||||||||||||||||||||||||||||||||||||||||
Cash outflows | 0 | 0 | (0 | ) | (1 | ) | (3 | ) | (15 | ) | (19 | ) | 0 | 0 | 0 | 1 | 4 | 14 | 19 | |||||||||||||||||||||||||||||||||||||
Cash inflows | 0 | 0 | 0 | 0 | 2 | 18 | 20 | |||||||||||||||||||||||||||||||||||||||||||||||||
Net cash flows | 0 | 0 | 0 | 0 | (1 | ) | 3 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total 31.12.09 | 0 | 0 | (0 | ) | (1 | ) | (1 | ) | 3 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||
1Interest rate swaps are generally gross settled. The table includes |
312
Note 23 Derivative instruments and cash outflows of all interest rate swaps designated in hedge accounting (continued)relationships, which are either assets or liabilities of UBS as of 31 December 2010.
Risks of derivative instruments
ample,example, because on the one hand, replacement values can increase over time (“potential future exposure”), while on the other hand, exposure may be mitigated by
entering into master netting agreements and bilateral collateral arrangements with counterparties. Both the exposure measures used by the Group internally to control credit risk and the capital requirements imposed by regulators reflect these additional factors.
313326
Financial informationNotes to the consolidated financial statements
Note 23 Derivative instruments and hedge accounting1 (continued) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Notional | Notional | |||||||||||||||||||||||||||||||||||||||||||||||||||
As of 31 December 2009 | Term to maturity | values | values | Other | ||||||||||||||||||||||||||||||||||||||||||||||||
Within 3 months | 3–12 months | 1–5 years | over 5 years | Total | related to | Total | related to | notional | ||||||||||||||||||||||||||||||||||||||||||||
CHF billion | PRV2 | NRV3 | PRV | NRV | PRV | NRV | PRV | NRV | PRV | PRVs | NRV | NRVs | values4 | |||||||||||||||||||||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Over-the-counter (OTC) contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Forward contracts | 1.8 | 1.6 | 0.7 | 0.8 | 0.1 | 0.1 | 0.0 | 0.0 | 2.5 | 1,343.7 | 2.5 | 1,286.5 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Swaps | 8.2 | 6.8 | 18.7 | 16.9 | 89.7 | 82.6 | 69.5 | 65.0 | 186.2 | 7,110.7 | 171.4 | 6,802.7 | 15,949.2 | |||||||||||||||||||||||||||||||||||||||
Options | 1.0 | 1.1 | 3.5 | 3.0 | 10.1 | 11.9 | 11.3 | 13.5 | 25.9 | 543.2 | 29.4 | 611.8 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Exchange-traded contracts5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Futures | 271.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Options | 0.1 | 0.1 | 0.2 | 0.2 | 0.2 | 0.2 | 0.0 | 0.0 | 0.5 | 3.9 | 0.4 | 3.5 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Total | 11.1 | 9.6 | 23.1 | 20.8 | 100.0 | 94.8 | 80.8 | 78.6 | 215.1 | 9,001.5 | 203.7 | 8,704.5 | 16,221.2 | |||||||||||||||||||||||||||||||||||||||
Credit derivative contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Over-the-counter (OTC) contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit default swaps | 0.1 | 0.3 | 0.9 | 0.9 | 33.1 | 32.1 | 42.9 | 36.4 | 77.1 | 1,254.7 | 69.7 | 1,208.9 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Total rate of return swaps | 0.1 | 0.1 | 0.0 | 0.0 | 1.0 | 0.3 | 0.4 | 0.4 | 1.5 | 5.7 | 0.9 | 5.4 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Options and warrants | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 9.3 | 0.0 | 6.6 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Total | 0.2 | 0.4 | 1.0 | 0.9 | 34.1 | 32.4 | 43.3 | 36.9 | 78.6 | 1,269.6 | 70.6 | 1,220.9 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Foreign exchange contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Over-the-counter (OTC) contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Forward contracts | 7.5 | 6.3 | 2.4 | 2.6 | 0.8 | 0.6 | 0.0 | 0.0 | 10.6 | 453.2 | 9.5 | 403.7 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Interest and currency swaps | 31.2 | 30.3 | 13.1 | 15.3 | 18.9 | 23.5 | 17.3 | 16.8 | 80.5 | 2,279.8 | 85.8 | 2,209.6 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Options | 1.8 | 1.7 | 2.1 | 2.0 | 1.2 | 1.2 | 0.9 | 0.8 | 5.9 | 609.7 | 5.7 | 560.2 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Exchange-traded contracts5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Futures | 1.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Options | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.1 | 1.5 | 0.1 | 0.1 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Total | 40.4 | 38.3 | 17.6 | 20.0 | 20.9 | 25.2 | 18.2 | 17.6 | 97.1 | 3,344.2 | 101.1 | 3,173.5 | 1.5 | |||||||||||||||||||||||||||||||||||||||
Equity/index contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Over-the-counter (OTC) contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Forward contracts | 0.9 | 0.8 | 1.1 | 1.2 | 0.5 | 0.8 | 0.4 | 0.9 | 2.9 | 56.6 | 3.7 | 46.9 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Options | 0.4 | 0.9 | 2.1 | 2.7 | 2.4 | 4.1 | 2.1 | 1.7 | 7.0 | 60.9 | 9.5 | 73.7 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Exchange-traded contracts5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Futures | 6.8 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Options | 4.9 | 4.6 | 4.7 | 4.9 | 5.2 | 5.8 | 0.2 | 0.1 | 15.1 | 30.5 | 15.5 | 36.2 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Total | 6.2 | 6.3 | 8.0 | 8.8 | 8.1 | 10.7 | 2.7 | 2.8 | 25.1 | 148.0 | 28.7 | 156.8 | 6.8 | |||||||||||||||||||||||||||||||||||||||
Commodities contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Over-the-counter (OTC) contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Forward contracts | 0.6 | 0.6 | 0.7 | 0.6 | 0.7 | 0.7 | 0.1 | 0.1 | 2.0 | 20.6 | 2.0 | 15.0 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Options | 0.3 | 0.2 | 0.7 | 0.6 | 0.9 | 0.9 | 0.1 | 0.2 | 1.9 | 21.7 | 1.9 | 23.6 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Exchange-traded contracts5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Futures | 2.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Options | 0.4 | 0.4 | 0.7 | 0.7 | 0.8 | 0.8 | 0.0 | 0.0 | 1.9 | 0.6 | 1.9 | 2.0 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Total | 1.3 | 1.2 | 2.0 | 1.9 | 2.4 | 2.4 | 0.2 | 0.4 | 5.9 | 42.9 | 5.8 | 40.7 | 2.7 | |||||||||||||||||||||||||||||||||||||||
Total derivative instruments, based on IFRS netting | 59.3 | 55.9 | 51.7 | 52.4 | 165.5 | 165.5 | 145.2 | 136.2 | 421.7 | 13,806.2 | 409.9 | 13,296.5 | 16,232.2 | |||||||||||||||||||||||||||||||||||||||
Replacement value netting, based on capital adequacy rules | (313.2 | ) | (313.2 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Cash collateral netting | (37.2 | ) | (32.7 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Total derivative instruments, based on capital adequacy netting6 | 71.3 | 64.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Financial information |
Note 23 Derivative instruments and hedge accounting (continued)1 | ||||||||||||||||||||||||||||||||||||||||
As of | 31.12.10 | 31.12.098 | ||||||||||||||||||||||||||||||||||||||
Notional | Notional | Notional | Notional | |||||||||||||||||||||||||||||||||||||
values | values | Other | values | values | Other | |||||||||||||||||||||||||||||||||||
Total | related | Total | related | notional | Total | related | Total | related | notional | |||||||||||||||||||||||||||||||
CHF billion | PRV2 | to PRVs | NRV3 | to NRVs | values4 | PRV2 | to PRVs | NRV3 | to NRVs | values4 | ||||||||||||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||||||||||||||||||||||
Over-the-counter (OTC) contracts | ||||||||||||||||||||||||||||||||||||||||
Forward contracts | 1.9 | 1,320.7 | 2.3 | 1,233.6 | 0.0 | 2.1 | 1,308.0 | 2.1 | 1,265.6 | 0.0 | ||||||||||||||||||||||||||||||
Swaps | 170.4 | 7,527.0 | 154.3 | 7,423.7 | 13,076.0 | 186.2 | 7,110.7 | 171.4 | 6,802.7 | 15,949.2 | ||||||||||||||||||||||||||||||
Options | 31.2 | 785.3 | 32.5 | 822.8 | 0.0 | 25.9 | 543.2 | 29.4 | 611.8 | 0.0 | ||||||||||||||||||||||||||||||
Exchange-traded contracts | ||||||||||||||||||||||||||||||||||||||||
Futures | 785.4 | 1,221.5 | ||||||||||||||||||||||||||||||||||||||
Options | 0.0 | 61.7 | 0.0 | 69.7 | 0.0 | 0.0 | 1.3 | 0.0 | 1.3 | 0.0 | ||||||||||||||||||||||||||||||
Agency transactions7 | 0.2 | 0.2 | 0.5 | 0.4 | ||||||||||||||||||||||||||||||||||||
Total | 203.7 | 9,694.7 | 189.3 | 9,549.8 | 13,861.4 | 214.7 | 8,963.2 | 203.3 | 8,681.4 | 17,170.7 | ||||||||||||||||||||||||||||||
Credit derivative contracts | ||||||||||||||||||||||||||||||||||||||||
Over-the-counter (OTC) contracts | ||||||||||||||||||||||||||||||||||||||||
Credit default swaps | 52.2 | 1,189.8 | 49.8 | 1,091.2 | 0.0 | 77.1 | 1,254.7 | 69.7 | 1,208.9 | 0.0 | ||||||||||||||||||||||||||||||
Total rate of return swaps | 3.5 | 6.1 | 1.3 | 4.2 | 0.0 | 1.5 | 5.7 | 0.9 | 5.4 | 0.0 | ||||||||||||||||||||||||||||||
Options and warrants | 0.1 | 11.9 | 0.1 | 9.5 | 0.0 | 0.0 | 9.3 | 0.0 | 6.6 | 0.0 | ||||||||||||||||||||||||||||||
Total | 55.8 | 1,207.8 | 51.2 | 1,104.9 | 0.0 | 78.6 | 1,269.6 | 70.6 | 1,220.9 | 0.0 | ||||||||||||||||||||||||||||||
Foreign exchange contracts | ||||||||||||||||||||||||||||||||||||||||
Over-the-counter (OTC) contracts | ||||||||||||||||||||||||||||||||||||||||
Forward contracts | 16.3 | 531.1 | 17.1 | 554.1 | 0.0 | 10.6 | 453.2 | 9.5 | 403.7 | 0.0 | ||||||||||||||||||||||||||||||
Interest and currency swaps | 88.5 | 2,279.9 | 97.0 | 2,190.5 | 0.0 | 80.5 | 2,279.8 | 85.8 | 2,209.6 | 0.0 | ||||||||||||||||||||||||||||||
Options | 8.7 | 515.1 | 8.8 | 483.4 | 0.0 | 5.9 | 347.7 | 5.7 | 350.7 | 0.0 | ||||||||||||||||||||||||||||||
Exchange-traded contracts | ||||||||||||||||||||||||||||||||||||||||
Futures | 0.0 | 9.0 | 1.5 | |||||||||||||||||||||||||||||||||||||
Options | 0.0 | 0.0 | 0.0 | 0.1 | 0.0 | 1.5 | 0.1 | 0.0 | ||||||||||||||||||||||||||||||||
Agency transactions7 | 0.0 | 0.0 | 0.1 | 0.1 | ||||||||||||||||||||||||||||||||||||
Total | 113.5 | 3,326.1 | 123.0 | 3,228.1 | 9.0 | 97.1 | 3,082.2 | 101.1 | 2,964.1 | 1.5 | ||||||||||||||||||||||||||||||
Equity / index contracts | ||||||||||||||||||||||||||||||||||||||||
Over-the-counter (OTC) contracts | ||||||||||||||||||||||||||||||||||||||||
Forward contracts | 2.6 | 32.2 | 4.0 | 46.3 | 0.0 | 2.7 | 26.0 | 3.4 | 28.1 | 0.0 | ||||||||||||||||||||||||||||||
Options | 8.1 | 67.1 | 8.7 | 81.6 | 0.0 | 7.0 | 80.8 | 9.5 | 73.7 | 0.0 | ||||||||||||||||||||||||||||||
Exchange-traded contracts | ||||||||||||||||||||||||||||||||||||||||
Futures | 28.8 | 26.5 | ||||||||||||||||||||||||||||||||||||||
Options | 3.8 | 106.7 | 3.7 | 111.0 | 0.0 | 4.6 | 108.5 | 4.7 | 120.5 | 0.0 | ||||||||||||||||||||||||||||||
Agency transactions7 | 7.5 | 7.6 | 10,5 | 10.8 | ||||||||||||||||||||||||||||||||||||
Total | 22.0 | 206.0 | 24.0 | 238.9 | 28.8 | 24.8 | 215.3 | 28.4 | 222.3 | 26.5 | ||||||||||||||||||||||||||||||
Commodities contracts | ||||||||||||||||||||||||||||||||||||||||
Over-the-counter (OTC) contracts | ||||||||||||||||||||||||||||||||||||||||
Forward contracts | 2.7 | 18.8 | 2.7 | 15.9 | 0.0 | 2.0 | 20.6 | 2.0 | 15.0 | 0.0 | ||||||||||||||||||||||||||||||
Options | 1.5 | 19.2 | 1.7 | 15.4 | 0.0 | 1.9 | 21.7 | 1.9 | 22.7 | 0.0 | ||||||||||||||||||||||||||||||
Exchange-traded contracts | ||||||||||||||||||||||||||||||||||||||||
Futures | 41.0 | 26.1 | ||||||||||||||||||||||||||||||||||||||
Options | 0.0 | 0.7 | 0.0 | 1.2 | 0.0 | 0.0 | 1.9 | 1.9 | 0.0 | |||||||||||||||||||||||||||||||
Agency transactions7 | 1.7 | 1.7 | 1.9 | 1.9 | ||||||||||||||||||||||||||||||||||||
Total | 5.9 | 38.7 | 6.0 | 32.5 | 41.0 | 5.9 | 44.2 | 5.8 | 39.6 | 26.1 | ||||||||||||||||||||||||||||||
Unsettled purchases of financial assets5 | 0.2 | 36.5 | 0.1 | 18.8 | 0.0 | 0.4 | 35.9 | 0.2 | 25.4 | |||||||||||||||||||||||||||||||
Unsettled sales of financial assets5 | 0.1 | 34.9 | 0.1 | 13.0 | 0.0 | 0.2 | 30.4 | 0.5 | 14.3 | |||||||||||||||||||||||||||||||
Total derivative instruments, based on IFRS netting | 401.1 | 14,544.6 | 393.8 | 14,186.0 | 13,940.2 | 421.7 | 13,640.8 | 409.9 | 13,168.1 | 17,224.9 | ||||||||||||||||||||||||||||||
Replacement value netting, based on capital adequacy rules | (301.5 | ) | (301.5 | ) | (313.2 | ) | (313.2 | ) | ||||||||||||||||||||||||||||||||
Cash collateral netting | (36.5 | ) | (23.9 | ) | (37.2 | ) | (32.7 | ) | ||||||||||||||||||||||||||||||||
Total derivative instruments, based on capital adequacy netting6 | 63.1 | 68.3 | 71.3 | 64.1 | ||||||||||||||||||||||||||||||||||||
314
Note 23 Derivative instruments and hedge accounting1 (continued) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Notional | Notional | |||||||||||||||||||||||||||||||||||||||||||||||||||
As of 31 December 2008 | Term to maturity | values | values | Other | ||||||||||||||||||||||||||||||||||||||||||||||||
Within 3 months | 3–12 months | 1–5 years | Over 5 years | Total | related to | Total | related to | notional | ||||||||||||||||||||||||||||||||||||||||||||
CHF billion | PRV2 | NRV3 | PRV | NRV | PRV | NRV | PRV | NRV | PRV | PRVs | NRV | NRVs | values4 | |||||||||||||||||||||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Over-the-counter (OTC) contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Forward contracts | 2.1 | 2.2 | 3.8 | 4.1 | 0.3 | 0.4 | 0.0 | 0.0 | 6.2 | 1,544.9 | 6.7 | 1,584.5 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Swaps | 9.5 | 9.9 | 23.6 | 24.3 | 152.1 | 140.5 | 144.8 | 142.9 | 330.0 | 8,543.3 | 317.6 | 8,260.0 | 15,002.0 | |||||||||||||||||||||||||||||||||||||||
Options | 4.0 | 3.7 | 6.6 | 7.0 | 14.3 | 15.7 | 12.6 | 16.5 | 37.4 | 498.4 | 43.0 | 595.5 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Exchange-traded contracts5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Futures | 527.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Options | 0.8 | 0.8 | 0.5 | 0.5 | 0.1 | 0.1 | 0.0 | 0.0 | 1.4 | 6.4 | 1.4 | 8.7 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Total | 16.4 | 16.6 | 34.5 | 36.0 | 166.8 | 156.7 | 157.4 | 159.5 | 375.1 | 10,593.1 | 368.7 | 10,448.7 | 15,529.6 | |||||||||||||||||||||||||||||||||||||||
Credit derivative contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Over-the-counter (OTC) contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit default swaps | 0.5 | 0.3 | 3.4 | 3.5 | 95.4 | 91.2 | 89.8 | 88.2 | 189.1 | 1,856.1 | 183.3 | 1,754.0 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Total rate of return swaps | 3.4 | 0.4 | 0.2 | 0.1 | 3.1 | 0.5 | 1.6 | 0.5 | 8.3 | 31.2 | 1.5 | 12.6 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Options and warrants | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 3.9 | 0.7 | 3.6 | 3.6 | 98.4 | 91.7 | 91.4 | 88.8 | 197.4 | 1,887.2 | 184.8 | 1,766.7 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Foreign exchange contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Over-the-counter (OTC) contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Forward contracts | 21.0 | 22.8 | 8.4 | 10.6 | 1.6 | 1.1 | 0.1 | 0.1 | 31.2 | 468.1 | 34.5 | 485.6 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Interest and currency swaps | 72.1 | 74.5 | 36.2 | 33.8 | 34.9 | 39.2 | 27.1 | 26.5 | 170.3 | 2,047.4 | 173.9 | 1,868.4 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Options | 7.5 | 7.6 | 10.0 | 9.1 | 2.1 | 1.8 | 0.0 | 0.0 | 19.7 | 610.1 | 18.6 | 524.8 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Exchange-traded contracts5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Futures | 1.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Options | 0.2 | 0.3 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.2 | 12.8 | 0.3 | 6.1 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Total | 101.0 | 105.2 | 54.6 | 53.5 | 38.7 | 42.1 | 27.2 | 26.6 | 221.5 | 3,138.3 | 227.3 | 2,884.8 | 1.7 | |||||||||||||||||||||||||||||||||||||||
Equity/index contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Over-the-counter (OTC) contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Forward contracts | 1.9 | 1.6 | 2.0 | 1.8 | 2.2 | 2.0 | 0.2 | 0.3 | 6.4 | 68.5 | 5.7 | 40.1 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Options | 1.7 | 3.2 | 4.8 | 7.4 | 4.7 | 8.5 | 1.7 | 4.0 | 12.9 | 108.9 | 23.0 | 106.1 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Exchange-traded contracts5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Futures | �� | 33.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Options | 5.0 | 5.2 | 5.3 | 6.7 | 4.8 | 5.6 | 0.9 | 1.2 | 16.1 | 97.9 | 18.7 | 110.5 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Total | 8.6 | 10.0 | 12.1 | 16.0 | 11.7 | 16.1 | 2.9 | 5.5 | 35.3 | 275.2 | 47.4 | 256.7 | 33.5 | |||||||||||||||||||||||||||||||||||||||
Commodities contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Over-the-counter (OTC) contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Forward contracts | 3.0 | 2.4 | 4.3 | 3.7 | 1.9 | 1.6 | 0.9 | 1.1 | 10.0 | 39.1 | 8.7 | 33.1 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Options | 0.8 | 1.0 | 2.6 | 2.5 | 2.6 | 2.3 | 0.3 | 0.2 | 6.3 | 36.3 | 6.1 | 42.4 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Exchange-traded contracts5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Futures | 14.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Options | 2.1 | 2.2 | 3.8 | 3.9 | 2.7 | 2.7 | 0.0 | 0.0 | 8.6 | 74.7 | 8.7 | 95.6 | 0.0 | |||||||||||||||||||||||||||||||||||||||
Total | 5.8 | 5.6 | 10.7 | 10.1 | 7.1 | 6.6 | 1.2 | 1.4 | 24.9 | 150.1 | 23.6 | 171.1 | 14.1 | |||||||||||||||||||||||||||||||||||||||
Total derivative instruments, based on IFRS netting | 135.7 | 138.1 | 115.5 | 119.2 | 322.8 | 313.1 | 280.0 | 281.6 | 854.1 | 16,043.9 | 851.9 | 15,528.0 | 15,578.9 | |||||||||||||||||||||||||||||||||||||||
Replacement value netting, based on capital adequacy rules | (651.7 | ) | (651.7 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Cash collateral netting | (41.3 | ) | (52.8 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Total derivative instruments, based on capital adequacy netting6 | 161.1 | 147.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||
315327
Financial information
Notes to the consolidated financial statements
Note 23 Derivative instruments and hedge accounting (continued)
On a notional value basis, credit protection bought and sold held as of 31 December 2010 matures in a range of approximately 10% within one year, approximately 70% within 1 to 5 years and approximately 20% after 5 years. The maturity profile of OTC interest rate contracts held as of 31 December 2010, based on notional values, is as follows: approximately 45% mature within
one year, 33% within 1 to 5 years and 22% over 5 years. Notional values of interest rate contracts cleared with The London Clearing House are presented under “other notional values” and are categorized into maturity buckets on the basis of contractual maturities of the cleared underlying derivative contracts.
328
Financial information |
Off-balance-sheet information
Note 24 Pledgeable off-balance-sheet securities
The Group obtains securities which are not recorded on the balance sheet with the right to sell or repledge them as shown in the table below.
CHF million | 31.12.09 | 31.12.08 | 31.12.10 | 31.12.09 | ||||||||||||
Fair value of securities received which can be sold or repledged | 528,856 | 651,380 | 573,852 | 528,856 | ||||||||||||
under reverse repurchase, securities borrowing and lending arrangements, derivative transactions and other transactions | 515,314 | 621,981 | ||||||||||||||
as collateral under reverse repurchase, securities borrowing and lending arrangements, derivative transactions and other transactions | 571,970 | 515,314 | ||||||||||||||
in unsecured borrowings | 13,542 | 29,399 | 1,882 | 13,542 | ||||||||||||
thereof sold or repledged | 398,883 | 430,670 | 428,347 | 398,883 | ||||||||||||
in connection with financing activities | 335,371 | 343,252 | 352,668 | 335,371 | ||||||||||||
to satisfy commitments under short sale transactions | 47,469 | 62,431 | 54,975 | 47,469 | ||||||||||||
in connection with derivative and other transactions | 16,043 | 24,987 | 20,705 | 16,043 |
Note 25 Operating lease commitments
AtAs of 31 December 2009,2010, UBS was obligated under a number of non-cancellable operating leases for premises and equipment used primarily for banking purposes. The significant premises leases usually include renewal options and escalation clauses in line with general office rental market conditions, as well as rent adjustments based on price indices. However, the lease agreementsagree-
ments do not contain contingent
rent payment clauses and purchase options, nor do they impose any restrictions on UBS’s ability to pay dividends, engage in debt financing transactions or enter into further lease agreements.
CHF million | 31.12.09 | 31.12.10 | ||||||
Operating leases due | ||||||||
2010 | 989 | |||||||
2011 | 870 | 862 | ||||||
2012 | 786 | 741 | ||||||
2013 | 658 | 646 | ||||||
2014 | 555 | 554 | ||||||
2015 and thereafter | 2,113 | |||||||
2015 | 464 | |||||||
2016 and thereafter | 1,818 | |||||||
Subtotal commitments for minimum payments under operating leases | 5,971 | 5,085 | ||||||
Less: Sublease rentals under non-cancellable leases | 690 | 500 | ||||||
Net commitments for minimum payments under operating leases | 5,281 | 4,585 |
CHF million | 31.12.10 | 31.12.09 | 31.12.08 | |||||||||
Gross operating lease expense | 1,057 | 1,191 | 1,215 | |||||||||
Sublease rental income | 97 | 57 | 50 | |||||||||
Net operating lease expense | 960 | 1,134 | 1,165 | |||||||||
316
Note 25 Operating lease commitments (continued)
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | |||||||||
Gross operating lease expense | 1,191 | 1,215 | 1,251 | |||||||||
from continuing operations | 1,191 | 1,215 | 1,233 | |||||||||
from discontinued operations | 0 | 0 | 18 | |||||||||
Sublease rental income from continuing operations | 57 | 50 | 54 | |||||||||
Net operating lease expense | 1,134 | 1,165 | 1,197 | |||||||||
from continuing operations | 1,134 | 1,165 | 1,179 | |||||||||
from discontinued operations | 0 | 0 | 18 | |||||||||
Operating lease contracts include non-cancellable long-term leases of office buildings in most UBS locations. AtAs of 31 December 2009,2010, the minimum lease commitments for each of
11 12 office locations exceeded CHF 100 million and non-cancellable minimum lease commitments for the office location in New York exceeded CHF 500 million.
317329
Financial information
Notes to the consolidated financial statements
Additional information
Note 26 Capital increasesincrease and mandatory convertible notes
June 2009 share capital increase
On 25 June 2009, UBS increased its share capital by issuing 293,258,050 new registered shares with a par value of CHF 0.10 each. The shares were placed with a small number of large institutional investors at a price of CHF 13.00 per share. Net proceeds from the capital increase were CHF 3.8 billion. The shares were issued upon decision by the Board of Directors out of authorized capital which had been approved at the annual general meeting of shareholders on 15 April 2009.
Conversion of the mandatory convertible notes
issued in March 2008
On 5 March 2010, the mandatory convertible notes (MCNs) with a notional value of CHF 13 billion issued in March 2008 to the Swiss Confederation
On 19 August 2009,Government of Singapore Investment Corporation Pte. Ltd. and an investor from the Swiss Confederation announced the conversion of itsMiddle East were converted into UBS CHF 6 billion mandatory convert-
ibleshares. The notes (MCNs). Upon conversion on 25 August 2009,were converted at a price of CHF 47.68 per share. As a result, UBS issued 332,225,913272,651,005 new shares with a nominal value of CHF 0.10 each from existing conditional capital. The liability and theNegative replacement valuerecorded on the balance sheet for the principal amount and the embedded derivative component of the MCNs were reclassified to equity.treated as equity instruments and recognized inShare premium. The conversion of the MCNs resulted in an overall increase in equitya reclassification of CHF 6,71827 million for 2009, reflecting an increase in share capital of CHF 33 million and an increase in sharefromShare premium of CHF 6,685 million. Prior to the conversion of the MCNs, the embedded derivative component was re-measured to fair value resulting in a gain of CHF 341 million for 2009. In addition, the Swiss Confederation waived its right to receive future coupon payments on the converted MCNs for a cash amount of approximately CHF 1.8 billion. The impact on UBS’s income statement resulting from this waiver was not material.Share capital.
Note 27 Fair value of financial instruments
a) Valuation principles
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. Financial instruments classified as held for trading or designated as at fair value through profit or loss, and financial assets classified as available for sale are recognized in the financial statements at fair value. All derivatives are measured at fair value.
instrument’s complexity and the availability of market-based data. Valuation adjustments may be made to allow for additional factors including model risks, liquidity risk as reflected in the bid / offer and credit risk. Based on the established fair value and model governance policies and related controls and procedures applied, the management believes that these valuation adjustments are necessary and appropriate to fairly state the values of financial instruments carried at fair value on the balance sheet.
value. This may differ from the value obtained from the valuation model (“Deferred day 1 profit or loss”). The timing of the recognition in profit and loss of this initial difference in fair value depends on the individual facts and circumstances of each transaction but is never later than when the market data become observable.
Pricing models and valuation techniques
318
value models and option pricing models. Discounted cash flows determine the value by estimating the expected future cash flows from assets or liabilities discounted to their present value. Relative value models determine the value based on the market prices of similar assets or liabilities. Option pricing models are complex present value models,include such probability-based techniques as binomial options pricing models.and Monte Carlo pricing.
330
Financial information |
Note 27 Fair value of financial instruments (continued)
some or all parameters, UBS calibrates the non-market-observable inputs used in its valuation models based on a combination of judgment, historical experience and knowledge of current market conditions. Assumptions and inputs used in valuation techniques and models include benchmark interest rates, credit spreads and other premiapremiums used in estimating discount rates, bond and equity prices, equity index prices, foreign exchange rates and volatilitieslevels of market volatility and correlations.
Interest rate curves Valuation curve
UBS uses various interest rate curves for valuing its financial instruments. Financial liabilities designated at fair value are measured using UBS’s senior debtfunds transfer price curve. Financial assets designated at fair value are valued consistent with the curve used for the particular business. Uncollateralized credit exposure is reserved through normal credit rating and reserving methods. For the valuation of uncollateralized derivative instruments, UBS generally employs a LIBOR flat curve. If the derivatives are only partially collateralized, or uncollateralized, the credit exposure is adjusted through a credit valuation adjustment (CVA) or a debit valuation adjustment (DVA). For the valuation of overnight interest-rate swaps,collateralized derivatives, UBS generally employs the overnight interest-rateindexed swap (OIS) curve.is applied.changes
For collateralized derivatives, the valuation approach was amended at the beginning of the year to use the OIS curve rather than the LIBOR flat curve. This followed a change in the market convention for pricing collateralized derivatives, to reflect that the interest rate typically paid on cash collateral references the OIS curve. The transitional effect of this change in estimate was recognized prospectively and resulted in an immaterial pre-tax gain.
UBS’s own credit risk in the valuations of derivative financial liabilities (Negative replacement values)
319
Financial informationNotes to the consolidated financial statements
mark-to-market movements, and UBS’s credit default spreads to determine the UBS counterparty exposure from the perspective of holders of UBS debt.
UBS, if they applied the same methodology as used to calculate UBS’s CVA. The impact of this methodology change is included in the financial impact of the valuation changes for derivative liabilities and financial liabilities designated at fair value described below.
31.12.09 | ||||||||
CHF billion | CVA1 | DVA | ||||||
Life-to-date | (4.3 | ) | 0.4 | |||||
of which: CVA on monoline credit protection – negative basis trades | (2.9 | ) | N/A | |||||
of which: CVA on monoline credit protection – other | (0.2 | ) | N/A | |||||
of which: CVA on other instruments | (1.2 | ) | N/A | |||||
Year-to-date2 | 0.6 | (1.9 | ) | |||||
of which: CVA on monoline credit protection – negative basis trades | (0.8 | ) | N/A | |||||
of which: CVA on monoline credit protection – other | 0.4 | N/A | ||||||
of which: CVA on other instruments | 1.1 | N/A | ||||||
31.12.10 | ||||||||
CHF billion | CVA1 | DVA | ||||||
Life-to-date gain / (loss) | (2.2 | ) | 0.5 | |||||
of which: CVA on monoline credit protection – negative basis trades | (1.1 | ) | N/A | |||||
of which: CVA on monoline credit protection – other | (0.1 | ) | N/A | |||||
of which: CVA on other instruments | (1.0 | ) | N/A | |||||
Gain / (loss) for the year ended2 | 1.0 | 0.2 | ||||||
of which: CVA on monoline credit protection – negative basis trades | 0.7 | N/A | ||||||
of which: CVA on monoline credit protection – other | 0.1 | N/A | ||||||
of which: CVA on other instruments | 0.2 | N/A | ||||||
331
Financial information
Notes to the consolidated financial statements
Note 27 Fair value of financial instruments (continued)
UBS’s own credit risk in the valuations of financial liabilities designated at fair value which provides a single level of discounting for uncollateralized funded instruments within UBS. The FTP curve is used by UBS to value uncollateralized and partially collateralized funding
The Group’s own credit changes are reflected in valuations for those financial liabilities designated at fair value, where the Group’s own credit risk would be considered by market participants. TheyOwn credit effects are discounted fornot reflected in the valuations of fully collateralized transactions and other instruments for which it is established market practice not to include an entity-specific adjustment for own credit. them.wereare calculated based on a senior debtfunds transfer price (FTP) curve, generated from observed external pricingassociated with new senior debttransactions designated at fair value, and for relevant tenors is set by reference to the level at which newly issued by the Group, or relevant secondary market transactions in senior long-term UBS debt.medium-term notes (MTNs) are priced. The senior debtFTP curve spread is considered to be representative of the credit risk which reflects the premium (or discount) that
market participants require to acquire UBS debt. InMTNs. The FTP curve was implemented at the absenceend of an observablethe year and has replaced the asset and liability management revaluation curve (ALMRC). The impact on the income statement at implementation was not material.
Own credit on financial liabilities designated at fair value | Own credit on financial liabilities designated at fair value | Own credit on financial liabilities designated at fair value | ||||||||||||||||||||||
As of or for the year ended | As of or for the year ended | |||||||||||||||||||||||
CHF million | 31.12.09 | 1 | 31.12.08 | 31.12.07 | 31.12.10 | 31.12.09 | 31.12.08 | |||||||||||||||||
Total gain/(loss) for the year ended | (2,023 | ) | 2,032 | 659 | ||||||||||||||||||||
Total gain / (loss) for the year ended | (548 | ) | (2,023 | ) | 2,032 | |||||||||||||||||||
of which: credit spread related only | (1,958 | ) | 3,993 | 659 | (470 | ) | (1,958 | ) | 3,993 | |||||||||||||||
Life-to-date gain | 890 | 2,953 | 663 | 237 | 890 | 2,953 |
Year-to-date amounts represent the following impacts from valuation changes as of 1 January 2009: increasechange during the year and life-to-date amounts reflect the cumulative change since initial recognition. The change in own credit of CHF 823 million on a year-to-date and life-to-date basis; increase of CHF 441 millionfor the period can be analyzed in own credit related to credit spread only.
320
The year-to-date amounts represent the portion of the change in fair value of the financial liabilities designated at fair value that is related to own credit. The life-to-date amount reflects the gain related to own credit by which the fair value of financial liabilities designated at fair value has changed since inception. Included in these amounts is the quantification oftwo components: (1) changes in fair value that are attributable to changesthe change in UBS’s credit spreadspreads during the periods. In addition,period, and (2) the total own credit changes include the credit effect of “volume changes”, i.e.volume changes, which is the credit effect of period changeschange in fair values attributable to factors other than credit spreads, such as redemptions, effects from time decay, changes in interest rates and changes in the value of referenced instruments issued by third parties, or,parties. The disclosed own credit amounts are also impacted by foreign currency movements.
Changes to the valuation of derivative financial instruments and financial instruments designated at fair value
Reflection of market liquidity risk in fair value determinations
Fair value estimates incorporate the effects of market liquidity risk in the relevant markets. Market liquidity risk is the risk that a loss is incurred in neutralizing the exposures within a position or portfolio by either liquidating the position or establishing an offsetting position. A liquidity adjustment is therefore maderaised to provide against the expected cost of covering open market risk positions within a portfolio or position. Bid/OfferLiquidity adjustments are bid / offer adjustments taken where a net open risk position is retained and the model on which it is valued is calibrated to mid market. Valuations based on models incorporate liquidity or risk premiums either implicitly (e.g., by
calibrating to market prices that incorporate such premiums) or explicitly.
Reflection of model uncertainty in fair value determinations
Uncertainties associated with the use of model-based valuations are predominantly addressed through the use of model reserves. These reserves reflect the amounts that UBS estimates are appropriate to deduct from the valuations produced directly by the models to reflect uncertainties in the relevant modeling assumptions and inputs used. In arriving at these estimates, UBS considers thea range of market practice and how it believes other market participants would assess these uncertainties. Model reserves are periodically reassessed in light of information from market transactions, pricing utilities, and other relevant sources.
Valuation processes
332
Financial information |
Note 27 Fair value of financial instruments (continued)
321
Financial informationNotes to the consolidated financial statements
Note 27 Fair value of financial instruments (continued)
b) Fair value hierarchy
– | Level 1 – quoted prices (unadjusted) in active markets for identical assets and liabilities |
– | Level 2 – valuation techniques for which all significant inputs are market observable, either directly or indirectly; and | |
– | Level 3 – valuation techniques which include significant inputs that are not based on observable market data. |
Determination of fair values from quoted market prices or valuation techniques | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Determination of fair values from quoted market prices or valuation techniques1 | Determination of fair values from quoted market prices or valuation techniques1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
31.12.09 | 31.12.08 | 31.12.10 | 31.12.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CHF billion | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||||||||||||
Trading portfolio assets | 110.9 | 65.5 | 11.6 | 188.0 | 128.1 | 128.4 | 15.3 | 271.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial assets held for trading2 | 77.8 | 60.8 | 10.0 | 148.5 | 94.1 | 65.5 | 11.6 | 171.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trading portfolio assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
pledged as collateral | 31.3 | 12.3 | 0.6 | 44.2 | 25.4 | 13.2 | 1.6 | 40.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial assets held for trading pledged as collateral | 38.3 | 22.2 | 0.8 | 61.4 | 31.3 | 12.3 | 0.6 | 44.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Positive replacement values | 4.0 | 393.8 | 23.8 | 421.7 | 5.1 | 811.2 | 37.8 | 854.1 | 3.6 | 385.1 | 12.4 | 401.1 | 4.0 | 393.8 | 23.8 | 421.7 | ||||||||||||||||||||||||||||||||||||||||||||||||
of which: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate contracts | 0.8 | 213.7 | 0.6 | 215.1 | 0.1 | 372.0 | 3.0 | 375.1 | 0.9 | 201.5 | 1.3 | 203.8 | 0.8 | 213.7 | 0.6 | 215.1 | ||||||||||||||||||||||||||||||||||||||||||||||||
Credit derivative contracts | 0.0 | 58.0 | 20.5 | 78.6 | 0.0 | 166.7 | 30.7 | 197.4 | 48.1 | 7.7 | 55.8 | 58.0 | 20.5 | 78.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign exchange contracts | 0.3 | 95.9 | 0.9 | 97.1 | 0.4 | 221.0 | 0.0 | 221.5 | 0.3 | 112.2 | 1.0 | 113.5 | 0.3 | 95.9 | 0.9 | 97.1 | ||||||||||||||||||||||||||||||||||||||||||||||||
Equity/index contracts | 2.9 | 20.5 | 1.7 | 25.1 | 4.6 | 26.7 | 4.1 | 35.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity / index contracts | 2.3 | 17.5 | 2.4 | 22.2 | 2.9 | 20.5 | 1.7 | 25.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commodities contracts | 0.0 | 5.8 | 0.1 | 5.9 | 0.0 | 24.8 | 0.0 | 24.8 | 0.0 | 5.8 | 0.0 | 5.9 | 0.0 | 5.8 | 0.1 | 5.9 | ||||||||||||||||||||||||||||||||||||||||||||||||
Financial assets designated | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
at fair value | 0.8 | 9.2 | 0.3 | 10.2 | 1.1 | 11.2 | 0.6 | 12.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial assets designated at fair value | 0.8 | 7.3 | 0.5 | 8.5 | 0.8 | 9.2 | 0.3 | 10.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial investments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
available-for-sale | 74.3 | 6.1 | 1.4 | 81.8 | 2.4 | 1.2 | 1.6 | 5.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial investments available-for-sale | 52.9 | 21.0 | 0.9 | 74.8 | 74.3 | 6.1 | 1.4 | 81.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | 221.4 | 487.0 | 37.6 | 745.9 | 162.1 | 965.2 | 57.0 | 1,184.3 | 173.4 | 496.4 | 24.5 | 694.3 | 204.5 | 487.0 | 37.6 | 729.1 | ||||||||||||||||||||||||||||||||||||||||||||||||
Trading portfolio liabilities | 33.5 | 13.6 | 0.4 | 47.5 | 33.9 | 27.5 | 1.0 | 62.4 | 42.9 | 11.8 | 0.3 | 55.0 | 33.5 | 13.6 | 0.4 | 47.5 | ||||||||||||||||||||||||||||||||||||||||||||||||
Negative replacement values | 3.7 | 389.2 | 17.0 | 409.9 | 4.9 | 812.0 | 35.0 | 851.9 | 3.5 | 379.9 | 10.4 | 393.8 | 3.7 | 389.2 | 17.0 | 409.9 | ||||||||||||||||||||||||||||||||||||||||||||||||
of which: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate contracts | 0.7 | 203.1 | 0.0 | 203.7 | 0.0 | 366.9 | 1.8 | 368.7 | 1.0 | 187.8 | 0.7 | 189.4 | 0.7 | 203.1 | 0.0 | 203.7 | ||||||||||||||||||||||||||||||||||||||||||||||||
Credit derivative contracts | 0.0 | 55.8 | 14.7 | 70.6 | 0.0 | 153.7 | 31.0 | 184.8 | 44.9 | 6.2 | 51.1 | 55.8 | 14.7 | 70.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign exchange contracts | 0.3 | 99.4 | 1.4 | 101.1 | 0.3 | 227.0 | 0.0 | 227.3 | 0.3 | 120.9 | 1.8 | 123.0 | 0.3 | 99.4 | 1.4 | 101.1 | ||||||||||||||||||||||||||||||||||||||||||||||||
Equity/index contracts | 2.8 | 25.0 | 1.0 | 28.7 | 4.5 | 40.7 | 2.1 | 47.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity / index contracts | 2.2 | 20.5 | 1.5 | 24.2 | 2.8 | 25.0 | 1.0 | 28.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commodities contracts | 0.0 | 5.8 | 0.0 | 5.8 | 0.0 | 23.6 | 0.0 | 23.6 | 0.0 | 5.8 | 0.1 | 6.0 | 0.0 | 5.8 | 0.0 | 5.8 | ||||||||||||||||||||||||||||||||||||||||||||||||
Financial liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
designated at fair value | 0.0 | 102.4 | 10.3 | 112.7 | 0.0 | 91.2 | 10.3 | 101.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial liabilities designated at fair value | 0.0 | 86.7 | 14.0 | 100.8 | 0.0 | 102.4 | 10.3 | 112.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other liabilities – amounts due under unit-linked investment contracts3 | 18.1 | 18.1 | 21.6 | 21.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities | 37.2 | 505.2 | 27.7 | 570.1 | 38.8 | 930.7 | 46.3 | 1,015.8 | 46.4 | 496.5 | 24.7 | 567.6 | 37.2 | 526.8 | 27.7 | 591.7 |
Detailed breakdowns of UBS’s trading portfolio and financial investments available-for-sale by fair value hierarchy levels are shown in Notethe Notes 11 and 13, respectively.
322333
Financial information
Note 27 Fair value of financial instruments (continued)
b) Fair value hierarchy (continued)
to level 2 consisted equallylargely consist of short sold debt and equity instruments.instruments of CHF 0.5 billion. These assets and liabilities transferred from level 1 to level 2 no longer met the average market activity UBS considers necessary when determining whether an instrument is traded in an active market.
Movements of level 3 instruments
Movements of level 3 instruments and gains/losses for level 3 instruments held at the end of the reporting period | ||||||||||||||||||||||||||||
Movements of level 3 instruments and gains / losses for level 3 instruments held at the end of the reporting period | Movements of level 3 instruments and gains / losses for level 3 instruments held at the end of the reporting period | |||||||||||||||||||||||||||
Trading portfolio assets | Derivative instruments | Financial liabilities | Financial assets held for | Derivative instruments1 | ||||||||||||||||||||||||
(including those pledged | (net replacement | designated at | trading (including those | Positive | Negative | Financial liabilities | ||||||||||||||||||||||
CHF billion | as collateral)1 | values)1 | fair value1 | pledged as collateral)1 | replacement values | replacement values | designated at fair value1 | |||||||||||||||||||||
Balance at 31 December 2008 | 16.9 | 2.8 | 10.3 | 16.9 | 37.8 | 35.0 | 10.3 | |||||||||||||||||||||
Total gains/losses included in the income statement | (3.9 | ) | 2.4 | (1.7 | ) | |||||||||||||||||||||||
Total gains / (losses) included in the income statement | (3.9 | ) | (13.0 | ) | (15.4 | ) | (1.7 | ) | ||||||||||||||||||||
Net trading income | (3.7 | ) | 2.2 | (1.1 | ) | (3.7 | ) | (12.8 | ) | (15.0 | ) | (1.1 | ) | |||||||||||||||
Other | (0.2 | ) | 0.2 | (0.6 | ) | (0.2 | ) | (0.2 | ) | (0.4 | ) | (0.6 | ) | |||||||||||||||
Purchases, sales, issuances and settlements | (6.3 | ) | (1.0 | ) | (4.6 | ) | (6.3 | ) | (9.6 | ) | (8.6 | ) | (4.6 | ) | ||||||||||||||
Purchases | 5.6 | 0.0 | 0.0 | 5.6 | 0.0 | 0.0 | 0.0 | |||||||||||||||||||||
Sales | (11.9 | ) | 0.0 | 0.0 | (11.9 | ) | 0.0 | 0.0 | 0.0 | |||||||||||||||||||
Issuances | 0.0 | 2.0 | 2.7 | 0.0 | 7.3 | 5.3 | 2.7 | |||||||||||||||||||||
Settlements | 0.0 | (3.0 | ) | (7.3 | ) | 0.0 | (16.9 | ) | (13.9 | ) | (7.3 | ) | ||||||||||||||||
Transfers into and/or out of level 3 | 5.4 | 2.8 | 5.3 | |||||||||||||||||||||||||
Transfers into or out of level 3 | 5.4 | 6.3 | 3.5 | 5.3 | ||||||||||||||||||||||||
Transfers into level 3 | 12.5 | 3.3 | 8.0 | 12.5 | 26.0 | 22.7 | 8.0 | |||||||||||||||||||||
Transfers out of level 3 | (7.1 | ) | (0.5 | ) | (2.7 | ) | (7.1 | ) | (19.7 | ) | (19.2 | ) | (2.7 | ) | ||||||||||||||
Foreign currency translation | 0.1 | (0.2 | ) | 1.0 | 0.1 | 2.2 | 2.5 | 1.0 | ||||||||||||||||||||
Balance at 31 December 2009 | 12.2 | 6.8 | 10.3 | 12.2 | 23.8 | 17.0 | 10.3 | |||||||||||||||||||||
Total gains/losses for the period included in the income statement for level 3 instruments held at the end of the reporting period | (0.5 | ) | (0.6 | ) | (0.7 | ) | ||||||||||||||||||||||
Total gains / (losses) for the period included in the income statement for level 3 instruments held at the end of the reporting period 2009 | (0.5 | ) | (9.3 | ) | 8.7 | (0.7 | ) | |||||||||||||||||||||
Net trading income | (1.0 | ) | (0.6 | ) | (0.7 | ) | (1.0 | ) | (9.4 | ) | 8.8 | (0.7 | ) | |||||||||||||||
Other | 0.5 | 0.0 | 0.0 | 0.5 | 0.1 | (0.1 | ) | 0.0 | ||||||||||||||||||||
Balance at 31 December 2009 | 12.2 | 23.8 | 17.0 | 10.3 | ||||||||||||||||||||||||
Total gains / (losses) included in the income statement | 0.2 | 1.2 | 1.8 | 0.3 | ||||||||||||||||||||||||
Net trading income | (0.2 | ) | 1.1 | 1.8 | 0.1 | |||||||||||||||||||||||
Other | 0.4 | 0.1 | 0.0 | 0.2 | ||||||||||||||||||||||||
Purchases, sales, issuances and settlements | 0.0 | (7.0 | ) | (5.4 | ) | (1.4 | ) | |||||||||||||||||||||
Purchases | 3.7 | 0.0 | 0.0 | 0.0 | ||||||||||||||||||||||||
Sales | (3.7 | ) | 0.0 | 0.0 | 0.0 | |||||||||||||||||||||||
Issuances | 0.0 | 1.6 | 1.4 | 3.3 | ||||||||||||||||||||||||
Settlements | 0.0 | (8.6 | ) | (6.8 | ) | (4.7 | ) | |||||||||||||||||||||
Transfers into or out of level 3 | (0.4 | ) | (2.7 | ) | (1.1 | ) | 4.7 | |||||||||||||||||||||
Transfers into level 3 | 2.4 | 1.6 | 1.8 | 5.8 | ||||||||||||||||||||||||
Transfers out of level 3 | (2.8 | ) | (4.3 | ) | (2.9 | ) | (1.1 | ) | ||||||||||||||||||||
Foreign currency translation | (1.0 | ) | (3.0 | ) | (1.9 | ) | 0.1 | |||||||||||||||||||||
Balance at 31 December 2010 | 10.8 | 12.4 | 10.4 | 14.0 | ||||||||||||||||||||||||
Total gains / (losses) for the period included in the income statement for level 3 instruments held at the end of the reporting period 2010 | 0.2 | 1.2 | (1.8 | ) | (0.3 | ) | ||||||||||||||||||||||
Net trading income | (0.2 | ) | 1.1 | (1.8 | ) | (0.1 | ) | |||||||||||||||||||||
Other | 0.4 | 0.1 | 0.0 | (0.2 | ) | |||||||||||||||||||||||
323334
Financial information |
Note 27 Fair value of financial instruments (continued)
– | structured rates and credit trades, including bespoke collateralized debt obligations (CDOs) and collateralized loan obligations (CLOs) | |
– | reference-linked notes | |
– | financial instruments linked to the US sub-prime residential and US commercial real estate markets | |
– | corporate bonds and corporate credit default swaps (CDS) | |
– | equity linked notes issued by UBS | |
– | traded loans |
Financial assets held for trading
Derivative instruments
335
Financial information
Notes to the consolidated financial statements
Note 27 Fair value of financial instruments (continued)
b) Fair value hierarchy (continued)
Material changes in level 3 instruments
Trading portfolio assets
Derivative instruments
Financial liabilities designated at fair value
Sensitivity information
Sensitivity of level 3 financial liabilities, including equity-linked notes issued by UBS,assets and funded credit derivatives. The main driver forliabilities
Level 3 sensitivity information
As of | 31.12.10 | |||||||
Favorable | Unfavorable | |||||||
CHF billion | changes | changes | ||||||
Cash instruments | ||||||||
Mortgage securities | 0.3 | (0.3 | ) | |||||
Debt securities | 0.2 | (0.2 | ) | |||||
Traded loans | 0.1 | (0.1 | ) | |||||
Total cash instruments | 0.6 | (0.6 | ) | |||||
Derivatives instruments | ||||||||
Equity derivatives | 0.4 | (0.4 | ) | |||||
Interest rate derivatives | 0.7 | (0.7 | ) | |||||
Credit derivatives | 0.1 | (0.1 | ) | |||||
Total derivatives instruments | 1.2 | (1.2 | ) | |||||
324336
Financial information |
Note 27 Fair value of financial instruments (continued)
b) Fair value hierarchy (continued)
uations for level 3 instruments. In undertaking this analysis, UBS evaluated these instruments by classifying them into low, medium and high categories of valuation uncertainty based on the assessment of instrument level characteristics and available market information. Instrument level characteristics include the model from which the valuation was derived, the degree of impact on fair value by unobservable parameters, reserves and valuation adjustments. Market information includes any data that supports the classification such as reference to similar instruments and observable pa-
rameter information. Based on the valuation uncertainty assigned to an instrument, the market value was adjusted upward and downward and summed across the level 3 financial assets and liabilities to arrive at the estimated range of reasonably possible alternative valuations, as shown in the table below: Favorable valuation changes for assets would be offset to a significant degree by unfavorable changes in liabilities and vice versa as a consistent use of different assumptions and estimates would prevent a simultaneous favorable or unfavorable valuation change of assets and liabilities.
As of 31 December 2009, CHF billion | Favorable changes | Unfavorable changes | ||||||
Financial assets1 | �� | 4.1 | (4.1 | ) | ||||
of which: trading portfolio assets (including those pledged as collateral) | 1.0 | (10 | ) | |||||
of which: positive replacement values | 3.1 | (3.1 | ) | |||||
Financial liabilities | (3.3 | ) | 3.3 | |||||
of which: financial liabilities designated at fair value | (1.6 | ) | 1.6 | |||||
of which: negative replacement values | (1.7 | ) | 1.7 | |||||
c) Valuation techniques by product and market risk sensitivity
Government and models.corporate bonds, bills and loans
Credit valuation adjustments on monoline credit protectionUBS previously entered into negative basis trades with monolines, whereby they providedvalued using either directly observed market prices typically from consensus providers or using a credit default swap protection against UBS-held underlyings,pricing model, which requires credit spreads, recovery and interest rate inputs.
Equity securities, hedge fund and investment fund units, convertible bonds, and options
The majority of equity securities are traded on public stock exchanges where quoted prices are readily and regularly available.
Residential Mortgage-Backed Securities (RMBS), Commercial Mortgage-Backed Securities (CMBS), Asset-Backed Securities (ABS) and Collateralized Debt Obligations (CDO)
Values of RMBS, CMBS, ABS and CDOs are determined by traded prices and independently verified market data when available. In the absence of direct market data, values will be derived from traded and quoted prices on the securities with similar characteristics or indices through benchmarking and the triangulation approaches.
Credit derivatives related to RMBS, CMBS, ABS and CDO
Credit derivatives
Rates swaps and forwards
CDO, and CLO asset categories, cash flow projections are used in conjunction with current fair values of the underlying assets to provide estimates of expectedvalued by estimating future exposure levels. For other asset categories, future exposure is based on current exposure.
Instruments linked to US residential real estate market
325337
Financial information
Notes to the consolidated financial statements
Note 27 Fair value of financial instruments (continued)
c) Valuation techniques by product and market risk sensitivity (continued)
based on contractual cashfixed and future index levels) and then discounting these flows using an interest rate that reflects the appropriate funding rate for that portion of the underlying bonds dueportfolio. Interest rates and future index levels used in the above calculations are generated from observing current market interest rates associated with typical OTC interest rate derivatives (swap rates, basis swap spreads, futures prices, FRA rates) and converting these into rates specific to the absence of liquidity,portfolio using market standard yield curve models.
Rates options
Commitments to acquire auction rate securities (ARSs)
US reference-linked notes (US RLNs)
RLNs is fairFX spot and forward
FX options
Non-US reference-linked notes (Non-US RLNs)
Option to acquire equity of the SNB StabFund
è | Refer to the “Risk and treasury management” section for more information on certain financial instruments with significant valuation uncertainty (CVA monolines, US and non-US reference-linked notes, option to acquire equity of the SNB StabFund) |
326
Note 27 Fair value of financial instruments (continued)
c) Valuation techniques by product and market risk sensitivity (continued)
fair value(Positive replacement values)with changes to fair value recognized in profit and loss. As of 31 December 2009, the fair value (after adjustments) of UBS’s call option was approximately USD 1,174 million (CHF 1,216 million; 31 December 2008: CHF 1,100 million).
Bespoke collateralized debt obligations (CDOs)
risks that the investor is exposed to is the correlation behavior of the names in the tranche.
Equity-linked notes issued by UBS
327
Financial informationNotes to the consolidated financial statements
Note 27 Fair value of financial instruments (continued)
d) Deferred day 1 profit or loss
The table reflects financial instruments for which fair value is determined using valuation models where not all significant inputs are market observable. Such financial instruments are initially recognized at their transaction price, although the values obtained from the relevant valuation
model on day 1 may differ. Day 1 reserves are released and P&L is recorded in trading profit or loss as
either the underlying parameters become observable or the transaction is closed out.
Deferred day 1 profit or loss
Deferred day 1 profit or loss | Deferred day 1 profit or loss | |||||||||||||||
For the year ended | For the year ended | |||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.10 | 31.12.09 | ||||||||||||
Balance at the beginning of the year | 627 | 550 | 599 | 627 | ||||||||||||
Deferred profit/(loss) on new transactions | 231 | 588 | ||||||||||||||
Deferred profit / (loss) on new transactions | 282 | 231 | ||||||||||||||
Recognized (profit)/loss in the income statement | (240 | ) | (459 | ) | ||||||||||||
Recognized (profit) / loss in the income statement | (260 | ) | (240 | ) | ||||||||||||
Foreign currency translation | (19 | ) | (52 | ) | (56 | ) | (19 | ) | ||||||||
Balance at the end of the year | 599 | 627 | 565 | 599 |
On 31 December 2009,2010, deferred day 1 profit or loss of approximately CHF 0.3 billion (31 December 2008:2009: approximately CHF 0.40.3 billion) pertains largely to multi-name credit default swaps (largely structured rates and credit trades, including bespoke CDOs and multi-name credit default swaps,
bespoke CDOs), and of approximately CHF 0.3 billion (31 December 2008:2009: approximately CHF 0.20.3 billion) to over-the-counter (OTC) equity options. Both instruments are presented as replacement values on UBS’s balance sheet.
338
Financial information |
Note 27 Fair value of financial instruments (continued)
e) Financial instruments accounted for at amortized cost
The following table reflects the estimated fair values for UBS’s instruments accounted for at amortized cost. Refer to Note 29 for an overview of financial assets classified as
“loans “loans and receivables” and financial liabilities accounted for at amortized cost.
31.12.09 | 31.12.08 | 31.12.10 | 31.12.09 | |||||||||||||||||||||||||||||
CHF billion | Carrying value | Fair value | Carrying value | Fair value | Carrying value | Fair value | Carrying value | Fair value | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Due from banks | 46.6 | 46.6 | 64.5 | 64.5 | 17.1 | 17.1 | 16.8 | 16.8 | ||||||||||||||||||||||||
Loans | 305.1 | 306.0 | 338.5 | 338.1 | 261.3 | 263.4 | 264.7 | 265.6 | ||||||||||||||||||||||||
Cash collateral on securities borrowed | 63.5 | 63.5 | 122.9 | 122.9 | 62.5 | 62.5 | 63.5 | 63.5 | ||||||||||||||||||||||||
Reverse repurchase agreements | 116.7 | 116.7 | 224.6 | 224.8 | 142.8 | 142.8 | 116.7 | 116.7 | ||||||||||||||||||||||||
Cash collateral receivables on derivative instruments | 38.1 | 38.1 | 53.8 | 53.8 | ||||||||||||||||||||||||||||
Accrued income and prepaid expenses, other assets | 5.1 | 5.1 | 9.1 | 9.1 | 20.6 | 20.6 | 21.4 | 21.4 | ||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Due to banks | 65.2 | 65.1 | 125.6 | 125.6 | 41.5 | 41.5 | 31.9 | 31.8 | ||||||||||||||||||||||||
Due to customers | 410.5 | 410.5 | 465.7 | 465.7 | 332.3 | 332.5 | 339.3 | 339.3 | ||||||||||||||||||||||||
Cash collateral on securities lent | 8.0 | 8.0 | 14.1 | 14.1 | 6.7 | 6.7 | 8.0 | 8.0 | ||||||||||||||||||||||||
Repurchase agreements | 64.2 | 64.2 | 102.5 | 102.5 | 74.8 | 74.7 | 64.2 | 64.2 | ||||||||||||||||||||||||
Cash collateral payables on derivative instruments | 58.9 | 58.9 | 66.1 | 66.1 | ||||||||||||||||||||||||||||
Debt issued | 134.5 | 133.6 | 201.2 | 199.7 | 131.6 | 131.4 | 134.5 | 133.6 | ||||||||||||||||||||||||
Accrued expenses and deferred income, other liabilities | 15.9 | 15.9 | 22.8 | 22.8 | 49.2 | 49.2 | 54.3 | 54.3 | ||||||||||||||||||||||||
Off-balance-sheet financial instruments | ||||||||||||||||||||||||||||||||
Commitments | ||||||||||||||||||||||||||||||||
Loan commitments1 | 0.3 | 0.4 | 0.4 | 1.9 | 0.3 | 1.2 | ||||||||||||||||||||||||||
Guarantees and similar instruments2 | 0.1 | (0.1 | ) | 0.1 | 0.3 | 0.1 | 0.4 |
328
Note 27 Fair value of financial instruments (continued)
e) Financial instruments accounted for at amortized cost (continued)Loans include Wealth Management assets, mainly mortgage loans, where fair values exceed related carrying values by CHF 3.4 billion, and Investment Bank assets where fair values fall below related carrying values by CHF 1.2 billion.
The fair values included in the table above were calculated for disclosure purposes only. The valuation techniques and assumptions described below provide a measurement of fair value of UBS’s financial instruments accounted for at amortized cost. However, because other institutions may use different methods and assumptions for their fair value estimation, such fair value disclosures cannot necessarily be compared from one financial institution to another. UBS applies significant judgments and assumptions to arrive at these fair values, which are more holistic and less sophisticated than UBS’s established fair value and model governance policies and processes applied forto financial instruments accounted for at fair value, whose fair values impact UBS’s balance sheet and net profit. The following principles were applied when determining fair value estimates for financial instruments accounted for at amortized cost:
– | For financial instruments with remaining maturities greater than three months, the fair value was determined from quoted market prices, where available. |
– | Where quoted market prices were not available, the fair values were estimated by discounting contractual cash flows using |
current market interest rates or appropriate yield curves for instruments with similar credit risk and maturity. These estimates generally include adjustments for counterparty credit or UBS’s own credit. |
– | For short-term financial instruments with remaining maturities of three months or less, the carrying amount, which is net of credit loss allowances, is generally considered a reasonable estimate of fair value. The following financial instruments accounted for at amortized cost |
have remaining maturities of three months or less: |
– | The fair value of |
339
Financial information
Notes to the consolidated financial statements
Note 27 Fair value of financial instruments (continued)
lowances, and does not reflect fair value changes in the credit quality of counterparties or UBS’s own credit movements. |
– | The fair value estimates for repurchase and reverse repurchase agreements with variable and fixed interest rates, for all maturities, include the valuation of the interest rate component of these instruments. Credit and debit valuation adjustments |
have not been included in the valuation due to the | ||
– | The estimated fair values of |
329
Financial informationNotes to the consolidated financial statements
Note 28 Pledged assets and transferred financial assets which do not qualify for derecognition
Financial assets are mainly pledged in securities borrowing and lending transactions, in repurchase and reverse repurchase transactions, under collateralized credit lines with central banks, against loans from mortgage institutions, in con-connection
nection with derivative transactions, as security deposits for stock exchanges and clearinghouse memberships, or transferred for security purposepurposes in connection with the issuance of covered bonds.
Assets pledged | ||||||
Carrying amount | ||||||
CHF million | 31.12.09 | 31.12.08 | ||||
Financial assets held for trading pledged to third parties for liabilities with and without the right of rehypothecation | 64,748 | 78,002 | ||||
of which: pledged to third parties with right of rehypothecation | 44,221 | 40,216 | ||||
Mortgage loans1 | 21,741 | 3,699 | ||||
Other2 | 65,775 | 21,040 | ||||
Total | 152,264 | 102,741 | ||||
The following table presents details of financial assets which have been sold or otherwise transferred, but which do not
qualify for derecognition. Criteria for derecognition are discussed in Note 1a) 5).
Assets pledged | Assets pledged | |||||||||||||||
Carrying amount | ||||||||||||||||
CHF million | 31.12.10 | 31.12.09 | ||||||||||||||
Financial assets held for trading portfolio assets pledged to third parties | 79,742 | 64,748 | ||||||||||||||
of which: pledged to third parties with right of rehypothecation | 61,352 | 44,221 | ||||||||||||||
Financial investments available-for-sale pledged to third parties | 38,106 | 53,222 | ||||||||||||||
Mortgage loans | 27,119 | 21,741 | ||||||||||||||
Other loans and receivables | 10,235 | 12,553 | ||||||||||||||
of which: pledged to third parties with right of rehypothecation | 559 | 192 | ||||||||||||||
Total financial assets pledged | 155,202 | 152,264 | ||||||||||||||
The following table presents details of financial assets which have been sold or otherwise transferred, but which do not qualify for derecognition. Criteria for derecognition are discussed in Note 1a) 5). | The following table presents details of financial assets which have been sold or otherwise transferred, but which do not qualify for derecognition. Criteria for derecognition are discussed in Note 1a) 5). | |||||||||||||||
Transfer of financial assets which do not qualify for derecognition | Transfer of financial assets which do not qualify for derecognition | Transfer of financial assets which do not qualify for derecognition | ||||||||||||||
Continued asset recognition in full – Total assets | Continued asset recognition in full – Total assets | |||||||||||||||
CHF billion | 31.12.09 | 31.12.08 | 31.12.10 | 31.12.09 | ||||||||||||
Nature of transaction | ||||||||||||||||
Securities lending agreements | 17.1 | 22.0 | 30.9 | 17.1 | ||||||||||||
Repurchase agreements | 24.6 | 13.1 | 28.6 | 24.6 | ||||||||||||
Other financial asset transfers | 110.9 | 46.6 | 96.6 | 110.9 | ||||||||||||
Total | 152.6 | 81.7 | 156.1 | 152.6 |
The transactions are mostly conducted under standard agreements employed by financial market participants and are undertaken with counterparties subject to UBS’s normal credit risk control processes. The resulting credit risk exposures are controlled by daily monitoring and collateralization of the positions. The financial assets which continue to be recognized are typically transferred in exchange for cash or other financial assets. The associated liabilities can therefore be assumed to be approximately the carrying amount of the transferred financial assets except for certain positions pledged with central banks.
full.recognition. These include credit risk, settlement risk, country risk and market risk.
330340
Financial information |
Note 29 Measurement categories of financial assets and financial liabilities
a) Measurement categories of financial assets and financial liabilities
The following table provides information about the carrying amounts of individual classes of financial instruments within the measurement categories of financial assets and financial liabilities as defined in IAS 39. Only those assets and liabilities which are deemed to be financial instruments are included
in the table below,be-
low, which causes certain balances to differ from those presented on the balance sheet.
Refer to “Note 27 Fair value of financial instruments” for more information on how fair value of financial instruments is determined.
è | Refer to “Note 27 Fair value of financial instruments” for more information on how fair value of financial instruments is determined |
31.12.10 | 31.12.09 | ||||||||||||||||
31.12.09 | 31.12.08 | ||||||||||||||||
Financial assets1 | |||||||||||||||||
Held for trading | |||||||||||||||||
Trading portfolio assets | 171,173 | 261,904 | 148,521 | 171,173 | |||||||||||||
Trading portfolio assets pledged as collateral | 44,221 | 40,216 | 61,352 | 44,221 | |||||||||||||
Debt issued2 | 3,109 | 4,152 | 2,665 | 3,109 | |||||||||||||
Positive replacement values | 421,694 | 854,100 | 401,146 | 421,694 | |||||||||||||
Total | 640,197 | 1,160,372 | 613,684 | 640,197 | |||||||||||||
Fair value through profit or loss | |||||||||||||||||
Financial assets designated at fair value | 10,223 | 12,882 | 8,504 | 10,223 | |||||||||||||
Cash, loans and receivables | |||||||||||||||||
Financial assets at amortized cost | |||||||||||||||||
Cash and balances with central banks | 20,899 | 32,744 | 26,939 | 20,899 | |||||||||||||
Due from banks | 46,574 | 64,451 | 17,133 | 16,804 | |||||||||||||
Cash collateral on securities borrowed | 63,507 | 122,897 | 62,454 | 63,507 | |||||||||||||
Reverse repurchase agreements | 116,689 | 224,648 | 142,790 | 116,689 | |||||||||||||
Cash collateral receivables on derivative instruments | 38,071 | 53,774 | |||||||||||||||
Loans | 305,061 | 338,520 | 261,263 | 264,710 | |||||||||||||
Accrued income and prepaid expenses | 1,465 | 3,238 | 1,404 | 1,465 | |||||||||||||
Other assets | 3,594 | 5,901 | 19,175 | 19,941 | |||||||||||||
Total | 557,789 | 792,399 | 569,229 | 557,789 | |||||||||||||
Available-for-sale | |||||||||||||||||
Financial investments available-for-sale | 81,757 | 5,248 | 74,768 | 81,757 | |||||||||||||
Total financial assets | 1,289,966 | 1,970,901 | 1,266,185 | 1,289,966 | |||||||||||||
Financial liabilities | |||||||||||||||||
Held for trading | |||||||||||||||||
Trading portfolio liabilities | 47,469 | 62,431 | 54,975 | 47,469 | |||||||||||||
Debt issued2 | 8 | 185 | 1,308 | 8 | |||||||||||||
Negative replacement values | 409,943 | 851,864 | 393,762 | 409,943 | |||||||||||||
Total | 457,420 | 914,480 | 450,045 | 457,420 | |||||||||||||
Fair value through profit or loss, other | |||||||||||||||||
Financial liabilities designated at fair value | 112,653 | 101,546 | 100,756 | 112,653 | |||||||||||||
Amounts due under unit-linked contracts | 21,740 | 22,084 | 18,125 | 21,740 | |||||||||||||
Total | 134,393 | 123,630 | 118,881 | 134,393 | |||||||||||||
Financial liabilities at amortized cost | |||||||||||||||||
Due to banks | 65,166 | 125,628 | 41,490 | 31,922 | |||||||||||||
Cash collateral on securities lent | 7,995 | 14,063 | 6,651 | 7,995 | |||||||||||||
Repurchase agreements | 64,175 | 102,561 | 74,796 | 64,175 | |||||||||||||
Cash collateral payables on derivative instruments | 58,924 | 66,097 | |||||||||||||||
Due to customers | 410,475 | 465,741 | 332,301 | 339,263 | |||||||||||||
Accrued expenses and deferred income | 8,522 | 10,012 | 7,581 | 8,522 | |||||||||||||
Debt issued | 134,453 | 201,221 | 131,628 | 134,453 | |||||||||||||
Other liabilities | 7,415 | 12,765 | 41,622 | 45,774 | |||||||||||||
Total | 698,201 | 931,991 | 694,993 | 698,201 | |||||||||||||
Total financial liabilities | 1,290,014 | 1,970,101 | 1,263,918 | 1,290,014 |
331341
Financial information
Notes to the consolidated financial statements
Note 29 Measurement categories of financial assets and financial liabilities (continued)
b) Reclassification of financial assets
The reclassification of financial assets reflected UBS’s change in intent and ability to hold these financial assets for the foreseeable future rather than for trading in the near term. The foreseeable future is interpreted to mean a period of approximately 12 months following the date of reclassification. The financial assets were reclassified using their fair value on the date of the reclassification, which became their new cost basis at that date.
Trading portfolio assets reclassified to loans | ||||||||
CHF billion | 31.12.09 | 31.12.08 | ||||||
Carrying value of trading portfolio assets reclassified | 19.9 | 24.2 | ||||||
Fair value of trading portfolio assets reclassified | 19.0 | 20.8 | ||||||
Pro-forma fair value gain/(loss) | (0.9 | ) | (3.4 | ) | ||||
Trading portfolio assets reclassified to loans | ||||||||
CHF billion | 31.12.10 | 31.12.09 | ||||||
Carrying value | 11.9 | 19.9 | ||||||
Fair value | 12.1 | 19.0 | ||||||
Pro-forma fair value gain / (loss) | 0.2 | (0.9 | ) | |||||
Fair values of reclassified financial assets decreased as well by approximatelyCHF 6.9 billion in 2010. The decreases included sales of CHF 6.3
billion, redemptions of CHF 0.7 billion, fair value changes of CHF 0.4 billion and the appreciation of the Swiss franc against the US dollar of CHF 1.4 billion, partially offset by fair value gains of CHF 1.8 billion in 2009, which includes a fair value gain of approximately CHF 4.7 billion and financial assets reclassified in 2009 of CHF 0.6 billion, offset by decreases of approximately CHF 2.6 billion related to sales and decreases of approximately CHF 4.5 billion related to redemptions and the decline of the CHF/USD exchange rate.
billion.
Reclassified assets | ||||||||||||||||
Ratio of carrying | ||||||||||||||||
31.12.09, CHF billion | Notional value | Fair value | Carrying value | to notional value | ||||||||||||
US student loan and municipal auction rate securities | 9.3 | 8.0 | 8.2 | 88% | ||||||||||||
Monoline-protected assets1 | 7.5 | 6.1 | 6.5 | 86% | ||||||||||||
Leveraged finance | 2.6 | 0.9 | 0.8 | 30% | ||||||||||||
CMBS/CRE (excluding interest-only strips) | 2.0 | 1.5 | 1.6 | 82% | ||||||||||||
US reference-linked notes | 1.1 | 0.9 | 1.0 | 86% | ||||||||||||
Other assets | 1.1 | 0.9 | 1.0 | 90% | ||||||||||||
Total (excluding CMBS interest-only strips) | 23.6 | 18.2 | 19.0 | 80% | ||||||||||||
CMBS interest-only strips | 0.8 | 0.9 | ||||||||||||||
Total reclassified assets | 23.6 | 19.0 | 19.9 | |||||||||||||
Reclassified financial assets impacted UBS’s income statement as presented in the table below.
Reclassified assets | Reclassified assets | |||||||||||||||||||||||
Ratio of carrying | ||||||||||||||||||||||||
CHF billion | Notional value | Fair value | Carrying value | to notional value | ||||||||||||||||||||
US student loan and municipal auction rate securities | 5.1 | 4.4 | 4.5 | 88 | % | |||||||||||||||||||
Monoline-protected assets | 6.1 | 5.4 | 5.3 | 86 | % | |||||||||||||||||||
Leveraged finance | 0.5 | 0.4 | 0.4 | 75 | % | |||||||||||||||||||
CMBS / CRE (excluding interest-only strips) | 0.2 | 0.1 | 0.1 | 81 | % | |||||||||||||||||||
US reference-linked notes | 0.6 | 0.6 | 0.5 | 83 | % | |||||||||||||||||||
Other assets | 0.9 | 0.8 | 0.7 | 82 | % | |||||||||||||||||||
Total (excluding CMBS interest-only strips) | 13.5 | 11.7 | 11.6 | 86 | % | |||||||||||||||||||
CMBS interest-only strips | 0.4 | 0.3 | ||||||||||||||||||||||
Total reclassified assets | 13.5 | 12.1 | 11.9 | |||||||||||||||||||||
Contribution of the reclassified assets to the income statement | Contribution of the reclassified assets to the income statement | Contribution of the reclassified assets to the income statement | ||||||||||||||||||||||
For the year ended | ||||||||||||||||||||||||
For the year ended | ||||||||||||||||||||||||
CHF billion | �� | 31.12.09 | 31.12.08 | 31.12.10 | 31.12.09 | |||||||||||||||||||
Net interest income | 1.5 | 0.1 | 0.5 | 1.5 | ||||||||||||||||||||
Credit loss (expense)/recovery | (1.0 | ) | (1.3 | ) | ||||||||||||||||||||
Credit loss (expense) / recovery | (0.1 | ) | (1.0 | ) | ||||||||||||||||||||
Other income | 0.1 | 0.0 | ||||||||||||||||||||||
Other income1 | 0.1 | 0.1 | ||||||||||||||||||||||
Impact on operating profit before tax | 0.6 | (1.2 | ) | 0.5 | 0.6 |
332342
Financial information |
Note 29 Measurement categories of financial assets and financial liabilities (continued)
c) Maximum exposure to credit risk and credit quality information
The table below presents the Group’s maximum exposure to credit risk without taking account of any collateral held or other credit enhancements. The amounts included in the table represent the carrying amounts of financial instruments subject to credit risk, which were determined under the guidance
of IFRS. Financial instrumentsin-
struments have been netted only if and to the extent a) legally enforceable rights to offset exist, and b) UBS has the intention to settle the underlying transactions on a net basis. As such, the amounts disclosed in the table below should not necessarily be considered a “risk measure”.
Maximum exposure to credit risk1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maximum exposure to credit risk | Maximum exposure to credit risk | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
31.12.09 | 31.12.08 | 31.12.10 | 31.12.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CHF million | WM&SB | WMA | IB | Other | 2 | UBS | WM&SB | WMA | IB | Other | 2 | UBS | WM&SB | WMA | IB | Other1 | UBS | WM&SB | WMA | IB | Other1 | UBS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances with central banks | 8,589 | 0 | 9,525 | 0 | 18,114 | 17,628 | 0 | 11,528 | 0 | 29,156 | 10,727 | 0 | 13,732 | 0 | 24,459 | 8,589 | 0 | 9,525 | 18,114 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Due from banks | 2,651 | 1,074 | 42,568 | 282 | 46,574 | 5,499 | 1,096 | 57,475 | 381 | 64,451 | 2,654 | 2,157 | 12,007 | 315 | 17,133 | 2,647 | 1,074 | 12,802 | 282 | 16,804 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans | 194,410 | 21,492 | 89,057 | 101 | 305,061 | 203,758 | 23,956 | 110,056 | 750 | 338,520 | 199,591 | 22,470 | 39,044 | 158 | 261,263 | 194,410 | 21,492 | 48,722 | 86 | 264,710 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash collateral on securities borrowed | 0 | 0 | 63,507 | 0 | 63,507 | 0 | 0 | 122,897 | 0 | 122,897 | 62,454 | 62,454 | 63,507 | 63,507 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reverse repurchase agreements | 1,107 | 4,302 | 109,896 | 1,384 | 116,689 | 0 | 4,223 | 219,580 | 844 | 224,648 | 3,615 | 123,574 | 15,601 | 142,790 | 1,107 | 4,302 | 109,896 | 1,384 | 116,689 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash collateral receivables on derivative instruments | 4 | 38,052 | 15 | 38,071 | 4 | 53,755 | 15 | 53,774 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued income, other assets and debt underwriting commitments subject to credit risk | 1,319 | 147 | 2,436 | 1,185 | 5,087 | 1,955 | 183 | 4,526 | 2,479 | 9,144 | 1,187 | 163 | 18,437 | 804 | 20,591 | 1,319 | 147 | 18,783 | 1,185 | 21,434 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial instruments measured at amortized cost on balance sheet | 208,076 | 27,015 | 316,989 | 2,952 | 555,032 | 228,840 | 29,458 | 526,062 | 4,454 | 788,816 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial instruments recognized at amortized cost on balance sheet | 214,163 | 28,405 | 307,300 | 16,893 | 566,762 | 208,076 | 27,015 | 316,989 | 2,952 | 555,032 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Positive replacement values | 2,534 | 520 | 416,862 | 1,778 | 421,694 | 5,610 | 491 | 847,158 | 841 | 854,100 | 2,688 | 600 | 396,018 | 1,840 | 401,146 | 2,534 | 520 | 416,862 | 1,778 | 421,694 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trading portfolio assets (including pledged positions) – debt instruments | 16,341 | 1,107 | 117,047 | 4,535 | 139,030 | 85 | 1,343 | 219,739 | 3,695 | 224,862 | 10,707 | 613 | 122,986 | 5 | 134,310 | 16,341 | 1,107 | 117,047 | 1,739 | 136,234 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial assets designated at fair value – debt instruments | 65 | 0 | 9,317 | 0 | 9,383 | 0 | 0 | 11,803 | 0 | 11,803 | 30 | 7,359 | 7,389 | 65 | 9,317 | 9,383 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial investments available-for-sale – debt instruments | 5,393 | 16,515 | 52,183 | 6,315 | 80,406 | 615 | 278 | 2,451 | 223 | 3,567 | 27 | 11,585 | 3,426 | 58,371 | 73,409 | 5,393 | 16,515 | 52,183 | 6,315 | 80,406 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial instruments measured at fair value on balance sheet | 24,333 | 18,142 | 595,409 | 12,628 | 650,513 | 6,310 | 2,112 | 1,081,151 | 4,759 | 1,094,332 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial instruments recognized at fair value on balance sheet | 13,453 | 12,798 | 529,789 | 60,215 | 616,255 | 24,333 | 18,142 | 595,409 | 9,832 | 647,717 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit guarantees, performance guarantees, documentary credits and similar instruments3 | 11,888 | 385 | 4,569 | 137 | 16,979 | 14,258 | 405 | 4,856 | 149 | 19,668 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit guarantees, performance guarantees, documentary credits and similar instruments2 | 10,449 | 370 | 5,467 | 119 | 16,405 | 11,888 | 385 | 4,569 | 137 | 16,979 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Undrawn irrevocable credit facilities | 7,236 | 498 | 51,593 | 0 | 59,328 | 2,775 | 13 | 57,528 | 0 | 60,316 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan commitments | 7,276 | 1,066 | 48,509 | 56,851 | 7,236 | 498 | 51,593 | 59,328 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Irrevocable commitments to acquire ARS | 0 | 0 | 8,700 | 0 | 8,700 | 0 | 0 | 16,571 | 0 | 16,571 | 140 | 140 | 8,700 | 8,700 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Irrevocable forward starting reverse repos agreements | 39,036 | 39,036 | 43,020 | 43,020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Irrevocable forward starting securities borrowing agreements | 454 | 454 | 904 | 904 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments | 19,124 | 883 | 64,862 | 137 | 85,007 | 17,033 | 418 | 78,955 | 149 | 96,555 | 17,724 | 1,436 | 93,607 | 119 | 112,887 | 19,124 | 883 | 108,786 | 137 | 128,931 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total at the year-end | 251,533 | 46,040 | 977,260 | 15,717 | 1,290,552 | 252,183 | 31,988 | 1,686,168 | 9,362 | 1,979,703 | 245,340 | 42,640 | 930,695 | 77,228 | 1,295,903 | 251,533 | 46,040 | 1,021,184 | 12,921 | 1,331,680 |
The table above does not include written credit protection, which is generally recognized on UBS’s balance sheet underNegative replacement values.values. It also excludes UBS’s potential obligations under the Swiss Deposit Insurance.Insurance (2010: CHF 961 million, 2009: 1,030 million).
alizationcollateralization and hedging. Collateral held and credit risk mitigation is described in the section “Risk management and control”.
333343
Financial information
Notes to the consolidated financial statements
Note 29 Measurement categories of financial assets and financial liabilities (continued)
Financial assets subject to credit risk by rating category | ||||||||||||||||||||||||||||||||
CHF million | 31.12.10 | |||||||||||||||||||||||||||||||
Rating category1 | 0-1 | 2-3 | 4-5 | 6-8 | 9-13 | defaulted | not rated4 | Total | ||||||||||||||||||||||||
Balances with central banks | 14,636 | 9,800 | 23 | 24,459 | ||||||||||||||||||||||||||||
Due from banks | 326 | 11,728 | 2,555 | 2,349 | 174 | 2 | 17,133 | |||||||||||||||||||||||||
Loans | 11,845 | 75,638 | 76,200 | 79,785 | 16,216 | 1,580 | 261,263 | |||||||||||||||||||||||||
Cash collateral on securities borrowed and reverse repurchase agreements | 59,372 | 112,871 | 23,093 | 8,229 | 1,675 | 4 | 205,244 | |||||||||||||||||||||||||
Positive replacement values | 15,220 | 331,725 | 38,372 | 12,567 | 2,187 | 1,074 | 401,146 | |||||||||||||||||||||||||
Cash collateral receivables on derivative instruments | 6,207 | 22,591 | 4,470 | 4,475 | 320 | 8 | 38,071 | |||||||||||||||||||||||||
Trading portfolio assets (including pledged) – debt instruments | 52,541 | 59,353 | 10,162 | 5,544 | 6,415 | 296 | 134,310 | |||||||||||||||||||||||||
Financial investments available-for-sale – debt instruments | 66,804 | 6,559 | 40 | 6 | 73,409 | |||||||||||||||||||||||||||
Other financial instruments | 104 | 5,853 | 3,734 | 16,349 | 1,646 | 294 | 27,980 | |||||||||||||||||||||||||
Commitments2 | ||||||||||||||||||||||||||||||||
Guarantees and similar instruments3 | 131 | 7,183 | 4,528 | 3,149 | 1,386 | 159 | 16,535 | |||||||||||||||||||||||||
Undrawn irrevocable credit facilities | 671 | 32,793 | 10,310 | 4,821 | 8,109 | 147 | 56,851 | |||||||||||||||||||||||||
Irrevocable forward starting reverse repos | 39,036 | 39,036 | ||||||||||||||||||||||||||||||
Irrevocable forward starting securities borrowing | 454 | 454 | ||||||||||||||||||||||||||||||
Total | 227,856 | 676,094 | 173,446 | 137,308 | 38,134 | 3,564 | 39,490 | 1,295,893 | ||||||||||||||||||||||||
CHF million | 31.12.09 | |||||||||||||||||||||||||||||||
Rating category1 | 0-1 | 2-3 | 4-5 | 6-8 | 9-13 | defaulted | not rated4 | Total | ||||||||||||||||||||||||
Balances with central banks | 14,491 | 3,615 | 9 | 18,114 | ||||||||||||||||||||||||||||
Due from banks | 312 | 14,092 | 1,517 | 596 | 176 | 111 | 16,804 | |||||||||||||||||||||||||
Loans | 15,738 | 68,854 | 76,986 | 84,120 | 16,295 | 2,716 | 264,710 | |||||||||||||||||||||||||
Cash collateral on securities borrowed and reverse repurchase agreements | 47,928 | 100,127 | 24,108 | 7,444 | 537 | 52 | 180,196 | |||||||||||||||||||||||||
Positive replacement values | 18,138 | 357,590 | 31,511 | 10,316 | 2,682 | 1,456 | 421,694 | |||||||||||||||||||||||||
Cash collateral receivables on derivative instruments | 7,956 | 37,621 | 3,563 | 3,835 | 606 | 194 | 53,774 | |||||||||||||||||||||||||
Trading portfolio assets (including pledged) – debt instruments | 60,216 | 56,032 | 9,871 | 4,429 | 4,985 | 701 | 136,234 | |||||||||||||||||||||||||
Financial investments available-for-sale – debt instruments | 75,363 | 5,007 | 3 | 25 | 8 | 80,406 | ||||||||||||||||||||||||||
Other financial instruments | 177 | 7,407 | 5,001 | 15,528 | 2,380 | 323 | 30,816 | |||||||||||||||||||||||||
Commitments2 | ||||||||||||||||||||||||||||||||
Guarantees and similar instruments3 | 87 | 8,391 | 4,129 | 2,931 | 1,475 | 56 | 17,070 | |||||||||||||||||||||||||
Undrawn irrevocable credit facilities | 962 | 40,682 | 8,441 | 3,357 | 5,463 | 422 | 59,328 | |||||||||||||||||||||||||
Irrevocable forward starting reverse repos | 43,020 | 43,020 | ||||||||||||||||||||||||||||||
Irrevocable forward starting securities borrowing | 904 | 904 | ||||||||||||||||||||||||||||||
Total | 241,368 | 699,417 | 165,140 | 132,582 | 34,608 | 6,032 | 43,924 | 1,323,070 | ||||||||||||||||||||||||
Financial assets subject to credit risk by rating category | ||||||||||||||||||||||||||||
CHF million | 31.12.09 | |||||||||||||||||||||||||||
Rating category | 0–1 | 2–3 | 4–5 | 6–8 | 9–13 | defaulted | Total | |||||||||||||||||||||
Balances with central banks | 14,491 | 3,615 | 9 | 18,114 | ||||||||||||||||||||||||
Due from banks | 3,392 | 39,256 | 2,526 | 1,108 | 186 | 106 | 46,574 | |||||||||||||||||||||
Loans | 21,000 | 82,204 | 81,791 | 98,611 | 18,544 | 2,910 | 305,061 | |||||||||||||||||||||
Cash collateral on securities borrowed and reverse repurchase agreements | 47,928 | 100,127 | 24,108 | 7,444 | 537 | 52 | 180,196 | |||||||||||||||||||||
Positive replacement values | 18,138 | 357,590 | 31,511 | 10,316 | 2,682 | 1,456 | 421,694 | |||||||||||||||||||||
Trading portfolio assets (including pledged) – debt instruments | 61,492 | 57,128 | 10,081 | 4,523 | 5,090 | 716 | 139,030 | |||||||||||||||||||||
Financial investments available-for-sale – debt instruments | 75,363 | 5,007 | 3 | 25 | 8 | 80,406 | ||||||||||||||||||||||
Other financial instruments | 696 | 9,211 | 2,435 | 945 | 559 | 624 | 14,470 | |||||||||||||||||||||
Commitments1 | ||||||||||||||||||||||||||||
Guarantees and similar instruments2 | 87 | 8,391 | 4,129 | 2,931 | 1,475 | 56 | 17,070 | |||||||||||||||||||||
Undrawn irrevocable credit facilities | 962 | 40,682 | 8,441 | 3,357 | 5,463 | 422 | 59,328 | |||||||||||||||||||||
Total | 243,550 | 703,210 | 165,033 | 129,262 | 34,546 | 6,341 | 1,281,942 | |||||||||||||||||||||
CHF million | 31.12.08 | |||||||||||||||||||||||||||
Rating category | 0-1 | 2-3 | 4-5 | 6-8 | 9-13 | defaulted | Total | |||||||||||||||||||||
Balances with central banks | 23,619 | 5,534 | 3 | 29,156 | ||||||||||||||||||||||||
Due from banks | 5,697 | 43,075 | 13,847 | 1,418 | 327 | 87 | 64,451 | |||||||||||||||||||||
Loans | 26,210 | 97,300 | 82,431 | 108,076 | 20,204 | 4,298 | 338,520 | |||||||||||||||||||||
Cash collateral on securities borrowed and reverse repurchase agreements | 95,379 | 218,644 | 19,841 | 12,528 | 711 | 441 | 347,544 | |||||||||||||||||||||
Positive replacement values | 46,805 | 602,505 | 172,865 | 24,333 | 5,081 | 2,511 | 854,100 | |||||||||||||||||||||
Trading portfolio assets (including pledged) – debt instruments | 98,836 | 89,508 | 20,780 | 7,103 | 8,031 | 604 | 224,862 | |||||||||||||||||||||
Financial investments available-for-sale – debt instruments | 3,271 | 131 | 110 | 35 | 16 | 3 | 3,567 | |||||||||||||||||||||
Other financial instruments | 1,253 | 13,085 | 2,846 | 2,048 | 890 | 824 | 20,947 | |||||||||||||||||||||
Commitments1 | ||||||||||||||||||||||||||||
Guarantees and similar instruments2 | 36 | 9,496 | 4,944 | 3,654 | 1,497 | 72 | 19,699 | |||||||||||||||||||||
Undrawn irrevocable credit facilities | 238 | 33,820 | 15,285 | 2,840 | 7,719 | 415 | 60,316 | |||||||||||||||||||||
Total | 301,344 | 1,113,099 | 332,952 | 162,035 | 44,477 | 9,254 | 1,963,161 | |||||||||||||||||||||
334344
Financial information |
Note 30 Pension and other post-employment benefit plans
CHF million | 31.12.10 | 31.12.09 | 31.12.08 | |||||||||
Net periodic pension cost for defined benefit plans | 477 | 742 | 660 | |||||||||
of which: related to major plans (Note 30a) | 430 | 694 | 672 | |||||||||
of which: related to post-retirement medical and life insurance plans (Note 30b) | 22 | 9 | 9 | |||||||||
of which: related to remaining plans | 25 | 39 | (21 | ) | ||||||||
Pension cost for defined contribution plans (Note 30c) | 246 | 246 | 312 | |||||||||
Total pension and other post-employment benefit plans (Note 6) | 724 | 988 | 972 | |||||||||
a) Defined benefit plans
Swiss pension plan
ForeignInternational pension plans
è | Refer also to Note 1a) 23). |
335345
Financial information
Notes to the consolidated financial statements
Note 30 Pension and other post-employment benefit plans (continued)
a) Defined benefit plans (continued) | ||||||||||||||||||||||||||||||||||||||||||||||||
Defined benefit plans | Defined benefit plans | |||||||||||||||||||||||||||||||||||||||||||||||
CHF million | Swiss | Foreign | Swiss | International | ||||||||||||||||||||||||||||||||||||||||||||
For the year ended | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.10 | 31.12.09 | 31.12.08 | ||||||||||||||||||||||||||||||||||||
Defined benefit obligation at the beginning of the year | (21,311 | ) | (20,877 | ) | (21,506 | ) | (3,642 | ) | (4,928 | ) | (5,207 | ) | (21,119 | ) | (21,311 | ) | (20,877 | ) | (4,353 | ) | (3,642 | ) | (4,928 | ) | ||||||||||||||||||||||||
Service cost | (432 | ) | (336 | ) | (367 | ) | (41 | ) | (63 | ) | (88 | ) | (384 | ) | (432 | ) | (336 | ) | (41 | ) | (41 | ) | (63 | ) | ||||||||||||||||||||||||
Interest cost | (672 | ) | (710 | ) | (633 | ) | (230 | ) | (251 | ) | (264 | ) | (657 | ) | (672 | ) | (710 | ) | (237 | ) | (230 | ) | (251 | ) | ||||||||||||||||||||||||
Plan participant contributions | (195 | ) | (233 | ) | (236 | ) | (197 | ) | (195 | ) | (233 | ) | ||||||||||||||||||||||||||||||||||||
Amendments | 0 | 0 | (414 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Actuarial gain/(loss) | 231 | (288 | ) | 1,508 | (471 | ) | 318 | 236 | (149 | ) | 231 | (288 | ) | (119 | ) | (471 | ) | 318 | ||||||||||||||||||||||||||||||
Benefits paid | 1,314 | 1,158 | 792 | 153 | 148 | 151 | 1,252 | 1,314 | 1,158 | 148 | 153 | 148 | ||||||||||||||||||||||||||||||||||||
Termination benefits | (54 | ) | (25 | ) | (21 | ) | (45 | ) | (54 | ) | (25 | ) | ||||||||||||||||||||||||||||||||||||
Acquisitions | 0 | 0 | (54 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation | (122 | ) | 1,134 | 298 | 549 | (122 | ) | 1,134 | ||||||||||||||||||||||||||||||||||||||||
Defined benefit obligation at the end of the year | (21,119 | ) | (21,311 | ) | (20,877 | ) | (4,353 | ) | (3,642 | ) | (4,928 | ) | (21,299 | ) | (21,119 | ) | (21,311 | ) | (4,053 | ) | (4,353 | ) | (3,642 | ) | ||||||||||||||||||||||||
Fair value of plan assets at the beginning of the year | 19,029 | 22,181 | 21,336 | 2,866 | 4,579 | 4,602 | 20,286 | 19,029 | 22,181 | 3,517 | 2,866 | 4,579 | ||||||||||||||||||||||||||||||||||||
Expected return on plan assets | 846 | 990 | 1,067 | 202 | 282 | 313 | 850 | 846 | 990 | 237 | 202 | 282 | ||||||||||||||||||||||||||||||||||||
Actuarial gain/(loss) | 963 | (3,820 | ) | (250 | ) | 266 | (1,027 | ) | (97 | ) | 54 | 963 | (3,820 | ) | 163 | 266 | (1,027 | ) | ||||||||||||||||||||||||||||||
Employer contributions | 567 | 603 | 584 | 232 | 194 | 200 | 510 | 513 | 578 | 86 | 232 | 194 | ||||||||||||||||||||||||||||||||||||
Employer contributions – termination benefits | 45 | 54 | 25 | 0 | ||||||||||||||||||||||||||||||||||||||||||||
Plan participant contributions | 195 | 233 | 236 | 197 | 195 | 233 | ||||||||||||||||||||||||||||||||||||||||||
Benefits paid | (1,314 | ) | (1,158 | ) | (792 | ) | (153 | ) | (148 | ) | (151 | ) | (1,252 | ) | (1,314 | ) | (1,158 | ) | (148 | ) | (153 | ) | (148 | ) | ||||||||||||||||||||||||
Foreign currency translation | 104 | (1,014 | ) | (288 | ) | (449 | ) | 104 | (1,014 | ) | ||||||||||||||||||||||||||||||||||||||
Fair value of plan assets at the end of the year | 20,286 | 19,029 | 22,181 | 3,517 | 2,866 | 4,579 | 20,690 | 20,286 | 19,029 | 3,406 | 3,517 | 2,866 | ||||||||||||||||||||||||||||||||||||
Funded status | (833 | ) | (2,282 | ) | 1,304 | (836 | ) | (776 | ) | (349 | ) | (609 | ) | (833 | ) | (2,282 | ) | (647 | ) | (836 | ) | (776 | ) | |||||||||||||||||||||||||
Unrecognized net actuarial (gains)/losses | 2,996 | 4,405 | 2,123 | 1,475 | 1,324 | 975 | 3,028 | 2,996 | 4,405 | 1,183 | 1,475 | 1,324 | ||||||||||||||||||||||||||||||||||||
Unrecognized assets | 0 | 0 | (1,304 | ) | ||||||||||||||||||||||||||||||||||||||||||||
(Accrued)/prepaid pension cost | 2,163 | 2,123 | 2,123 | 639 | 548 | 626 | 2,418 | 2,163 | 2,123 | 536 | 639 | 548 | ||||||||||||||||||||||||||||||||||||
Movement in the net (liability) or asset | ||||||||||||||||||||||||||||||||||||||||||||||||
(Accrued)/prepaid pension cost at the beginning of the year | 2,123 | 2,123 | 1,953 | 548 | 626 | 633 | 2,163 | 2,123 | 2,123 | 639 | 548 | 626 | ||||||||||||||||||||||||||||||||||||
Net periodic pension cost | (527 | ) | (603 | ) | (414 | ) | (167 | ) | (69 | ) | (97 | ) | (300 | ) | (527 | ) | (603 | ) | (130 | ) | (167 | ) | (69 | ) | ||||||||||||||||||||||||
Employer contributions | 567 | 603 | 584 | 232 | 194 | 200 | 510 | 513 | 578 | 86 | 232 | 194 | ||||||||||||||||||||||||||||||||||||
Acquisitions | 0 | 0 | (54 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Employer contributions – termination benefits | 45 | 54 | 25 | 0 | ||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation | 26 | (203 | ) | (56 | ) | (59 | ) | 26 | (203 | ) | ||||||||||||||||||||||||||||||||||||||
(Accrued)/prepaid pension cost | 2,163 | 2,123 | 2,123 | 639 | 548 | 626 | 2,418 | 2,163 | 2,123 | 536 | 639 | 548 | ||||||||||||||||||||||||||||||||||||
Amounts recognized in the balance sheet | ||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid pension cost | 2,163 | 2,123 | 2,123 | 890 | 798 | 887 | 2,418 | 2,163 | 2,123 | 756 | 890 | 798 | ||||||||||||||||||||||||||||||||||||
Accrued pension liability | (251 | ) | (250 | ) | (261 | ) | (220 | ) | (251 | ) | (250 | ) | ||||||||||||||||||||||||||||||||||||
(Accrued)/prepaid pension cost | 2,163 | 2,123 | 2,123 | 639 | 548 | 626 | 2,418 | 2,163 | 2,123 | 536 | 639 | 548 | ||||||||||||||||||||||||||||||||||||
Components of net periodic pension cost | ||||||||||||||||||||||||||||||||||||||||||||||||
Service cost | 384 | 432 | 336 | 41 | 41 | 63 | ||||||||||||||||||||||||||||||||||||||||||
Interest cost | 657 | 672 | 710 | 237 | 230 | 251 | ||||||||||||||||||||||||||||||||||||||||||
Expected return on plan assets | (850 | ) | (846 | ) | (990 | ) | (237 | ) | (202 | ) | (282 | ) | ||||||||||||||||||||||||||||||||||||
Amortization of unrecognized net (gains)/losses | 64 | 215 | 0 | 89 | 98 | 37 | ||||||||||||||||||||||||||||||||||||||||||
Immediate recognition of net actuarial (gains)/losses in current period | 1,826 | |||||||||||||||||||||||||||||||||||||||||||||||
Termination benefits | 45 | 54 | 25 | |||||||||||||||||||||||||||||||||||||||||||||
Limit of defined benefit asset | (1,304 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Net periodic pension cost | 300 | 527 | 603 | 130 | 167 | 69 | ||||||||||||||||||||||||||||||||||||||||||
336346
Financial information |
Note 30 Pension and other post-employment benefit plans (continued)
a) Defined benefit plans (continued)
CHF million | Swiss | Foreign | ||||||||||||||||||||||
For the year ended | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.09 | 31.12.08 | 31.12.07 | ||||||||||||||||||
Components of net periodic pension cost | ||||||||||||||||||||||||
Service cost | 432 | 336 | 367 | 41 | 63 | 88 | ||||||||||||||||||
Interest cost | 672 | 710 | 633 | 230 | 251 | 264 | ||||||||||||||||||
Expected return on plan assets | (846 | ) | (990 | ) | (1,067 | ) | (202 | ) | (282 | ) | (313 | ) | ||||||||||||
Amortization of unrecognized net (gains)/losses | 215 | 0 | 0 | 98 | 37 | 58 | ||||||||||||||||||
Immediate recognition of net actuarial (gains)/losses in current period | 0 | 1,826 | (1,258 | ) | ||||||||||||||||||||
Immediate recognition of past service cost in current period | 0 | 0 | 414 | |||||||||||||||||||||
Special termination benefits | 54 | 25 | 21 | |||||||||||||||||||||
Limit of defined benefit asset | 0 | (1,304 | ) | 1,304 | ||||||||||||||||||||
Net periodic pension cost | 527 | 603 | 414 | 167 | 69 | 97 | ||||||||||||||||||
Funded and unfunded plans | ||||||||||||||||||||||||
Swiss | ||||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | 31.12.05 | |||||||||||||||||||
Defined benefit obligation from funded plans | (21,119 | ) | (21,311 | ) | (20,877 | ) | (21,506 | ) | (20,972 | ) | ||||||||||||||
Plan assets | 20,286 | 19,029 | 22,181 | 21,336 | 20,229 | |||||||||||||||||||
Surplus/(deficit) | (833 | ) | (2,282 | ) | 1,304 | (170 | ) | (743 | ) | |||||||||||||||
Experience gains/(losses) on plan liabilities | 214 | 0 | 0 | |||||||||||||||||||||
Experience gains/(losses) on plan assets | 963 | (3,820 | ) | (250 | ) | |||||||||||||||||||
Foreign | ||||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | 31.12.05 | |||||||||||||||||||
Defined benefit obligation from funded plans | (4,078 | ) | (3,402 | ) | (4,654 | ) | (5,002 | ) | (4,635 | ) | ||||||||||||||
Defined benefit obligation from unfunded plans | (275 | ) | (240 | ) | (274 | ) | (205 | ) | (385 | ) | ||||||||||||||
Plan assets | 3,517 | 2,866 | 4,579 | 4,602 | 4,288 | |||||||||||||||||||
Surplus/(deficit) | (836 | ) | (776 | ) | (349 | ) | (605 | ) | (732 | ) | ||||||||||||||
Experience gains/(losses) on plan liabilities | (12 | ) | 62 | (32 | ) | |||||||||||||||||||
Experience gains/(losses) on plan assets | 266 | (1,027 | ) | (97 | ) | |||||||||||||||||||
Funded and unfunded plans | ||||||||||||||||||||||||
Swiss | ||||||||||||||||||||||||
CHF million | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | |||||||||||||||||||
Defined benefit obligation from funded plans | (21,299 | ) | (21,119 | ) | (21,311 | ) | (20,877 | ) | (21,506 | ) | ||||||||||||||
Plan assets | 20,690 | 20,286 | 19,029 | 22,181 | 21,336 | |||||||||||||||||||
Surplus / (deficit) | (609 | ) | (833 | ) | (2,282 | ) | 1,304 | (170 | ) | |||||||||||||||
Experience gains / (losses) on plan liabilities | 253 | 214 | 0 | |||||||||||||||||||||
Experience gains / (losses) on plan assets | 54 | 963 | (3,820 | ) | ||||||||||||||||||||
International | ||||||||||||||||||||||||
CHF million | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | |||||||||||||||||||
Defined benefit obligation from funded plans | (3,813 | ) | (4,078 | ) | (3,402 | ) | (4,654 | ) | (5,002 | ) | ||||||||||||||
Defined benefit obligation from unfunded plans | (240 | ) | (275 | ) | (240 | ) | (274 | ) | (205 | ) | ||||||||||||||
Plan assets | 3,406 | 3,517 | 2,866 | 4,579 | 4,602 | |||||||||||||||||||
Surplus / (deficit) | (647 | ) | (836 | ) | (776 | ) | (349 | ) | (605 | ) | ||||||||||||||
Experience gains / (losses) on plan liabilities | (17 | ) | (12 | ) | 62 | |||||||||||||||||||
Experience gains / (losses) on plan assets | 163 | 266 | (1,027 | ) | ||||||||||||||||||||
Swiss | International | |||||||||||||||||||||||
31.12.10 | 31.12.09 | 31.12.08 | 31.12.10 | 31.12.09 | 31.12.08 | |||||||||||||||||||
Principal weighted average actuarial assumptions used (%) | ||||||||||||||||||||||||
Assumptions used to determine defined benefit obligations at the end of the year | ||||||||||||||||||||||||
Discount rate | 2.8 | 3.3 | 3.3 | 5.4 | 5.7 | 6.0 | ||||||||||||||||||
Expected rate of salary increase | 2.5 | 2.5 | 2.5 | 4.9 | 5.0 | 4.5 | ||||||||||||||||||
Rate of pension increase | 0.3 | 0.5 | 0.5 | 2.3 | 2.5 | 1.9 | ||||||||||||||||||
Assumptions used to determine net periodic pension cost for the year ended | ||||||||||||||||||||||||
Discount rate | 3.3 | 3.3 | 3.5 | 5.7 | 6.0 | 5.8 | ||||||||||||||||||
Expected rate of return on plan assets | 4.3 | 4.5 | 4.5 | 6.9 | 6.6 | 7.1 | ||||||||||||||||||
Expected rate of salary increase | 2.5 | 2.5 | 2.5 | 5.0 | 4.5 | 4.8 | ||||||||||||||||||
Rate of pension increase | 0.5 | 0.5 | 0.8 | 2.5 | 1.9 | 2.4 | ||||||||||||||||||
Plan assets (weighted average) | ||||||||||||||||||||||||
Actual plan asset allocation (%) | ||||||||||||||||||||||||
Equity instruments | 32 | 35 | 26 | 45 | 46 | 46 | ||||||||||||||||||
Debt instruments | 54 | 51 | 55 | 38 | 35 | 35 | ||||||||||||||||||
Real estate | 13 | 13 | 13 | 3 | 3 | 3 | ||||||||||||||||||
Other | 1 | 1 | 6 | 14 | 16 | 16 | ||||||||||||||||||
Total | 100 | 100 | 100 | 100 | 100 | 100 | ||||||||||||||||||
Long-term target plan asset allocation (%) | ||||||||||||||||||||||||
Equity instruments | 15-39 | 18-44 | 20-48 | 40-42 | 42-45 | 45-48 | ||||||||||||||||||
Debt instruments | 44-68 | 41-65 | 37-63 | 38-44 | 37-44 | 37-38 | ||||||||||||||||||
Real estate | 10-18 | 9-17 | 10-20 | 3-6 | 3-7 | 3-7 | ||||||||||||||||||
Other | 0--5 | 0-5 | 0-5 | 11-15 | 11-12 | 10-12 | ||||||||||||||||||
Actual return on plan assets (%) | 4.6 | 9.7 | (12.8 | ) | 11.7 | 15.5 | (18.2 | ) | ||||||||||||||||
Additional details to fair value of plan assets | ||||||||||||||||||||||||
UBS financial instruments and UBS bank accounts | 258 | 205 | 782 | |||||||||||||||||||||
UBS AG shares1 | 25 | 66 | 55 | |||||||||||||||||||||
Derivative financial instruments, counterparty UBS | 298 | 25 | 41 | |||||||||||||||||||||
Other assets used by UBS | 188 | 193 | 107 | |||||||||||||||||||||
337347
Financial information
Notes to the consolidated financial statements
Note 30 Pension and other post-employment benefit plans (continued)
a) Defined benefit plans (continued)
Mortality tables and life expectancies for major plans | ||||||||||||||||||||||||||||
Life expectancy at age 65 for a male member currently | ||||||||||||||||||||||||||||
aged 65 | aged 45 | |||||||||||||||||||||||||||
Country | Mortality table | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.10 | 31.12.09 | 31.12.08 | |||||||||||||||||||||
Switzerland | BVG 2005 | 17.9 | 17.9 | 17.8 | 17.9 | 17.9 | 17.8 | |||||||||||||||||||||
UK | PA 2000 G, medium cohort with adjustment | 23.0 | 22.8 | 22.7 | 25.9 | 25.7 | 25.6 | |||||||||||||||||||||
Germany | Dr. K. Heubeck 2005 G | 19.3 | 19.1 | 19.0 | 22.0 | 21.9 | 21.8 | |||||||||||||||||||||
US | PPA mandated mortality table per IRC 1.430(h)(3) | 19.0 | 18.4 | 18.4 | 19.0 | 18.4 | 18.4 | |||||||||||||||||||||
Swiss | Foreign | |||||||||||||||||||||||
31.12.09 | 31.12.08 | 31.12.07 | 31.12.09 | 31.12.08 | 31.12.07 | |||||||||||||||||||
Principal weighted average actuarial assumptions used (%) | ||||||||||||||||||||||||
Assumptions used to determine defined benefit obligations at the end of the year | ||||||||||||||||||||||||
Discount rate | 3.3 | 3.3 | 3.5 | 5.7 | 6.0 | 5.8 | ||||||||||||||||||
Expected rate of salary increase | 2.5 | 2.5 | 2.5 | 5.0 | 4.5 | 4.8 | ||||||||||||||||||
Rate of pension increase | 0.5 | 0.5 | 0.8 | 2.5 | 1.9 | 2.4 | ||||||||||||||||||
Assumptions used to determine net periodic pension cost for the year ended | ||||||||||||||||||||||||
Discount rate | 3.3 | 3.5 | 3.0 | 6.0 | 5.8 | 5.2 | ||||||||||||||||||
Expected rate of return on plan assets | 4.5 | 4.5 | 5.0 | 6.6 | 7.1 | 7.0 | ||||||||||||||||||
Expected rate of salary increase | 2.5 | 2.5 | 2.5 | 4.5 | 4.8 | 4.6 | ||||||||||||||||||
Rate of pension increase | 0.5 | 0.8 | 0.8 | 1.9 | 2.4 | 2.1 | ||||||||||||||||||
Plan assets (weighted average) | ||||||||||||||||||||||||
Actual plan asset allocation (%) | ||||||||||||||||||||||||
Equity instruments | 35 | 26 | 38 | 46 | 46 | 50 | ||||||||||||||||||
Debt instruments | 51 | 55 | 47 | 35 | 35 | 38 | ||||||||||||||||||
Real estate | 13 | 13 | 11 | 3 | 3 | 4 | ||||||||||||||||||
Other | 1 | 6 | 4 | 16 | 16 | 8 | ||||||||||||||||||
Total | 100 | 100 | 100 | 100 | 100 | 100 | ||||||||||||||||||
Long-term target plan asset allocation (%) | ||||||||||||||||||||||||
Equity instruments | 18–44 | 20–48 | 33–51 | 42–45 | 45–48 | 49–52 | ||||||||||||||||||
Debt instruments | 41–65 | 37–63 | 31–50 | 37–44 | 37–38 | 38–44 | ||||||||||||||||||
Real estate | 9–17 | 10–20 | 10–19 | 3–7 | 3–7 | 4–6 | ||||||||||||||||||
Other | 0–5 | 0–5 | 0 | 11–12 | 10–12 | 1–3 | ||||||||||||||||||
Actual return on plan assets (%) | 9.7 | (12.8 | ) | 3.9 | 15.5 | (18.2 | ) | 4.8 | ||||||||||||||||
Additional details to fair value of plan assets | ||||||||||||||||||||||||
UBS financial instruments and UBS bank accounts | 205 | 782 | 336 | |||||||||||||||||||||
UBS AG shares1 | 66 | 55 | 128 | |||||||||||||||||||||
Securities lent to UBS included in plan assets | 0 | 0 | 9,379 | |||||||||||||||||||||
Other assets used by UBS included in plan assets | 218 | 148 | 111 | |||||||||||||||||||||
Mortality tables and life expectancies for major plans | ||||||||||||||||||||||||||
Life expectancy at age 65 for a male member currently | ||||||||||||||||||||||||||
aged 65 | aged 45 | |||||||||||||||||||||||||
Country | Mortality table | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.09 | 31.12.08 | 31.12.07 | |||||||||||||||||||
Switzerland | BVG 2005 | 17.9 | 17.8 | 17.8 | 17.9 | 17.8 | 17.8 | |||||||||||||||||||
PA 2000 G, medium cohort with | ||||||||||||||||||||||||||
UK | adjustment | 22.8 | 22.7 | 21.9 | 25.7 | 25.6 | 23.0 | |||||||||||||||||||
Germany | Dr. K. Heubeck 2005 G | 19.1 | 19.0 | 18.9 | 21.9 | 21.8 | 21.6 | |||||||||||||||||||
US | RP 2000 with projections | 18.4 | 18.4 | 18.3 | 18.4 | 18.4 | 18.3 | |||||||||||||||||||
Life expectancy at age 65 for a female member currently | Life expectancy at age 65 for a female member currently | |||||||||||||||||||||||||||||||||||||||||||||||||||||
aged 65 | aged 45 | aged 65 | aged 45 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Country | Mortality table | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.09 | 31.12.08 | 31.12.07 | Mortality table | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.10 | 31.12.09 | 31.12.08 | ||||||||||||||||||||||||||||||||||||||||
Switzerland | BVG 2005 | 21.0 | 21.1 | 21.1 | 21.0 | 21.1 | 21.1 | BVG 2005 | 21.0 | 21.0 | 21.1 | 21.0 | 21.0 | 21.1 | ||||||||||||||||||||||||||||||||||||||||
PA 2000 G, medium cohort with | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
UK | adjustment | 24.6 | 24.5 | 24.8 | 26.5 | 26.4 | 25.8 | PA 2000 G, medium cohort with adjustment | 24.7 | 24.6 | 24.5 | 26.6 | 26.5 | 26.4 | ||||||||||||||||||||||||||||||||||||||||
Germany | Dr. K. Heubeck 2005 G | 23.3 | 23.1 | 23.0 | 25.8 | 25.7 | 25.6 | Dr. K. Heubeck 2005 G | 23.4 | 23.3 | 23.1 | 26.0 | 25.8 | 25.7 | ||||||||||||||||||||||||||||||||||||||||
US | RP 2000 with projections | 20.6 | 20.6 | 20.5 | 20.6 | 20.6 | 20.5 | PPA mandated mortality table per IRC 1.430(h)(3) | 20.9 | 20.6 | 20.6 | 20.9 | 20.6 | 20.6 |
338348
Financial information |
Note 30 Pension and other post-employment benefit plans (continued)
b) Post-retirement medical and life insurance plans
In the US and the UK, UBS offers retiree medical benefits that contribute to the health care coverage of certain employees and beneficiaries after retirement. The UK plan is closed to new entrants. In addition to retiree medical benefits, UBS in the US also provides retiree life insurance benefits.benefits to certain employees. The benefit obligation in excess of the fair value of plan assets for these plans amounts to CHF 186209 million as of 31 December 2009 (2008:2010 (2009: CHF 159186 million; 2007:2008: CHF 190159 million) and the total accrued post-retirement cost amounts to CHF 163158 million as of 31
31 December 2009 (2008:2010 (2009: CHF 163 million; 2008: CHF 164 million; 2007: CHF 181 million). The net periodic post-retirement costs for the years ended 31 December 2010, 31 December 2009, and 31 December 2008 and 31 December 2007 were CHF 22 million (net of a curtailment gain of CHF 0 million), CHF 9 million (including(net of a curtailment gain of CHF 8 million), and CHF 9 million (including(net of a curtailment gain of CHF 11 million), and CHF 26 million, respectively.
Post-retirement medical and life insurance plans | Post-retirement medical and life insurance plans | |||||||||||||||||||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.10 | 31.12.09 | 31.12.08 | ||||||||||||||||||||||||||||||||||
Post-retirement benefit obligation at the beginning of the year | (159 | ) | (190 | ) | (219 | ) | (186 | ) | (159 | ) | (190 | ) | ||||||||||||||||||||||||||||
Service cost | (7 | ) | (8 | ) | (12 | ) | (9 | ) | (7 | ) | (8 | ) | ||||||||||||||||||||||||||||
Interest cost | (10 | ) | (11 | ) | (11 | ) | (11 | ) | (10 | ) | (11 | ) | ||||||||||||||||||||||||||||
Plan participant contributions | (2 | ) | (0 | ) | (1 | ) | (2 | ) | (2 | ) | 0 | |||||||||||||||||||||||||||||
Actuarial gain/(loss) | (31 | ) | 14 | 39 | ||||||||||||||||||||||||||||||||||||
Amendments | 0 | 0 | (8 | ) | ||||||||||||||||||||||||||||||||||||
Actuarial gain / (loss) | (35 | ) | (31 | ) | 14 | |||||||||||||||||||||||||||||||||||
Benefits paid | 10 | 7 | 8 | 10 | 10 | 7 | ||||||||||||||||||||||||||||||||||
Curtailments | 9 | 9 | 0 | 9 | 9 | |||||||||||||||||||||||||||||||||||
Foreign currency translation | 4 | 20 | 14 | 24 | 4 | 20 | ||||||||||||||||||||||||||||||||||
Post-retirement benefit obligation at the end of the year | (186 | ) | (159 | ) | (190 | ) | (209 | ) | (186 | ) | (159 | ) | ||||||||||||||||||||||||||||
Fair value of plan assets at the beginning of the year | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||
Employer contributions | 8 | 6 | 7 | 8 | 8 | 6 | ||||||||||||||||||||||||||||||||||
Plan participant contributions | 2 | 1 | 1 | 2 | 2 | 1 | ||||||||||||||||||||||||||||||||||
Benefits paid | (10 | ) | (7 | ) | (8 | ) | (10 | ) | (10 | ) | (7 | ) | ||||||||||||||||||||||||||||
Fair value of plan assets at the end of the year | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | 31.12.05 | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | ||||||||||||||||||||||||||||||
Defined benefit obligation | (186 | ) | (159 | ) | (190 | ) | (219 | ) | (216 | ) | (209 | ) | (186 | ) | (159 | ) | (190 | ) | (219 | ) | ||||||||||||||||||||
Plan asset | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
Surplus/(deficit) | (186 | ) | (159 | ) | (190 | ) | (219 | ) | (216 | ) | ||||||||||||||||||||||||||||||
Surplus / (deficit) | (209 | ) | (186 | ) | (159 | ) | (190 | ) | (219 | ) | ||||||||||||||||||||||||||||||
Experience gains/(losses) on plan liabilities | 8 | 3 | 8 | 1 | (3 | ) | ||||||||||||||||||||||||||||||||||
Experience gains / (losses) on plan liabilities | 6 | 8 | 3 |
The post-retirement benefit expense is determined by using the assumed average health care cost trend rate. The rate used in determining post-retirement benefit expensefor 2011 is assumed to be 9% for 20098% and is assumed to decrease gradually to an ultimate trend rate of 5% in 2015.by 2018. On a country-by-country basis, the same discount rate is used for the calculation of the post-retirement benefit obligation from medical and life plans as for the defined benefit obligations arising from pension plans.
Assumed average health care cost trend rates have a significant effect on the amounts reported for health care plans. A one percentage point change in the assumed health care cost trend rates would change the US post-retirement benefit obligation and the service and interest cost components of the net periodic post-retirement benefit costs as follows:
CHF million | 1% increase | 1% decrease | 1% increase | 1% decrease | ||||||||||||
Effect on total service and interest cost | 4 | (3 | ) | 5 | (4 | ) | ||||||||||
Effect on the post-retirement benefit obligation | 26 | (21 | ) | 35 | (27 | ) |
339349
Financial information
Notes to the consolidated financial statements
Note 30 Pension and other post-employment benefit plans (continued)
c) Defined contribution plans
UBS also sponsors a number of defined contribution plans in its foreigninternational locations. The locations with defined contribution plans of a materialsignificant nature are in the UK and the US. Certain plans permit employees to make contributions and earn matching
or other contributions from UBS. The em-
ployeremployer contributions to these plans recognized as expense for the years ended 31 December 2009,2010, 31 December 2008,2009, and 31 December 20072008 were CHF 246 million, CHF 312246 million, and CHF 285312 million, respectively.
d) Related party disclosure
UBS is the principal bank for the pension fund of UBS in Switzerland. In this function, UBS is engaged to execute most of the pension fund’s banking activities. These activities can include, but are not limited to, trading and securities lending and borrowing. All transactions have been executed at arm’s length conditions.
multaneously into lease-back arrangements for some of the properties with 25-year lease terms and two renewal options for ten years each. At 31 December 2008 the minimum commitment towards the Swiss pension fund under the related leases was approximately CHF 41 million.
Related party disclosure | Related party disclosure | Related party disclosure | ||||||||||||||||||||||
For the year ended | For the year ended | |||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.10 | 31.12.09 | 31.12.08 | ||||||||||||||||||
Received by UBS | ||||||||||||||||||||||||
Fees | 34 | 44 | 58 | 21 | 34 | 44 | ||||||||||||||||||
Paid by UBS | ||||||||||||||||||||||||
Rent | 11 | 12 | 7 | |||||||||||||||||||||
Interest | 2 | 1 | 2 | 3 | 2 | 1 | ||||||||||||||||||
Dividends and capital repayments | 0 | 4 | 38 | 0 | 0 | 4 |
The transaction volumes in UBS shares and other UBS securities are as follows:
Transaction volumes – related parties | Transaction volumes – related parties | Transaction volumes – related parties | ||||||||||||||||||||||
For the year ended | For the year ended | |||||||||||||||||||||||
31.12.09 | 31.12.08 | 31.12.07 | 31.12.10 | 31.12.09 | 31.12.08 | |||||||||||||||||||
Financial instruments bought by pension funds | ||||||||||||||||||||||||
UBS AG shares (in thousands of shares) | 3,869 | 6,925 | 1,728 | 2,684 | 3,869 | 6,925 | ||||||||||||||||||
UBS financial instruments (nominal values in CHF million) | 35 | 78 | 950 | 40 | 35 | 78 | ||||||||||||||||||
Financial instruments sold by pension funds or matured | ||||||||||||||||||||||||
UBS AG shares (in thousands of shares) | 4,116 | 1,881 | 1,930 | 4,735 | 4,116 | 1,881 | ||||||||||||||||||
UBS financial instruments (nominal values in CHF million) | 14 | 10 | 976 | 10 | 14 | 10 |
UBS has also leased buildings from its pension funds. The rent paiddid not hold financial instruments issued by UBS under these leases amounted to CHF 12 million in 2009, CHF 7 million in 2008, and CHF 6 million in 2007.
defined benefit pension plans are included in the additional detailsDetails to the fair value of plan assets.assets of the defined pension plans are disclosed in Note 30a. Furthermore, UBS defined
contribution planspension funds hold 17,259,20317,665,621 UBS shares with a market value of CHF 278272 million as of 31 December 2009 (2008:2010 (2009: 17,259,203 shares with a market value of CHF 278 million; 2008: 17,866,949 shares with a market value of CHF 272 million; 2007: 14,121,239 shares with a market value of CHF 736 million).
340350
Financial information |
Note 31 Equity participation and other compensation plans
a) Plans offered
UBS has established several equity participation and other compensation plans to further align the interests of executives, managers and staff with the interests of shareholders. The plans are offered to eligible employees in approximately 50 countries and are designed to meet the complex legal, tax and regulatory requirements of each country in which they are offered. UBS’s compensation plans are mandatory, discretionary or voluntary. The explanations below provide a general description of the terms of the most significant plans offered, however specific plan rules may vary by country. Refer to Note 1a) 24) for a description of the accounting policy related to equity participation and other compensation plans.
Mandatory share-based compensation plans
all SEEOP awards is recognized during the performance year, which is generally the period prior to the grant date.
vesting of these awards is subject to certain employees SEEOP awards with a nine-month vesting period.the fulfillment of specific performance conditions. Compensation expense is recognized on the same basis as for theseother share-settled EOP awards.
Mandatory deferred cash compensation plans
341351
Financial information
Notes to the consolidated financial statements
Note 31 Equity participation and other compensation plans (continued)
a) Plans offered (continued)
the initial four-year period and a market rate of interest thereafter. The awards vest in 20% increments six to ten years following grant date. Interest earned on UBS contributions is forfeitable under certain circumstances. Compensation expense is recognized on a straight-line basis from the grant date to the earliest of the vesting date or the retirement eligibility date of the employee.
Discretionary share-based compensation plans
eligibility date of the employee.
ingduring the performance year, which is generally the period prior to the grant date. During 2009, UBS only granted SESOP awards only to certain employees for which it had a contractual commitment. No SESOP awards were granted in 2010.
Voluntary share-based compensation plans
Other plans
342352
Financial information |
Note 31 Equity participation and other compensation plans (continued)
b) Effect on income statement
Mandatory, discretionaryEffect on income statement for the financial year and voluntary share-based
future periods
Personnel expenses – recognized and deferred1 | ||||||||||||||||||||||||
Personnel expenses for the year ended 2010 | Personnel expenses deferred to 2011 and later | |||||||||||||||||||||||
Expenses | Expenses | |||||||||||||||||||||||
relating to | relating to | Relating to | Relating to | |||||||||||||||||||||
awards for | awards for | awards | awards for | |||||||||||||||||||||
CHF million | 2010 | prior years | Total | for 2010 | prior years | Total | ||||||||||||||||||
Variable bonus awards | ||||||||||||||||||||||||
Cash discretionary bonus | 2,079 | 5 | 2,084 | 0 | 0 | 0 | ||||||||||||||||||
Conditional Variable Compensation Plan (CVCP) | 0 | 179 | 179 | 0 | 292 | 292 | ||||||||||||||||||
Cash Balance and other cash plans | 64 | 71 | 135 | 236 | 19 | 255 | ||||||||||||||||||
Total deferred cash plans | 64 | 250 | 314 | 236 | 311 | 547 | ||||||||||||||||||
Equity Ownership Plan (EOP/SEEOP/Performance) – UBS shares | 434 | 852 | 1,286 | 1,249 | 515 | 1,764 | ||||||||||||||||||
Performance Equity Plan (PEP) | 6 | 5 | 11 | 16 | 2 | 18 | ||||||||||||||||||
Incentive Performance Plan (IPP) | 0 | 131 | 131 | 6 | 221 | 227 | ||||||||||||||||||
Total UBS share plans | 440 | 988 | 1,428 | 1,271 | 738 | 2,009 | ||||||||||||||||||
UBS share option plans (KESAP/KESOP) | 145 | 145 | 114 | 114 | ||||||||||||||||||||
Equity Ownership Plan (EOP) – AIVs | 28 | 83 | 111 | 67 | 57 | 124 | ||||||||||||||||||
Total discretionary bonus | 2,611 | 1,471 | 4,082 | 1,574 | 1,220 | 2,794 | ||||||||||||||||||
Variable compensation | ||||||||||||||||||||||||
Variable compensation – other2 | 399 | (89 | ) | 310 | 337 | 20 | 357 | |||||||||||||||||
Financial advisor compensation – cash payments | 1,813 | 0 | 1,813 | 0 | 0 | 0 | ||||||||||||||||||
Compensation commitments and advances related to recruited financial advisors | 29 | 570 | 599 | 388 | 2,186 | 2,574 | ||||||||||||||||||
Partner Plus and other deferred cash plans | 127 | 35 | 162 | 221 | 302 | 523 | ||||||||||||||||||
UBS share plans | 11 | 82 | 93 | 89 | 266 | 355 | ||||||||||||||||||
Wealth Management Americas financial advisor compensation3 | 1,980 | 687 | 2,667 | 698 | 2,754 | 3,452 | ||||||||||||||||||
Total | 4,990 | 2,069 | 7,059 | 2,609 | 3,994 | 6,603 | ||||||||||||||||||
Mandatory deferred cash compensation plansThe total deferred cash compensation expense, related to CBP and CVCP (as described in previous section),personnel expenses recognized for the year ended 31 December 2009 was2010 of CHF 631,843 million is comprised of UBS share plans of CHF 1,428 million, UBS share option plans of CHF 145 million, Equity Ownership Plan – AIVs of CHF 111 million, related social security costs of CHF 90 million and other variable compensation of CHF 69 million. At 31 December 2009, total2 Includes replacement awards of CHF 107 million, forfeiture credits of CHF (167) million, guaranteed bonuses of CHF 135 million, severance payments of CHF 69 million and UBS’s Equity Plus Plan of CHF 80 million. 3 Financial advisor compensation expenseconsists of grid-based compensation based directly on compensable revenues generated by financial advisors and supplemental compensation calculated based on financial advisor productivity, firm tenure and other variables. It also includes costs related to CVCP awardscompensation commitments and advances granted in 2009to financial advisors at the time of recruitment, which will be recognized as an expense in the income statement from 2010 and later is CHF 570 million. This amount is expected to be recognized in Personnel expenses over a weighted average period of 1.8 years.
c) UBS share awards
Movements in shares granted under the equity participation plans described in Note 31a) are as follows:
Weighted | Weighted | Weighted | ||||||||||||||||||||||
Number of | average | Number of | average | Number of | average | |||||||||||||||||||
shares | grant date | shares | grant date | shares | grant date | |||||||||||||||||||
31.12.09 | fair value CHF | 31.12.08 | fair value CHF | 31.12.07 | fair value CHF | |||||||||||||||||||
Forfeitable, at the beginning of the year | 84,736,935 | 53 | 59,102,580 | 66 | 56,141,102 | 58 | ||||||||||||||||||
Shares awarded during the year | 39,067,130 | 12 | 90,895,594 | 32 | 30,271,820 | 70 | ||||||||||||||||||
Distributions during the year | (31,293,824 | ) | 66 | (60,105,109 | ) | 61 | (25,031,819 | ) | 55 | |||||||||||||||
Forfeited during the year | (5,621,615 | ) | 38 | (5,156,131 | ) | 54 | (2,278,523 | ) | 66 | |||||||||||||||
Forfeitable, at the end of the year | 86,888,626 | 31 | 84,736,935 | 53 | 59,102,580 | 66 | ||||||||||||||||||
of which: shares vested for accounting purposes | 40,148,461 | 65,767,017 | 47,700,903 | |||||||||||||||||||||
UBS measures compensation expense based on the average market price of the UBS share on the grant date as quoted on the SIX Swiss Exchange less a discount for post-vesting sale and hedge restrictions and non-vesting conditions, in accordance with IFRS 2Share-based Payment: Vesting Conditions and Cancellations.The grant date fair value of notional UBS shares without dividend entitlements also includes a deduction for the present value of future expected dividends to be paid between grant date and distribution.
weighted average discount for share awards granted in 2009 is approximately 31.7% of the market price of the UBS share. Discounts for non-vesting conditions are based on the probability that the non-vesting conditions will be achieved and the award will become exercisable. The fair value of share-based awards granted prior to 2008 was not discounted for post-vesting sale and hedge restrictions, as there was no distinction between vesting and non-vesting conditions until the IASB amended IFRS 2Share-based Payment: Vesting Conditions and Cancellations.The market value of shares legally vested was CHF 346 million, CHF 1,385 million, and CHF 1,737 million for the years ended 31 December 2009, 31 December 2008, and 31 December 2007, respectively.
343353
Financial information
Notes to the consolidated Financial informationfinancial statements
Note 31 Equity participation and other compensation plans (continued)
Personnel expenses – recognized and deferred1 | ||||||||||||||||||||||||
Personnel expenses for the year ended 2009 | Personnel expenses deferred to 2010 and later | |||||||||||||||||||||||
Expenses | Expenses | |||||||||||||||||||||||
relating to | relating to | Relating to | Relating to | |||||||||||||||||||||
awards for | awards for | awards for | awards for | |||||||||||||||||||||
CHF million | 2009 | prior years | Total | 2009 | prior years | Total | ||||||||||||||||||
Variable bonus awards | ||||||||||||||||||||||||
Cash discretionary bonus | 2,245 | (169 | ) | 2,076 | 0 | 0 | 0 | |||||||||||||||||
Conditional Variable Compensation Plan (CVCP) | 0 | 19 | 19 | 0 | 558 | 558 | ||||||||||||||||||
Cash Balance and other cash plans | 44 | 0 | 44 | 45 | 12 | 57 | ||||||||||||||||||
Total deferred cash plans | 44 | 19 | 63 | 45 | 570 | 615 | ||||||||||||||||||
Equity Ownership Plan (EOP/SEEOP) – UBS shares | 276 | 283 | 559 | 1,352 | 97 | 1,449 | ||||||||||||||||||
Performance Equity Plan (PEP) | 0 | 0 | 0 | 8 | 0 | 8 | ||||||||||||||||||
Incentive Performance Plan (IPP) | 0 | 0 | 0 | 467 | 0 | 467 | ||||||||||||||||||
Total UBS share plans | 276 | 283 | 559 | 1,827 | 97 | 1,924 | ||||||||||||||||||
UBS share option plans (KESAP/KESOP) | 33 | 23 | 56 | 34 | 286 | 320 | ||||||||||||||||||
Equity Ownership Plan (EOP) – AIVs | 34 | 21 | 55 | 134 | 13 | 147 | ||||||||||||||||||
Total discretionary bonus | 2,632 | 177 | 2,809 | 2,040 | 966 | 3,006 | ||||||||||||||||||
Variable compensation | ||||||||||||||||||||||||
Variable compensation – other2 | 816 | 14 | 830 | 61 | 27 | 88 | ||||||||||||||||||
Financial advisor compensation – cash payments | 1,712 | 0 | 1,712 | 0 | 0 | 0 | ||||||||||||||||||
Compensation commitments and advances related to recruited financial advisors | 127 | 471 | 598 | 1,198 | 1,744 | 2,942 | ||||||||||||||||||
Partner Plus and other deferred cash plans | 28 | (7 | ) | 21 | 124 | 241 | 365 | |||||||||||||||||
UBS share plans | 0 | 95 | 95 | 110 | 236 | 346 | ||||||||||||||||||
Wealth Management Americas financial advisor compensation3 | 1,867 | 559 | 2,426 | 1,432 | 2,221 | 3,653 | ||||||||||||||||||
Total | 5,315 | 750 | 6,065 | 3,533 | 3,214 | 6,747 | ||||||||||||||||||
Additional disclosures on mandatory, discretionary and voluntary share-based compensation plans (including AIVs granted under EOP)
periods is CHF 1,382 million and will be recognized inPersonnel expensesover a weighted average period of 2.5 years. Deferred compensation amounts included in the table above differ from this amount as they include non-vested awards granted in February and March 2011 related to the compensation core cycle 2010.
354
Financial information |
Note 31 Equity participation and other compensation plans (continued)
d) c) Movements during the year
UBS share and performance share awards
UBS share awards | ||||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
Number of | average grant | Number of | average grant | Number of | average grant | |||||||||||||||||||
shares | date fair | shares | date fair | shares | date fair | |||||||||||||||||||
2010 | value CHF | 2009 | value CHF | 2008 | value CHF | |||||||||||||||||||
Outstanding, at the beginning of the year | 86,888,626 | 31 | 84,736,935 | 53 | 59,102,580 | 66 | ||||||||||||||||||
Shares awarded during the year | 125,133,310 | 15 | 39,067,130 | 12 | 90,895,594 | 32 | ||||||||||||||||||
Distributions during the year | (29,669,688 | ) | 42 | (31,293,824 | ) | 66 | (60,105,109 | ) | 61 | |||||||||||||||
Forfeited during the year | (11,267,108 | ) | 21 | (5,621,615 | ) | 38 | (5,156,131 | ) | 54 | |||||||||||||||
Outstanding, at the end of the year | 171,085,140 | 18 | 86,888,626 | 31 | 84,736,935 | 53 | ||||||||||||||||||
of which: shares vested for accounting purposes | 47,366,286 | 40,148,461 | 65,767,017 | |||||||||||||||||||||
The market value of shares that became legally vested during the years ended 31 December 2010, 2009, and 2008 was CHF 421 million, CHF 346 million, and CHF 1,385 million, respectively.
Movements in IPP units are as follows:
Incentive Performance Plan | ||||||||||||
Weighted average | ||||||||||||
Number of | fair value of IPP | Representative of | ||||||||||
performance shares | performance shares | UBS shares | ||||||||||
2010 | at grant date CHF1 | 20102 | ||||||||||
Forfeitable, at the beginning of the year | 0 | 0 | 0 | |||||||||
Awarded during the year | 19,629,916 | 22 | 19,629,916 | |||||||||
Distributions during the year | 0 | 0 | 0 | |||||||||
Forfeited / cancelled during the year | (1,472,674 | ) | 22 | (1,472,674 | ) | |||||||
Increase / decrease of UBS shares to be delivered upon vesting, based on conditions at the end of the year | N/A | N/A | 0 | |||||||||
Forfeitable, at the end of the year | 18,157,242 | 22 | 18,157,242 | |||||||||
of which: performance shares vested for accounting purposes | 4,073,546 | 4,073,546 | ||||||||||
Movements in PEP units are as follows:
Performance Equity Plan | ||||||||||||
Weighted average | ||||||||||||
Number of | fair value of PEP | Representative of | ||||||||||
performance shares | performance shares | UBS shares | ||||||||||
2010 | at grant date CHF1 | 20102 | ||||||||||
Forfeitable, at the beginning of the year | 0 | 0 | 0 | |||||||||
Awarded during the year | 545,642 | 16 | 545,642 | |||||||||
Distributions during the year | 0 | 0 | 0 | |||||||||
Forfeited during the year | (26,805 | ) | 16 | (26,805 | ) | |||||||
Increase / decrease of UBS shares to be delivered upon vesting, based on conditions at the end of the year | N/A | N/A | (251,636 | ) | ||||||||
Forfeitable, at the end of the year | 518,837 | 16 | 267,201 | |||||||||
of which: performance shares vested for accounting purposes | 221,638 | 114,143 | ||||||||||
355
Financial information
Notes to the consolidated financial statements
Note 31 Equity participation and other compensation plans (continued)
UBS option awards
Movements in options granted under the equity participation plans described in Note 31a) areoption awards were as follows:
UBS option awards | UBS option awards | |||||||||||||||||||||||||||||||||||||||||||||||
Weighted | Weighted | |||||||||||||||||||||||||||||||||||||||||||||||
Number of | average | Number of | Weighted | Number of | Weighted | average | Weighted | Weighted | ||||||||||||||||||||||||||||||||||||||||
options | exercise price | options | average exercise | options | average exercise | Number of | exercise price | Number of | average exercise | Number of | average exercise | |||||||||||||||||||||||||||||||||||||
31.12.09 | CHF2 | 31.12.081 | price CHF1,2 | 31.12.071 | price CHF1,2 | options 2010 | CHF2 | options 2009 | price CHF2 | options 20081 | price CHF1,2 | |||||||||||||||||||||||||||||||||||||
Outstanding, at the beginning of the year | 236,055,545 | 47 | 198,213,092 | 52 | 188,393,473 | 47 | 228,623,886 | 43 | 236,055,545 | 47 | 198,213,092 | 52 | ||||||||||||||||||||||||||||||||||||
Granted during the year | 22,525,624 | 13 | 62,973,879 | 30 | 48,094,483 | 67 | 0 | 0 | 22,525,624 | 13 | 62,973,879 | 30 | ||||||||||||||||||||||||||||||||||||
Exercised during the year | (48,241 | ) | 16 | (3,673,657 | ) | 26 | (34,331,511 | ) | 36 | (40,894 | ) | 14 | (48,241 | ) | 16 | (3,673,657 | ) | 26 | ||||||||||||||||||||||||||||||
Forfeited during the year | (7,245,512 | ) | 37 | (6,732,080 | ) | 52 | (3,650,942 | ) | 62 | (5,814,986 | ) | 33 | (7,245,512 | ) | 37 | (6,732,080 | ) | 52 | ||||||||||||||||||||||||||||||
Expired unexercised | (22,663,530 | ) | 48 | (14,725,689 | ) | 46 | (292,411 | ) | 58 | (17,222,431 | ) | 54 | (22,663,530 | ) | 48 | (14,725,689 | ) | 46 | ||||||||||||||||||||||||||||||
Outstanding, at the end of the year | 228,623,886 | 43 | 236,055,545 | 47 | 198,213,092 | 52 | 205,545,575 | 42 | 228,623,886 | 43 | 236,055,545 | 47 | ||||||||||||||||||||||||||||||||||||
Exercisable, at the end of the year | 137,797,186 | 51 | 124,054,442 | 46 | 96,396,428 | 39 | 155,302,104 | 48 | 137,797,186 | 51 | 124,054,442 | 46 |
The weighted average share price at the time when the options were exercised during the year was CHF 18, CHF 34, and CHF 72 for the years ended 31 December 2009, 31 De-
cember 2008, and 31 December 2007, respectively. The following table provides additional information about option awards:
31.12.09 | 31.12.08 | 31.12.07 | 31.12.10 | 31.12.09 | 31.12.08 | |||||||||||||||||||
Weighted average share price of options exercised (CHF) | 16 | 18 | 34 | |||||||||||||||||||||
Intrinsic value of options exercised during the year (CHF million) | 0.2 | 29 | 1,046 | 0.06 | 0.20 | 29 | ||||||||||||||||||
Weighted average grant date fair value of options granted (CHF) | 6.00 | 7.53 | 10.43 | N/A | 6.00 | 7.53 |
The following table summarizesprovides additional information about options outstanding and options exercisable atas of 31 December 2009:2010:
Options outstanding | Options exercisable | Options outstanding | Options exercisable | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted | Weighted | Weighted | Weighted | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted | Aggregate | average | Weighted | Aggregate | average | Weighted | Aggregate | average | Weighted | Aggregate | average | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of | average | intrinsic value | remaining | Number of | average | intrinsic value | remaining | Number of | average | intrinsic value | remaining | Number of | average | intrinsic value | remaining | |||||||||||||||||||||||||||||||||||||||||||||||||
options | exercise price | (CHF/USD | contractual | options | exercise price | (CHF/USD | contractual | options | exercise price | (CHF / USD | contractual | options | exercise price | (CHF / USD | contractual | |||||||||||||||||||||||||||||||||||||||||||||||||
Range of exercise price per share | outstanding | (CHF/USD) | million) | term (years) | exercisable | (CHF/USD) | million) | term (years) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Range of exercise prices | outstanding | (CHF / USD) | million) | term (years) | exercisable | (CHF / USD) | million) | term (years) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CHF awards | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10.21–15.00 | 18,599,225 | 11.33 | 87.8 | 9.1 | 2,001 | 14.47 | 0.0 | 8.9 | 17,491,529 | 11.31 | 70.6 | 8.1 | 3,739,473 | 14.47 | 3.3 | 7.9 | ||||||||||||||||||||||||||||||||||||||||||||||||
15.01–25.00 | 11,560,852 | 18.70 | 1.8 | 9.3 | 93,767 | 20.07 | 0.0 | 8.7 | 10,805,461 | 18.72 | 0.0 | 8.3 | 3,480,569 | 22.45 | 0.0 | 7.7 | ||||||||||||||||||||||||||||||||||||||||||||||||
25.01–35.00 | 45,514,537 | 31.10 | 0.0 | 7.3 | 8,319,508 | 28.31 | 0.0 | 3.4 | 43,010,690 | 31.12 | 0.0 | 6.4 | 22,141,540 | 29.88 | 0.0 | 5.6 | ||||||||||||||||||||||||||||||||||||||||||||||||
35.01–15.00 | 25,831,524 | 39.04 | 0.0 | 5.0 | 16,931,901 | 40.58 | 0.0 | 3.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
35.01–45.00 | 22,801,529 | 38.91 | 0.0 | 4.1 | 14,768,284 | 40.65 | 0.0 | 2.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
45.01–55.00 | 21,961,024 | 49.34 | 0.0 | 5.4 | 21,539,533 | 49.26 | 0.0 | 5.3 | 19,987,650 | 49.37 | 0.0 | 4.4 | 19,801,910 | 49.33 | 0.0 | 4.4 | ||||||||||||||||||||||||||||||||||||||||||||||||
55.01–65.00 | 4,945,136 | 60.26 | 0.0 | 7.0 | 4,509,038 | 59.96 | 0.0 | 6.9 | 4,867,956 | 60.23 | 0.0 | 6.0 | 4,867,956 | 60.23 | 0.0 | 6.0 | ||||||||||||||||||||||||||||||||||||||||||||||||
65.01–75.00 | 67,395,232 | 67.89 | 0.0 | 6.7 | 53,616,749 | 67.27 | 0.0 | 6.6 | 57,874,089 | 67.71 | 0.0 | 5.7 | 57,872,067 | 67.71 | 0.0 | 5.7 | ||||||||||||||||||||||||||||||||||||||||||||||||
10.21–75.00 | 195,807,530 | 44.98 | 89.6 | 6.9 | 105,012,497 | 55.83 | 0.0 | 5.6 | 176,838,904 | 44.25 | 70.6 | 5.9 | 126,671,799 | 51.97 | 3.3 | 5.2 | ||||||||||||||||||||||||||||||||||||||||||||||||
USD awards | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4.61–15.00 | 15,632 | 13.53 | 0.0 | 0.3 | 15,632 | 13.53 | 0.0 | 0.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
15.01–25.00 | 10,288,746 | 21.11 | 0.0 | 2.7 | 10,268,746 | 21.11 | 0.0 | 2.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
15.51–25.00 | 10,429,351 | 20.19 | 0.0 | 1.8 | 10,409,351 | 20.19 | 0.0 | 1.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
25.01–35.00 | 3,037,460 | 27.95 | 0.0 | 3.7 | 3,037,355 | 27.95 | 0.0 | 3.7 | 7,011,857 | 31.68 | 0.0 | 3.3 | 7,011,557 | 31.68 | 0.0 | 3.3 | ||||||||||||||||||||||||||||||||||||||||||||||||
35.01–45.00 | 16,052,302 | 38.12 | 0.0 | 4.8 | 16,040,740 | 38.12 | 0.0 | 4.8 | 11,256,014 | 38.61 | 0.0 | 4.1 | 11,200,872 | 38.62 | 0.0 | 4.2 | ||||||||||||||||||||||||||||||||||||||||||||||||
45.01–51.99 | 3,422,216 | 44.89 | 0.0 | 5.4 | 3,422,216 | 44.89 | 0.0 | 5.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
45.01–46.91 | 9,449 | 46.81 | 0.0 | 4.6 | 8,525 | 46.91 | 0.0 | 5.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4.61–51.99 | 32,816,356 | 32.54 | 0.0 | 4.1 | 32,784,689 | 32.54 | 0.0 | 4.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
15.51–46.91 | 28,706,671 | 30.23 | 0.0 | 3.1 | 28,630,305 | 30.22 | 0.0 | 3.1 |
344356
Financial information |
Note 31 Equity participation and other compensation plans (continued)
e) UBS SARSARs awards
Movements in SARs granted under the equity participation plans described in Note 31a) are as follows:
UBS SAR awards | UBS SAR awards | |||||||||||||||||||||||
Weighted | ||||||||||||||||||||||||
Number | average | Number | Weighted | |||||||||||||||||||||
Number of rights | Weighted average | of SARs | exercise | of SARs | average exercise | |||||||||||||||||||
31.12.09 | exercise price (CHF) | 2010 | price CHF | 2009 | price CHF | |||||||||||||||||||
Outstanding, at the beginning of the year | 0 | 0 | 60,907,175 | 12 | 0 | 0 | ||||||||||||||||||
Granted during the year | 66,126,830 | 12 | 0 | 0 | 66,126,830 | 12 | ||||||||||||||||||
Exercised during the year | 0 | 0 | (160,334 | ) | 12 | 0 | 0 | |||||||||||||||||
Forfeited during the year | (5,219,655 | ) | 11 | (2,721,700 | ) | 11 | (5,219,655 | ) | 11 | |||||||||||||||
Expired unexercised | 0 | 0 | (10,100 | ) | 11 | 0 | 0 | |||||||||||||||||
Outstanding, at the end of the year | 60,907,175 | 12 | 58,015,041 | 12 | 60,907,175 | 12 | ||||||||||||||||||
Exercisable, at the end of the year | 4,000,000 | 10 | 4,005,317 | 10 | 4,000,000 | 10 |
The following table summarizesprovides additional information about SARs exercises, grants and intrinsic values:
31.12.10 | 31.12.09 | |||||||
Weighted average share price of SARs exercised (CHF) | 15.8 | N/A | ||||||
Intrinsic value of SARs exercised during the year (CHF million) | 0.6 | N/A | ||||||
Weighted average grant date fair value of SARs granted (CHF) | N/A | 5.0 | ||||||
The following table provides additional information about SARs outstanding atas of 31 December 2009.2010:
SARs outstanding | SARs outstanding | SARs exercisable | ||||||||||||||||||||||||||||||||||||||||||||||
Weighted average | Weighted | Weighted | ||||||||||||||||||||||||||||||||||||||||||||||
Number of SARs | Weighted average | Aggregate | remaining contractual | Weighted | average | Weighted | average | |||||||||||||||||||||||||||||||||||||||||
Range of exercise price per SAR | outstanding | exercise price (CHF) | intrinsic value (CHF) | term (years) | ||||||||||||||||||||||||||||||||||||||||||||
Number of | average | Aggregate | remaining | Number of | average | Aggregate | remaining | |||||||||||||||||||||||||||||||||||||||||
SARs | exercise | intrinsic value | contractual | SARs | exercise | intrinsic value | contractual | |||||||||||||||||||||||||||||||||||||||||
CHF awards | ||||||||||||||||||||||||||||||||||||||||||||||||
Range of exercise prices | outstanding | price (CHF) | (CHF million) | term (years) | exercisable | price (CHF) | (CHF million) | term (years) | ||||||||||||||||||||||||||||||||||||||||
CHF | ||||||||||||||||||||||||||||||||||||||||||||||||
9.35–12.50 | 59,273,505 | 11.26 | 283.9 | 8.8 | 56,450,205 | 11.26 | 231.2 | 7.8 | 4,000,000 | 10.10 | 21.0 | 3.2 | ||||||||||||||||||||||||||||||||||||
12.51–15.00 | 53,410 | 14.57 | 0.1 | 9.5 | 51,410 | 14.56 | 0.0 | 8.5 | 0 | 0.00 | 0.0 | 0.0 | ||||||||||||||||||||||||||||||||||||
15.01–17.50 | 268,330 | 16.47 | 0.0 | 9.5 | 217,496 | 16.52 | 0.0 | 8.4 | 5,317 | 16.80 | 0.0 | 8.4 | ||||||||||||||||||||||||||||||||||||
17.51–20.00 | 406,930 | 19.25 | 0.0 | 9.7 | 390,930 | 19.25 | 0.0 | 8.7 | 0 | 0.00 | 0.0 | 0.0 | ||||||||||||||||||||||||||||||||||||
37.51–40.00 | 905,000 | 40.00 | 0.0 | 9.2 | ||||||||||||||||||||||||||||||||||||||||||||
35.01–40.00 | 905,000 | 40.00 | 0.0 | 8.2 | 0 | 0.00 | 0.0 | 0.0 | ||||||||||||||||||||||||||||||||||||||||
9.35–40.00 | 60,907,175 | 11.77 | 284.0 | 8.8 | 58,015,041 | 11.78 | 231.2 | 7.8 | 4,005,317 | 10.11 | 21.0 | 3.2 |
345357
Financial information
Notes to the consolidated financial statements
Note 31 Equity participation and other compensation plans (continued)
f)d) Valuation
UBS share awards
UBS options and SARs (instruments) isawards
weighted average
31.12.09 | ||||||||||||
CHF awards | range low | range high | ||||||||||
Expected volatility (%) | 48.22 | 40.91 | 53.47 | |||||||||
Risk-free interest rate (%) | 2.16 | 1.50 | 2.57 | |||||||||
Expected dividend (CHF) | 0.27 | 0.00 | 0.29 | |||||||||
Strike price (CHF) | 11.88 | 9.35 | 40.00 | |||||||||
Share price (CHF) | 11.64 | 9.35 | 19.27 | |||||||||
31.12.08 | ||||||||||||
CHF awards | range low | range high | ||||||||||
Expected volatility (%) | 33.86 | 30.00 | 49.32 | |||||||||
Risk-free interest rate (%) | 2.83 | 1.74 | 3.27 | |||||||||
Expected dividend (CHF) | 1.85 | 1.10 | 2.57 | |||||||||
Strike price (CHF) | 30.11 | 14.47 | 46.02 | |||||||||
Share price (CHF) | 28.05 | 14.47 | 43.61 | |||||||||
UBS performance share awards (IPP, PEP)
31.12.09 | ||||||||||||
CHF awards | range low | range high | ||||||||||
Expected volatility (%) | 48.22 | 40.91 | 53.47 | |||||||||
Risk-free interest rate (%) | 2.16 | 1.50 | 2.57 | |||||||||
Expected dividend (CHF) | 0.27 | 0.00 | 0.29 | |||||||||
Strike price (CHF) | 11.88 | 9.35 | 40.00 | |||||||||
Share price (CHF) | 11.64 | 9.35 | 19.27 | |||||||||
31.12.08 | ||||||||||||
CHF awards | range low | range high | ||||||||||
Expected volatility (%) | 33.86 | 30.00 | 49.32 | |||||||||
Risk-free interest rate (%) | 2.83 | 1.74 | 3.27 | |||||||||
Expected dividend (CHF) | 1.85 | 1.10 | 2.57 | |||||||||
Strike price (CHF) | 30.11 | 14.47 | 46.02 | |||||||||
Share price (CHF) | 28.05 | 14.47 | 43.61 | |||||||||
31.12.07 | ||||||||||||
CHF awards | range low | range high | ||||||||||
Expected volatility (%) | 23.86 | 22.51 | 29.23 | |||||||||
Risk-free interest rate (%) | 2.58 | 2.46 | 3.27 | |||||||||
Expected dividend (CHF) | 3.13 | 2.20 | 4.56 | |||||||||
Strike price (CHF)1 | 71.31 | 55.48 | 78.80 | |||||||||
Share price (CHF)1 | 70.25 | 55.48 | 78.80 | |||||||||
31.12.10 | ||||||||
IPP CHF awards | PEP CHF awards | |||||||
Expected TSR volatility (%) | 38.07 | 63.00 | ||||||
Expected EP volatility (%) | N/A | 57.00 | ||||||
Risk-free interest rate (%) | 1.06 | 0.60 | ||||||
Expected dividend (CHF) | 0.12 | 0.10 | ||||||
Share price (CHF) | 14.80 | 14.80 | ||||||
346358
Financial information |
The Group defines related parties as associated companies (entities which are controlled or significantly influenced by UBS), post-employment benefit plans for the benefit of UBS employees, key management personnel, close family members of key management personnel and entities which are, directly or indirectly, controlled or jointly controlled
controlled by key management personnel or their close family members. Key management personnel is defined as members of the Board of Directors (BoD) and Group Executive Board (GEB). This definition is based on the revised requirements of IAS 24Related Party Disclosuresissued in November 2009.
a) Remuneration of key management personnel
The non-independent members of the BoD have top management employment contracts and receive pension benefits upon retirement. Total remuneration of the non-inde-
pendentnon-independent members of the BoD and GEB including those who stepped down during 200920101is as follows:
Remuneration of key management personnel | ||||||||||||
CHF million | 31.12.10 | 31.12.09 | 31.12.08 | |||||||||
Base salaries and other cash payments | 16 | 16 | 12 | |||||||||
Incentive awards – cash | 30 | 3 | 64 | 0 | ||||||||
Employer’s contributions to retirement benefit plans | 1 | 2 | 2 | |||||||||
Benefits in kind, fringe benefits (at market value) | 1 | 1 | 1 | |||||||||
Equity compensation benefits2 | 48 | 4 | 29 | 0 | ||||||||
Total | 96 | 112 | 15 | |||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | |||||||||
Base salaries and other cash payments | 16 | 12 | 14 | |||||||||
Incentive awards – cash | 64 | 0 | 38 | |||||||||
Employer’s contributions to retirement benefit plans | 2 | 2 | 2 | |||||||||
Benefits in kind, fringe benefits (at market value) | 1 | 1 | 2 | |||||||||
Equity compensation benefits2 | 29 | 0 | 22 | |||||||||
Total | 112 | 15 | 78 | |||||||||
Marcel Rohner stepped down as Group CEO on 26 February 2009. In honoring the twelve-month notice period of his contract, he received his annual salary of CHF 1,500,000. For 2009, as also for 2008, he did not receive any discretionary incentive awards. After assessing his tenure as Group CEO and the specific organizational transition requirements, the HRCC deemed it appropriate to approve a one-time contribution of CHF 1,200,000 into the UBS pension fund on his behalf to cover the deficit in his pension fund.
The independent members of the BoD do not have employment or service contracts with UBS, and thus are not entitled to benefits upon termination of their service on the BoD. Payments to these
individuals for their services as external board members amounted to CHF 6.7 million in 2010, CHF 6.4 million in 2009 and CHF 6.4 million in 2008 and CHF 5.7 million in 2007.
347
Financial informationNotes to the consolidated financial statements
Note 32 Related parties (continued)
b) Equity holdings
b) Equity holdings | b) Equity holdings | |||||||||||||||||||||||
31.12.09 | 31.12.08 | 31.12.07 | 31.12.10 | 31.12.09 | 31.12.08 | |||||||||||||||||||
Number of stock options from equity participation plans held by non-independent members of the BoD and the GEB1 | 9,410,280 | 8,458,037 | 6,828,152 | 9,085,194 | 9,410,280 | 8,458,037 | ||||||||||||||||||
Number of shares held by members of the BoD, GEB and parties closely linked to them | 4,180,154 | 5,869,952 | 6,693,012 | 4,850,196 | 4,180,154 | 5,869,952 |
Of the share totals above, atas of 31 December 2010, 31 December 2009 and 31 December 2008, and 31 December 2007,5,597 shares, 0 shares 15,878 shares and 4,85215,878 shares respectively were held by close family members of key management personnel and 0 shares, 103,8410 shares and 2,200,000103,841 shares respectively were held by entities which are directly or indirectly controlled orcon-
trolled or jointly controlled by key management personnel or their close family members. Further information about UBS’s equityRefer to “Note 31 Equity participation plans can be foundand other compensation plans” in Note 31.this section for more information. No member of the BoD or GEB is the beneficial owner of more than 1% of the Group’s shares at 31 December 2009.2010.
359
Financial information
Notes to the consolidated financial statements
Note 32 Related parties (continued)
c) Loans, advances and mortgages to key management personnel
Non-independent members of the BoD and GEB members have been granted loans, fixed advances and mortgages on the same terms and conditions that are available to other employees, based on terms and conditions granted to third parties adjusted for reducedre-
duced credit risk. Independent BoD
members are granted loans and mortgages at general market conditions.
Loans, advances and mortgages to key management personnel | Loans, advances and mortgages to key management personnel | |||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.10 | 31.12.09 | ||||||||||||
Balance at the beginning of the year | 11 | 15 | 18 | 11 | ||||||||||||
Additions | 12 | 8 | 8 | 12 | ||||||||||||
Reductions | (5 | ) | (12 | ) | (4 | ) | (5 | ) | ||||||||
Balance at the end of the year | 18 | 11 | 22 | 18 |
No unsecured loans were granted to key management personnel as of 31 December 20092010 and 31 December 2008.2009.
d) Associated companies
CHF million | 31.12.09 | 31.12.08 | ||||||
Balance at the beginning of the year | 301 | 220 | ||||||
Additions | 295 | 171 | ||||||
Reductions | (222 | ) | (77 | ) | ||||
Credit loss (expense)/recovery | (1 | ) | 0 | |||||
Foreign currency translation | 0 | (13 | ) | |||||
Balance at the end of the year | 373 | 301 | ||||||
of which: unsecured loans | 42 | 82 | ||||||
of which: allowances for credit losses | 1 | 3 | ||||||
All loans to associated companies are transacted at arm’s length.
348
CHF million | 31.12.10 | 31.12.09 | ||||||
Balance at the beginning of the year | 373 | 301 | ||||||
Additions | 2 | 295 | ||||||
Reductions | (118 | ) | (222 | ) | ||||
Credit loss (expense) / recovery | 0 | (1 | ) | |||||
Foreign currency translation | 2 | 0 | ||||||
Balance at the end of the year | 259 | 373 | ||||||
of which: unsecured loans | 39 | 42 | ||||||
of which: allowances for credit losses | 1 | 1 | ||||||
Note 32 Related parties (continued)
d) Associated companies (continued)
Other transactions with associated companies transacted at arm’s length are as follows:length:
As of or for the year ended | As of or for the year ended | |||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.10 | 31.12.09 | 31.12.08 | ||||||||||||||||||
Payments to associates for goods and services received | 130 | 90 | 87 | 139 | 130 | 90 | ||||||||||||||||||
Fees received for services provided to associates | 2 | 6 | 20 | 1 | 2 | 6 | ||||||||||||||||||
Commitments and contingent liabilities to associates | 156 | 40 | 33 | 68 | 156 | 40 |
Note 34 provides a list of significant associates.
360
Financial information |
Note 32 Related parties (continued)
e) Other related party transactions
In 2008, these entities included: Aebi +
Other related party transactions | Other related party transactions | |||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.10 | 31.12.09 | 31.12.08 | ||||||||||||||||||
Balance at the beginning of the year | 6 | 158 | 539 | 0 | 6 | 158 | ||||||||||||||||||
Additions | 0 | 0 | 77 | 0 | 0 | 0 | ||||||||||||||||||
Reductions | (6 | ) | (152 | ) | (458 | ) | 0 | (6 | ) | (152 | ) | |||||||||||||
Balance at the end of the year1 | 0 | 6 | 158 | 0 | 0 | 6 |
Other transactions with these related parties include:
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.10 | 31.12.09 | 31.12.08 | ||||||||||||||||||
Goods sold and services provided to UBS | 0 | 1 | 8 | 0 | 0 | 1 | ||||||||||||||||||
Fees received for services provided by UBS | 0 | 11 | 6 | 1 | 0 | 11 |
As part of its sponsorship of Team Alinghi, UBS paid CHF 828,090 (EUR 538,000) in basic sponsoring fees for 2008.
Team Alinghi’s controlling shareholder is UBS former Board member Ernesto Bertarelli.
f) Additional information
UBS. As
349361
Financial information
Notes to the consolidated financial statements
Note 33 Events after the reporting period
In January 2010, UBS closedSubsequent to the sale of its investments in several associated entities owning office space in New York. A significant portionpublication of the office space is leasedunaudited fourth quarter 2010 financial report on 8 February 2011, management decided to adjust the annual financial statements 2010. The net impact of these adjustments on net profit attributable to UBS shareholders was a gain of CHF 373 million, which increased basic and diluted earnings per share by CHF 0.10.
porting period which would require disclosure or adjustment
Note 34 Significant subsidiaries and associates
The legal entity group structure of UBS is designed to support the Group’s businesses within an efficient legal, tax, regulatory and funding framework. Neither the business divisions of UBS (namely Investment Bank, Wealth Management Americas, Wealth Management & Swiss Bank and Global Asset Management) nor the Corporate Center are replicated in their own individual legal entities, but rather they generally operate out of UBS AG (Parent Bank) through its Swiss and foreign branches.
Significant subsidiaries | ||||||||||||||||||||
Share capital in | Equity interest | |||||||||||||||||||
Company | Jurisdiction of incorporation | Business division1 | millions | accumulated in % | ||||||||||||||||
Caisse Centrale de Réescompte | Paris, France | Global AM | EUR | 5.0 | 100.0 | |||||||||||||||
CCR Asset Management S.A. | Paris, France | Global AM | EUR | 4.8 | 100.0 | |||||||||||||||
FondcenterAG | Zurich, Switzerland | Global AM | CHF | 0.1 | 100.0 | |||||||||||||||
OOO UBS Bank | Moscow, Russia | IB | RUB | 1,250.0 | 100.0 | |||||||||||||||
PT UBS Securities Indonesia | Jakarta, Indonesia | IB | IDR | 118,000.0 | 98.6 | |||||||||||||||
Topcard Service AG | Glattbrugg, Switzerland | WM&SB | CHF | 0.2 | 100.0 | |||||||||||||||
UBS (Bahamas) Ltd. | Nassau, Bahamas | WM&SB | USD | 4.0 | 100.0 | |||||||||||||||
UBS (France) S.A. | Paris, France | WM&SB | EUR | 125.7 | 100.0 | |||||||||||||||
UBS (Grand Cayman) Limited | George Town, Cayman Islands | IB | USD | 25.0 | 100.0 | |||||||||||||||
UBS (Italia) S.p.A. | Milan, Italy | WM&SB | EUR | 60.0 | 100.0 | |||||||||||||||
UBS (Luxembourg) S.A. | Luxembourg, Luxembourg | WM&SB | CHF | 150.0 | 100.0 | |||||||||||||||
UBS (Luxembourg) SA Austria Branch | Vienna, Austria | WM&SB | CHF | 0.0 | 100.0 | |||||||||||||||
UBS (Monaco) S.A. | Monte Carlo, Monaco | WM&SB | EUR | 9.2 | 100.0 | |||||||||||||||
UBS Alternative and Quantitative Investments Limited | London, Great Britain | Global AM | GBP | 0.3 | 100.0 | |||||||||||||||
UBS Alternative and Quantitative Investments LLC | Delaware, USA | Global AM | USD | 0.1 | 100.0 | |||||||||||||||
UBS Americas Inc | Delaware, USA | IB | USD | 0.0 | 100.0 | |||||||||||||||
UBS Asesores SA | Panama, Panama | WM&SB | USD | 0.0 | 100.0 | |||||||||||||||
UBS Bank (Canada) | Toronto, Canada | WMA | CAD | 8.5 | 100.0 | |||||||||||||||
UBS Bank Mexico, S.A. Institucion de Banca Multiple, UBS Grupo Financiero | Mexico City, Mexico | IB | MXN | 706.4 | 100.0 | |||||||||||||||
UBS Bank USA | Utah, USA | WMA | USD | 1,880.0 | 2 | 100.0 | ||||||||||||||
UBS Bank, S.A. | Madrid, Spain | WM&SB | EUR | 82.2 | 100.0 | |||||||||||||||
UBS Belgium SA/NV | Brussels, Belgium | WM&SB | EUR | 23.0 | 100.0 | |||||||||||||||
UBS Capital Securities (Jersey) Limited | St. Helier, Jersey | CC | EUR | 0.0 | 100.0 | |||||||||||||||
Significant subsidiaries |
Share capital | Equity interest | |||||||||||||
Company | Jurisdiction of incorporation | Business division1 | in millions | accumulated in % | ||||||||||
CCR Asset Management S.A. | Paris, France | Global AM | EUR | 5.3 | 100.0 | |||||||||
Ellington Co., Ltd. | Tokyo, Japan | IB | JPY | 10.0 | 100.0 | |||||||||
Fondcenter AG | Zurich, Switzerland | Global AM | CHF | 0.1 | 100.0 | |||||||||
OOO UBS Bank | Moscow, Russia | IB | RUB | 1,250.0 | 100.0 | |||||||||
PT UBS Securities Indonesia | Jakarta, Indonesia | IB | IDR | 118,000.0 | 98.6 | |||||||||
Topcard Service AG | Glattbrugg, Switzerland | WM&SB | CHF | 0.2 | 100.0 | |||||||||
UBS (Bahamas) Ltd. | Nassau, Bahamas | WM&SB | USD | 4.0 | 100.0 | |||||||||
UBS (France) S.A. | Paris, France | WM&SB | EUR | 125.7 | 100.0 | |||||||||
UBS (Grand Cayman) Limited | George Town, Cayman Islands | IB | USD | 25.0 | 100.0 | |||||||||
UBS (Italia) S.p.A. | Milan, Italy | WM&SB | EUR | 60.0 | 100.0 | |||||||||
UBS (Luxembourg) S.A. | Luxembourg, Luxembourg | WM&SB | CHF | 150.0 | 100.0 | |||||||||
UBS (Luxembourg) SA Austria Branch | Vienna, Austria | WM&SB | CHF | 0.0 | 100.0 | |||||||||
UBS (Monaco) S.A. | Monte Carlo, Monaco | WM&SB | EUR | 9.2 | 100.0 | |||||||||
UBS Alternative and Quantitative Investments Limited | London, Great Britain | Global AM | GBP | 0.3 | 100.0 | |||||||||
UBS Alternative and Quantitative Investments LLC | Delaware, USA | Global AM | USD | 0.1 | 100.0 | |||||||||
UBS Americas Inc | Delaware, USA | IB | USD | 0.0 | 100.0 | |||||||||
350362
Financial information |
Note 34 Significant subsidiaries and associates (continued)
Significant subsidiaries (continued) | Significant subsidiaries (continued) | Significant subsidiaries (continued) | ||||||||||||||||||||||||||||||||
Share capital in | Equity interest | Share capital | Equity interest | |||||||||||||||||||||||||||||||
Company | Jurisdiction of incorporation | Business division1 | millions | accumulated in % | Jurisdiction of incorporation | Business division1 | in millions | accumulated in % | ||||||||||||||||||||||||||
UBS Asesores SA | Panama, Panama | WM&SB | USD | 0.0 | 100.0 | |||||||||||||||||||||||||||||
UBS Bank (Canada) | Toronto, Canada | WMA | CAD | 8.5 | 100.0 | |||||||||||||||||||||||||||||
UBS Bank (Netherlands) B.V. | Amsterdam, the Netherlands | WM&SB | EUR | 0.2 | 100.0 | |||||||||||||||||||||||||||||
UBS Bank Mexico, S.A. Institucion de Banca Multiple, UBS Grupo Financiero | Mexico City, Mexico | IB | MXN | 706.4 | 100.0 | |||||||||||||||||||||||||||||
UBS Bank USA | Utah, USA | WMA | USD | 1,880.0 | 2 | 100.0 | ||||||||||||||||||||||||||||
UBS Bank, S.A. | Madrid, Spain | WM&SB | EUR | 82.2 | 100.0 | |||||||||||||||||||||||||||||
UBS Belgium SA/NV | Brussels, Belgium | WM&SB | EUR | 28.0 | 100.0 | |||||||||||||||||||||||||||||
UBS Brasil Administradora de Valores Mobiliarios Ltda | São Paulo, Brazil | WM&SB | BRL | 0.0 | 100.0 | |||||||||||||||||||||||||||||
UBS Capital Securities (Jersey) Limited | St. Helier, Jersey | CC | EUR | 0.0 | 100.0 | |||||||||||||||||||||||||||||
UBS Card Center AG | Glattbrugg, Switzerland | WM&SB | CHF | 0.1 | 100.0 | Glattbrugg, Switzerland | WM&SB | CHF | 0.1 | 100.0 | ||||||||||||||||||||||||
UBS Casa de Bolsa, S.A. de C.V. | Mexico City, Mexico | IB | MXN | 114.9 | 100.0 | Mexico City, Mexico | IB | MXN | 114.9 | 100.0 | ||||||||||||||||||||||||
UBS Convertible Securities (Jersey) Limited | St. Helier, Jersey | CC | CHF | 50.0 | 100.0 | |||||||||||||||||||||||||||||
UBS Custody Services Singapore Pte. Ltd. | Singapore, Singapore | WM&SB | SGD | 5.5 | 100.0 | Singapore, Singapore | WM&SB | SGD | 5.5 | 100.0 | ||||||||||||||||||||||||
UBS Derivatives Hong Kong Limited | Hong Kong, China | IB | HKD | 880.0 | 100.0 | Hong Kong, China | IB | HKD | 880.0 | 100.0 | ||||||||||||||||||||||||
UBS Deutschland AG | Frankfurt am Main, Germany | WM&SB | EUR | 176.0 | 100.0 | Frankfurt am Main, Germany | WM&SB | EUR | 176.0 | 100.0 | ||||||||||||||||||||||||
UBS Fiduciaria S.p.A. | Milan, Italy | WM&SB | EUR | 0.2 | 100.0 | Milan, Italy | WM&SB | EUR | 0.2 | 100.0 | ||||||||||||||||||||||||
UBS Finance (Curação) N.V. | Willemstad, Netherlands Antilles | CC | USD | 0.1 | 100.0 | Willemstad, Netherlands Antilles | CC | USD | 0.1 | 100.0 | ||||||||||||||||||||||||
UBS Finance (Delaware) LLC | Delaware, USA | IB | USD | 37.3 | 2 | 100.0 | Delaware, USA | IB | USD | 37.3 | 2 | 100.0 | ||||||||||||||||||||||
UBS Financial Services Inc. | Delaware, USA | WMA | USD | 3,505.8 | 2 | 100.0 | Delaware, USA | WMA | USD | 3,875.0 | 2 | 100.0 | ||||||||||||||||||||||
UBS Financial Services Incorporated of Puerto Rico | Hato Rey, Puerto Rico | WMA | USD | 31.0 | 2 | 100.0 | Hato Rey, Puerto Rico | WMA | USD | 31.0 | 2 | 100.0 | ||||||||||||||||||||||
UBS Fund Advisor, L.L.C. | Delaware, USA | WMA | USD | 0.0 | 2 | 100.0 | Delaware, USA | WMA | USD | 0.0 | 2 | 100.0 | ||||||||||||||||||||||
UBS Fund Holding (Luxembourg) S.A. | Luxembourg, Luxembourg | Global AM | CHF | 42.0 | 100.0 | |||||||||||||||||||||||||||||
UBS Fund Holding (Switzerland) AG | Basel, Switzerland | Global AM | CHF | 18.0 | 100.0 | |||||||||||||||||||||||||||||
UBS Fund Management (Luxembourg) SA | Luxembourg, Luxembourg | Global AM | EUR | 10.0 | 100.0 | |||||||||||||||||||||||||||||
UBS Fund Management (Switzerland) AG | Basel, Switzerland | Global AM | CHF | 1.0 | 100.0 | Basel, Switzerland | Global AM | CHF | 1.0 | 100.0 | ||||||||||||||||||||||||
UBS Fund Services (Cayman) Ltd | George Town, Cayman Islands | Global AM | USD | 5.6 | 100.0 | George Town, Cayman Islands | Global AM | USD | 5.6 | 100.0 | ||||||||||||||||||||||||
UBS Fund Services (Ireland) Limited | Dublin, Ireland | Global AM | EUR | 1.3 | 100.0 | Dublin, Ireland | Global AM | EUR | 1.3 | 100.0 | ||||||||||||||||||||||||
UBS Fund Services (Luxembourg) S.A. | Luxembourg, Luxembourg | Global AM | CHF | 2.5 | 100.0 | Luxembourg, Luxembourg | Global AM | CHF | 2.5 | 100.0 | ||||||||||||||||||||||||
UBS Fund Services (Luxembourg) S.A. Poland Branch | Zabierzow, Poland | CC | PLN | 0.1 | 100.0 | Zabierzow, Poland | CC | PLN | 0.1 | 100.0 | ||||||||||||||||||||||||
UBS Futures Singapore Ltd. | Singapore, Singapore | IB | USD | 39.8 | 2 | 100.0 | Singapore, Singapore | IB | USD | 39.8 | 2 | 100.0 | ||||||||||||||||||||||
UBS Global Asset Management (Americas) Inc | Delaware, USA | Global AM | USD | 0.0 | 100.0 | Delaware, USA | Global AM | USD | 0.0 | 100.0 | ||||||||||||||||||||||||
UBS Global Asset Management (Australia) Ltd | Sydney, Australia | Global AM | AUD | 8.0 | 100.0 | Sydney, Australia | Global AM | AUD | 8.0 | 100.0 | ||||||||||||||||||||||||
UBS Global Asset Management (Canada) Co | Toronto, Canada | Global AM | CAD | 117.0 | 2 | 100.0 | Toronto, Canada | Global AM | CAD | 117.0 | 2 | 100.0 | ||||||||||||||||||||||
UBS Global Asset Management (Deutschland) GmbH | Frankfurt am Main, Germany | Global AM | EUR | 7.7 | 100.0 | Frankfurt am Main, Germany | Global AM | EUR | 7.7 | 100.0 | ||||||||||||||||||||||||
UBS Global Asset Management (Hong Kong) Limited | Hong Kong, China | Global AM | HKD | 25.0 | 100.0 | Hong Kong, China | Global AM | HKD | 25.0 | 100.0 | ||||||||||||||||||||||||
UBS Global Asset Management (Italia) SGR SpA | Milan, Italy | Global AM | EUR | 5.1 | 100.0 | Milan, Italy | Global AM | EUR | 5.1 | 100.0 | ||||||||||||||||||||||||
UBS Global Asset Management (Japan) Ltd | Tokyo, Japan | Global AM | JPY | 2,200.0 | 100.0 | Tokyo, Japan | Global AM | JPY | 2,200.0 | 100.0 | ||||||||||||||||||||||||
UBS Global Asset Management (Singapore) Ltd | Singapore, Singapore | Global AM | SGD | 4.0 | 100.0 | Singapore, Singapore | Global AM | SGD | 4.0 | 100.0 | ||||||||||||||||||||||||
UBS Global Asset Management (Taiwan) Ltd | Taipei, Taiwan | Global AM | TWD | 340.0 | 100.0 | Taipei, Taiwan | Global AM | TWD | 340.0 | 100.0 | ||||||||||||||||||||||||
UBS Global Asset Management (UK) Ltd | London, Great Britain | Global AM | GBP | 93.0 | 100.0 | London, Great Britain | Global AM | GBP | 125.0 | 100.0 | ||||||||||||||||||||||||
UBS Global Asset Management (US) Inc | Delaware, USA | Global AM | USD | 17.2 | 2 | 100.0 | Delaware, USA | Global AM | USD | 17.2 | 2 | 100.0 | ||||||||||||||||||||||
UBS Global Asset Management Funds Ltd | London, Great Britain | Global AM | GBP | 26.0 | 100.0 | London, Great Britain | Global AM | GBP | 26.0 | 100.0 | ||||||||||||||||||||||||
UBS Global Asset Management Holding Ltd | London, Great Britain | Global AM | GBP | 109.4 | 100.0 | London, Great Britain | Global AM | GBP | 151.4 | 100.0 | ||||||||||||||||||||||||
UBS Global Asset Management Life Ltd | London, Great Britain | Global AM | GBP | 5.0 | 100.0 | London, Great Britain | Global AM | GBP | 15.0 | 100.0 | ||||||||||||||||||||||||
UBS Global Life AG | Vaduz, Liechtenstein | WM&SB | CHF | 5.0 | 100.0 | Vaduz, Liechtenstein | WM&SB | CHF | 5.0 | 100.0 | ||||||||||||||||||||||||
UBS Global Trust Corporation | St. John, Canada | WM&SB | CAD | 0.1 | 100.0 | St. John, Canada | WM&SB | CAD | 0.1 | 100.0 | ||||||||||||||||||||||||
UBS Hana Asset Management Company Ltd | Seoul, South Korea | Global AM | KRW | 45,000.0 | 51.0 | Seoul, South Korea | Global AM | KRW | 45,000.0 | 51.0 | ||||||||||||||||||||||||
UBS Hypotheken AG | Zurich, Switzerland | WM&SB | CHF | 0.1 | 98.0 | Zurich, Switzerland | WM&SB | CHF | 0.1 | 98.0 | ||||||||||||||||||||||||
UBS International Holdings B.V. | Amsterdam, the Netherlands | CC | EUR | 6.8 | 100.0 | Amsterdam, the Netherlands | CC | EUR | 6.8 | 100.0 | ||||||||||||||||||||||||
UBS International Hong Kong Limited | Hong Kong, China | WMA | USD | 1.7 | 100.0 | |||||||||||||||||||||||||||||
UBS International Life Limited | Dublin, Ireland | WM&SB | EUR | 1.0 | 100.0 | Dublin, Ireland | WM&SB | EUR | 1.0 | 100.0 | ||||||||||||||||||||||||
UBS Investment Management Canada Inc. | Toronto, Canada | WMA | CAD | 0.0 | 100.0 | |||||||||||||||||||||||||||||
UBS Investments Philippines, Inc. | Makati City, Philippines | IB | PHP | 360.0 | 99.4 | |||||||||||||||||||||||||||||
UBS Italia SIM SpA | Milan, Italy | IB | EUR | 15.1 | 100.0 | |||||||||||||||||||||||||||||
UBS Leasing AG | Zurich, Switzerland | WM&SB | CHF | 10.0 | 100.0 | |||||||||||||||||||||||||||||
UBS Life AG | Zurich, Switzerland | WM&SB | CHF | 25.0 | 100.0 | |||||||||||||||||||||||||||||
UBS Life Insurance Company USA | California, USA | WMA | USD | 39.3 | 2 | 100.0 | ||||||||||||||||||||||||||||
UBS Limited | London, Great Britain | IB | GBP | 63.3 | 100.0 | |||||||||||||||||||||||||||||
UBS Loan Finance LLC | Delaware, USA | IB | USD | 16.7 | 2 | 100.0 | ||||||||||||||||||||||||||||
UBS Menkul Degerler AS | Istanbul, Turkey | IB | TRY | 30.0 | 100.0 |
351363
Financial information
Notes to the consolidated financial statements
Note 34 Significant subsidiaries and associates (continued)
Significant subsidiaries (continued) | Significant subsidiaries (continued) | Significant subsidiaries (continued) | ||||||||||||||||||||||||||||||||||
Share capital in | Equity interest | Share capital | Equity interest | |||||||||||||||||||||||||||||||||
Company | Jurisdiction of incorporation | Business division1 | millions | accumulated in % | Jurisdiction of incorporation | Business division1 | in millions | accumulated in % | ||||||||||||||||||||||||||||
UBS Investment Management Canada Inc. | Toronto, Canada | WMA | CAD | 0.0 | 100.0 | |||||||||||||||||||||||||||||||
UBS Investments Philippines, Inc. | Makati City, Philippines | IB | PHP | 360.0 | 99.4 | |||||||||||||||||||||||||||||||
UBS Italia SIM SpA | Milan, Italy | IB | EUR | 15.1 | 100.0 | |||||||||||||||||||||||||||||||
UBS Leasing AG | Zurich, Switzerland | WM&SB | CHF | 10.0 | 100.0 | |||||||||||||||||||||||||||||||
UBS Life AG | Zurich, Switzerland | WM&SB | CHF | 25.0 | 100.0 | |||||||||||||||||||||||||||||||
UBS Life Insurance Company USA | California, USA | WMA | USD | 39.3 | 2 | 100.0 | ||||||||||||||||||||||||||||||
UBS Limited | London, Great Britain | IB | GBP | 153.7 | 100.0 | |||||||||||||||||||||||||||||||
UBS Loan Finance LLC | Delaware, USA | IB | USD | 16.7 | 2 | 100.0 | ||||||||||||||||||||||||||||||
UBS Menkul Degerler AS | Istanbul, Turkey | IB | TRY | 30.0 | 100.0 | |||||||||||||||||||||||||||||||
UBS New Zealand Limited | Auckland, New Zealand | IB | NZD | 7.5 | 100.0 | Auckland, New Zealand | IB | NZD | 7.5 | 100.0 | ||||||||||||||||||||||||||
UBS O’Connor Limited | London, Great Britain | Global AM | GBP | 8.8 | 100.0 | London, Great Britain | Global AM | GBP | 8.8 | 100.0 | ||||||||||||||||||||||||||
UBS O’Connor LLC | Delaware, USA | Global AM | USD | 1.0 | 100.0 | Delaware, USA | Global AM | USD | 1.0 | 100.0 | ||||||||||||||||||||||||||
UBS Preferred Funding (Jersey) Limited | St. Helier, Jersey | CC | EUR | 0.0 | 100.0 | St. Helier, Jersey | CC | EUR | 0.0 | 100.0 | ||||||||||||||||||||||||||
UBS Preferred Funding Company LLC I | Delaware, USA | CC | USD | 0.0 | 100.0 | |||||||||||||||||||||||||||||||
UBS Preferred Funding Company LLC II | Delaware, USA | CC | USD | 0.0 | 100.0 | Delaware, USA | CC | USD | 0.0 | 100.0 | ||||||||||||||||||||||||||
UBS Preferred Funding Company LLC IV | Delaware, USA | CC | USD | 0.0 | 100.0 | Delaware, USA | CC | USD | 0.0 | 100.0 | ||||||||||||||||||||||||||
UBS Preferred Funding Company LLC V | Delaware, USA | CC | USD | 0.0 | 100.0 | Delaware, USA | CC | USD | 0.0 | 100.0 | ||||||||||||||||||||||||||
UBS Real Estate Kapitalanlagegesellschaft mbH | Munich, Germany | Global AM | EUR | 7.5 | 51.0 | Munich, Germany | Global AM | EUR | 7.5 | 94.9 | ||||||||||||||||||||||||||
UBS Real Estate Securities Inc | Delaware, USA | IB | USD | 1,300.4 | 100.0 | Delaware, USA | IB | USD | 1,300.4 | 2 | 100.0 | |||||||||||||||||||||||||
UBS Realty Investors LLC | Massachusetts, USA | Global AM | USD | 9.3 | 100.0 | Massachusetts, USA | Global AM | USD | 9.3 | 100.0 | ||||||||||||||||||||||||||
UBS Saudi Arabia | Riyadh, Saudi Arabia | IB | SAR | 110.0 | 73.0 | |||||||||||||||||||||||||||||||
UBS Sauerborn Private Equity Komplementär GmbH | Bad Homburg, Germany | WM&SB | EUR | 0.0 | 100.0 | Bad Homburg, Germany | WM&SB | EUR | 0.0 | 100.0 | ||||||||||||||||||||||||||
UBS Securities (Thailand) Ltd | Bangkok, Thailand | IB | THB | 400.0 | 100.0 | Bangkok, Thailand | IB | THB | 400.0 | 100.0 | ||||||||||||||||||||||||||
UBS Securities Asia Limited | Hong Kong, China | IB | HKD | 20.0 | 100.0 | Hong Kong, China | IB | HKD | 20.0 | 100.0 | ||||||||||||||||||||||||||
UBS Securities Australia Ltd | Sydney, Australia | IB | AUD | 209.8 | 2 | 100.0 | Sydney, Australia | IB | AUD | 209.8 | 2 | 100.0 | ||||||||||||||||||||||||
UBS Securities Canada Inc | Toronto, Canada | IB | CAD | 10.0 | 100.0 | Toronto, Canada | IB | CAD | 10.0 | 100.0 | ||||||||||||||||||||||||||
UBS Securities España Sociedad de Valores SA | Madrid, Spain | IB | EUR | 15.0 | 100.0 | Madrid, Spain | IB | EUR | 15.0 | 100.0 | ||||||||||||||||||||||||||
UBS Securities France S.A. | Paris, France | IB | EUR | 22.9 | 100.0 | Paris, France | IB | EUR | 22.9 | 100.0 | ||||||||||||||||||||||||||
UBS Securities Hong Kong Limited | Hong Kong, China | IB | HKD | 430.0 | 100.0 | Hong Kong, China | IB | HKD | 430.0 | 100.0 | ||||||||||||||||||||||||||
UBS Securities India Private Limited | Mumbai, India | IB | INR | 140.0 | 100.0 | Mumbai, India | IB | INR | 140.0 | 100.0 | ||||||||||||||||||||||||||
UBS Securities International Limited | London, Great Britain | IB | GBP | 18.0 | 100.0 | London, Great Britain | IB | GBP | 18.0 | 100.0 | ||||||||||||||||||||||||||
UBS Securities Israel Limited | Herzliya Pituach, Israel | IB | ILS | 0.0 | 100.0 | |||||||||||||||||||||||||||||||
UBS Securities Japan Ltd | George Town, Cayman Islands | IB | JPY | 60,000.0 | 100.0 | George Town, Cayman Islands | IB | JPY | 60,000.0 | 100.0 | ||||||||||||||||||||||||||
UBS Securities LLC | Delaware, USA | IB | USD | 22.205.6 | 2 | 100.0 | Delaware, USA | IB | USD | 22,205.6 | 2 | 100.0 | ||||||||||||||||||||||||
UBS Securities Malaysia Sdn. Bhd. | Kuala Lumpur, Malaysia | IB | MYR | 80.0 | 100.0 | Kuala Lumpur, Malaysia | IB | MYR | 80.0 | 100.0 | ||||||||||||||||||||||||||
UBS Securities Philippines Inc | Makati City, Philippines | IB | PHP | 190.0 | 100.0 | Makati City, Philippines | IB | PHP | 190.0 | 100.0 | ||||||||||||||||||||||||||
UBS Securities Pte. Ltd. | Singapore, Singapore | IB | SGD | 311.5 | 100.0 | Singapore, Singapore | IB | SGD | 311.5 | 100.0 | ||||||||||||||||||||||||||
UBS Securities Pte. Ltd. Seoul Branch | Seoul, South Korea | IB | KRW | 150,000.0 | 100.0 | Seoul, South Korea | IB | KRW | 150,000.0 | 100.0 | ||||||||||||||||||||||||||
UBS Service Centre (Poland) Sp. z o.o. | Krakow, Poland | CC | PLN | 0.1 | 100.0 | Krakow, Poland | CC | PLN | 1.4 | 100.0 | ||||||||||||||||||||||||||
UBS South Africa (Proprietary) Limited | Sandton, South Africa | IB | ZAR | 0.0 | 100.0 | Sandton, South Africa | IB | ZAR | 0.0 | 100.0 | ||||||||||||||||||||||||||
UBS Swiss Financial Advisers AG | Zurich, Switzerland | WM&SB | CHF | 1.5 | 100.0 | Zurich, Switzerland | WM&SB | CHF | 1.5 | 100.0 | ||||||||||||||||||||||||||
UBS Trust Company National Association | New York, USA | WMA | USD | 105.0 | 2 | 100.0 | New York, USA | WMA | USD | 55.0 | 2 | 100.0 | ||||||||||||||||||||||||
UBS Trustees (Bahamas) Ltd | Nassau, Bahamas | WM&SB | USD | 2.0 | 100.0 | Nassau, Bahamas | WM&SB | USD | 2.0 | 100.0 | ||||||||||||||||||||||||||
UBS Trustees (Cayman) Ltd | George Town, Cayman Islands | WM&SB | USD | 2.0 | 100.0 | George Town, Cayman Islands | WM&SB | USD | 2.0 | 100.0 | ||||||||||||||||||||||||||
UBS Trustees (Jersey) Ltd. | St. Helier, Jersey | WM&SB | GBP | 0.0 | 100.0 | St. Helier, Jersey | WM&SB | GBP | 0.0 | 100.0 | ||||||||||||||||||||||||||
UBS Trustees (Singapore) Ltd | Singapore, Singapore | WM&SB | SGD | 3.3 | 100.0 | Singapore, Singapore | WM&SB | SGD | 3.3 | 100.0 | ||||||||||||||||||||||||||
UBS UK Properties Limited | London, Great Britain | IB | GBP | 132.0 | 100.0 | London, Great Britain | IB | GBP | 132.0 | 100.0 | ||||||||||||||||||||||||||
UBS Wealth Management (UK) Ltd | London, Great Britain | WM&SB | GBP | 2.5 | 100.0 | London, Great Britain | WM&SB | GBP | 2.5 | 100.0 | ||||||||||||||||||||||||||
UBS Wealth Management Australia Ltd | Melbourne, Australia | WM&SB | AUD | 53.9 | 100.0 | Sydney, Australia | WM&SB | AUD | 53.9 | 100.0 | ||||||||||||||||||||||||||
Vermogens Advies Holding B.V. | Amsterdam, the Netherlands | WM&SB | EUR | 0.3 | 100.0 | |||||||||||||||||||||||||||||||
UBS Wealth Management Israel Ltd | Herzliya Pituach, Israel | WM&SB | ILS | 3.5 | 100.0 | |||||||||||||||||||||||||||||||
352364
Financial information |
Note 34 Significant subsidiaries and associates (continued)
Changes in the consolidation scope | |||||||||||
Newly significant, fully consolidated companies | |||||||||||
UBS | |||||||||||
UBS | |||||||||||
UBS | |||||||||||
UBS | |||||||||||
UBS | |||||||||||
UBS | |||||||||||
Significant deconsolidated companies | Reason for deconsolidation | |||||||
Merged | ||||||||
UBS | Liquidated | |||||||
UBS Fund Holding (Luxembourg) S.A. – Luxembourg, Luxembourg | Liquidated | |||||||
UBS Fund Holding (Switzerland) AG – | Merged | |||||||
UBS | Liquidated | |||||||
Significant associates | ||||||||
Company | Industry | Equity interest in % | ||||||
SIX Group AG – Zurich, Switzerland1 | Financial | 17.3 | ||||||
UBS Securities Co. Limited – Beijing, China | Financial | 20.0 | ||||||
353
Financial informationNotes to the consolidated financial statements
Note 35 Invested assets and net new money
Invested assets include all client assets managed by or deposited with UBS for investment purposes. Invested assets include managed fund assets, managed institutional assets, discretionary and advisory wealth management portfolios, fiduciary deposits, time deposits, savings accounts and wealth management securities or brokerage accounts. All assets held for purely transactional purposes and custody-only assets, including corporate client assets held for cash management and transactional purposes, are excluded from invested assets as the Group only administers the assets and does not offer advice on how the assets should be invested. Also excluded are non-bankable assets (e.g.(e. g. art collections) and deposits from third-party banks for funding or trading purposes.
utesdistributes it. This results in double counting within UBS total invested assets, as both business divisions are providing a service independently to their respective clients, and both add value and generate revenue.
Net new money in a period is the net amount of invested assets that are entrusted to UBS by new and existing clients less those withdrawn by existing clients and clients who terminated their relationship with UBS.
As of or for the year ended | |||||||||
CHF billion | 31.12.09 | 31.12.08 | |||||||
Fund assets managed by UBS | 319 | 339 | |||||||
Discretionary assets | 590 | 528 | |||||||
Other invested assets | 1,325 | 1,307 | |||||||
Total invested assets (double counts included) | 2,233 | 2,174 | |||||||
of which: double count | 254 | 273 | |||||||
of which: acquisitions (divestments) | (48.2 | ) | 19.1 | ||||||
Net new money (double counts included) | (147.3 | ) | (226.0 | ) | |||||
354365
Financial information
Notes to the consolidated financial statements
Note 35 Invested assets and net new money (continued)
As of or for the year ended | ||||||||
CHF billion | 31.12.10 | 31.12.09 | ||||||
Fund assets managed by UBS | 282 | 319 | ||||||
Discretionary assets | 596 | 590 | ||||||
Other invested assets | 1,274 | 1,325 | ||||||
Total invested assets (double counts included) | 2,152 | 2,233 | ||||||
of which: double count | 225 | 254 | ||||||
of which: acquisitions (divestments) | 0.0 | (48.2 | ) | |||||
Net new money (double counts included) | (14.3 | ) | (147.3 | ) | ||||
Note 36 Business combinations
Business combinations completed in 2010
In 2010 no significant business combinations were completed.
Business combinations completed in 2009
Acquisition of the commodity index business of
AIG Financial Products Corp.
tributableattributable transaction costs, amounted to CHF 74 million (USD 65 million) of which CHF 17 million (USD 15 million) was paid in cash upon closing. The remaining payments, based upon future earnings of the purchased business, are expected to bewere made by Septemberin 2010. The cost of the business combination was allocated toIntangible assetsof CHF 40 million (USD 35 million) andGoodwill of CHF 34 million (USD 30 million). The business of AIG was integrated into UBS’s Investment Bank.
AIG Commodity Index 2009 | AIG Commodity Index 2009 | AIG Commodity Index 2009 | ||||||||||||||||||||||
CHF million | Book value | Step-up to fair value | Fair value | Book value | Step-up to fair value | Fair value | ||||||||||||||||||
Assets | ||||||||||||||||||||||||
Intangible assets | 0 | 40 | 40 | 0 | 40 | 40 | ||||||||||||||||||
Goodwill | 0 | 34 | 34 | 0 | 34 | 34 | ||||||||||||||||||
All other assets | 598 | 0 | 598 | 598 | 0 | 598 | ||||||||||||||||||
Total assets | 598 | 74 | 672 | 598 | 74 | 672 | ||||||||||||||||||
Liabilities and equity | ||||||||||||||||||||||||
Liabilities | 598 | 0 | 598 | 598 | 598 | |||||||||||||||||||
Equity | 0 | 74 | 74 | 74 | 74 | |||||||||||||||||||
Total liabilities and equity | 598 | 74 | 672 | 598 | 74 | 672 |
355
Financial informationNotes to the consolidated financial statements
Note 36 Business combinations (continued)
Business combinations completed in 2008
Caisse Centrale de Réescompte Group
allocated toIntangible assetsreflecting customer relationships of CHF 36 million (EUR 23 million), net assets of CHF 209 million (EUR 131 million) andGoodwill ofCHF 368 million (EUR 233 million). The business of CCR, which included EUR 13.3 billion of invested assets as of 31 December 2007 and approximately 190 employees, was integrated into UBS’s asset management and wealth management businesses in France.
Caisse Centrale de Réescompte Group (CCR) 2008 | ||||||||||||
CHF million | Book value | Step-up to fair value | Fair value | |||||||||
Assets | ||||||||||||
Intangible assets | 0 | 36 | 36 | |||||||||
Property and equipment | 5 | 0 | 5 | |||||||||
Goodwill | 0 | 368 | 368 | |||||||||
All other assets | 513 | 1 | 514 | |||||||||
Total assets | 518 | 405 | 923 | |||||||||
Liabilities and equity | ||||||||||||
Liabilities | 297 | 13 | 310 | |||||||||
Equity | 221 | 392 | 613 | |||||||||
Total liabilities and equity | 518 | 405 | 923 | |||||||||
In 2009, the allocations were finalized and the intangible assets and goodwill were allocated to the divisions as follows:
Caisse Centrale de Réescompte Group (CCR) 2008 | ||||||||||||
Wealth Management & | Global Asset | |||||||||||
CHF million | Swiss Bank | Management | Total | |||||||||
Assets | ||||||||||||
Intangible assets | 10 | 26 | 36 | |||||||||
Goodwill | 33 | 335 | �� | 368 | ||||||||
356
Note 36 Business combinations (continued)
VermogensGroep
cost of the business combination was allocated toIntangible assetsof CHF 49 million (EUR 30 million),Net liabilitiesof CHF 2.1 million (EUR 1.3 million) andGoodwillof CHF 126 million (EUR 78 million). VermogensGroep serve wealthy private clients, foundations and institutions in the Dutch market and managed client assets of approximately EUR 4 billion at the time of the transaction. VermogensGroep was integrated into UBS’s wealth management business.
VermogensGroep 2008 | ||||||||||||
CHF million | Book value | Step-up to fair value | Fair value | |||||||||
Assets | ||||||||||||
Intangible assets | 0 | 49 | 49 | |||||||||
Property and equipment | 2 | 0 | 2 | |||||||||
Goodwill | 0 | 126 | 126 | |||||||||
All other assets | 10 | 0 | 10 | |||||||||
Total assets | 12 | 175 | 187 | |||||||||
Liabilities and equity | ||||||||||||
Liabilities | 2 | 12 | 14 | |||||||||
Equity | 10 | 163 | 173 | |||||||||
Total liabilities and equity | 12 | 175 | 187 | |||||||||
Pro-forma information (unaudited)
The following pro-forma information shows UBS’s total operating income, net profit attributable to UBS shareholders and basic earnings per share as if all of the acquisitions completed
ary 2007.2008. Adjustments have been made to reflect additional amortization and depreciation of assets and liabilities, which have been assigned fair values different from their carryover basesbasis in purchase accounting.
Pro-forma information (unaudited) | Pro-forma information (unaudited) | Pro-forma information (unaudited) | ||||||||||||||||||
For the year ended | For the year ended | |||||||||||||||||||
CHF million, except where indicated | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.09 | 31.12.08 | |||||||||||||||
Total operating income | 22,606 | 910 | 31,932 | 22,606 | 910 | |||||||||||||||
Net profit | (2,737 | ) | (21,251 | ) | (5,233 | ) | (2,737 | ) | (21,251 | ) | ||||||||||
Basic earnings per share (CHF) | (0.75 | ) | (7.61 | ) | (2.40 | ) | (0.75 | ) | (7.61 | ) |
357366
Financial informationNotes to the consolidated financial statements
Financial information |
Note 37 Discontinued operations
2010
In 2010, private equity investments sold in prior years contributed a subsequent gain of CHF 2 million to UBS’s net profit from discontinued operations.
2009
In 2009, private equity investments sold in prior years contributed a subsequent loss of CHF 7 million to UBS’s net profit from discontinued operations.
2008
Industrial holdings
2007
Industrial holdings
Private Banks & GAM
358
Note 37 Discontinued operations (continued)
For the year ended 31.12.08 | For the year ended 31.12.08 | |||||||||||||||
CHF million | Private Banks & GAM1,2 | Industrial Holdings2 | Private Banks & GAM1, 2 | Industrial Holdings2 | ||||||||||||
Operating income | 0 | 19 | 0 | 19 | ||||||||||||
Operating expenses | 0 | (15 | ) | 0 | (15 | ) | ||||||||||
Operating profit from discontinued operations before tax | 0 | 34 | 0 | 34 | ||||||||||||
Pre-tax gain on sale | 44 | 120 | 44 | 120 | ||||||||||||
Profit from discontinued operations before tax | 44 | 155 | 44 | 155 | ||||||||||||
Tax expense on operating profit from discontinued operations before tax | 0 | 0 | 0 | 0 | ||||||||||||
Tax expense on gain from sale | 1 | 0 | 1 | 0 | ||||||||||||
Tax expense from discontinued operations | 1 | 0 | 1 | 0 | ||||||||||||
Net profit from discontinued operations | 43 | 155 | 43 | 155 | ||||||||||||
Net cash flows from | ||||||||||||||||
operating activities | 0 | (1 | ) | 0 | (1 | ) | ||||||||||
investing activities | 0 | 3 | 0 | 3 | ||||||||||||
financing activities | 0 | 0 | 0 | 0 |
For the year ended 31.12.07 | ||||||||
CHF million | Private Banks & GAM1 | Industrial Holdings1 | ||||||
Operating income | 0 | 394 | ||||||
Operating expenses | 0 | 358 | ||||||
Operating profit from discontinued operations before tax | 0 | 36 | ||||||
Pre-tax gain on sale | 7 | 102 | ||||||
Profit from discontinued operations before tax | 7 | 138 | ||||||
Tax expense on operating profit from discontinued operations before tax | 0 | 0 | ||||||
Tax expense on gain from sale | (258 | ) | 0 | |||||
Tax expense from discontinued operations | (258 | ) | 0 | |||||
Net profit from discontinued operations | 265 | 138 | ||||||
Net cash flows from | ||||||||
operating activities | 0 | 32 | ||||||
investing activities | 0 | (1 | ) | |||||
financing activities | 0 | (42 | ) | |||||
359Note 38 Reorganizations and disposals
Sale of investment in New York office building
In January 2010, UBS closed the sale of its investments in several associated entities owning office space in New York. A significant portion of the office space is leased by UBS Group until 2018. The sales price was CHF 187 million with a resulting gain on sale of CHF 180 million.
Restructuring 2010
During 2010, UBS incurred net restructuring charges of CHF 113 million. Wealth Management Americas recognized CHF 90 million for real-estate related costs inGeneral and administrative expensesand CHF 37 million for impairment inDepreciation of property and equipment. In addition, the business division incurred personnel related restructuring charges of CHF 35 million. The Investment Bank released personnel related restructuring provisions of CHF 25 million.
367
Financial information
Notes to the consolidated financial statements
Note 38 Reorganizations and disposals
Sale of UBS Pactual
On 18 September 2009, UBS completed the sale of its Brazilian financial services business, UBS Pactual, to BTG Investments, LP. The sale consideration consisted of a combination of cash and transfer of liabilities by BTG Investments. The total cash consideration amounted to USD 620 million, of which USD 420 million was paid at closing of the transaction and the remaining USD 200 million, plus accrued interest, will be payable 12 months after the closing. The liabilities transferred to BTG Investments consisted primarily of the present value of the residual payment obligation of USD 1.6 billion owed to former Pactual partners, which was incurred by UBS upon acquisition of Pactual in 2006 and was due in 2011.
Sale of 56 branches in Wealth Management Americas
Following an agreement announced in March 2009, UBS sold 56 branches in Wealth Management Americas to Stifel, Nicolaus & Company, Incorporated for an upfront cash payment of approximately USD 29 million. In addition, UBS received aggregate payments of USD 18 million for net fixed
assets and employee forgivable loans, and net USD 154 million for customer loans that were transferred. Under the terms of the agreement, UBS may also receive additional consideration contingent on the performance of the business sold during the two years following the closing of the transaction. The transaction was closed in four separate closings during the second half of 2009. Overall, for 2009 the impact of the transaction on UBS’s profit before tax was a net charge of approximately USD 12 million.
Sale of UBS’s India Service Centre (ISC)
On 30 December 2009, UBS completed the sale of its India Service Centre (ISC) to Cognizant Technology Solutions for a sale consideration of USD 82 million, which was paid in cash at closing.
Sale of assets to a third-party fund controlled by the Swiss National Bank (SNB)
As announced on 16 October 2008, UBS entered into an agreement with the Swiss National Bank (SNB) to transfer certain illiquid securities and other positions to the SNB StabFund limited partnership for collective investments (the “fund”), which is fully owned and controlled by the SNB.
360
Note 38 Reorganizations and disposals (continued)
payment of the par value of these shares (the “contingent share issue”).
ability that has been deemed remote at 31 December 2009 and 2008. The contingent share issue was treated as an equity instrument and was recognized at fair value in equity as an increase to share premium and an expense in net trading income in 2008. The fair value of the contingent share issue was estimated at approximately CHF 607 million and not thereafter re-measured to fair value.
Restructuring
In 2009, UBS incurred restructuring charges of CHF 791 million, including CHF 491 million inPersonnel expenses,mainly for severance payments, CHF 256 million inGeneral and administrative expenses,primarily for real-estate related costs, and CHF 45 million of depreciation and impairment losses on property and equipment. These restructuring charges were allocated to the business divisions as follows: Wealth Management & Swiss Bank, CHF 322 million; Wealth Management Americas, CHF 152 million; Global Asset Management, CHF 48 million; Investment Bank, CHF 226 million; and the Corporate Center, CHF 45 million.
Note 39 Currency translation rates
The following table shows the principalmain rates used to translate the financial information of UBS’s foreign entitiesoperations into Swiss francs:
Spot rate | Average rate | Spot rate | Average rate | |||||||||||||||||||||||||||||||||||||||
As of | Year ended | As of | Year ended | |||||||||||||||||||||||||||||||||||||||
31.12.09 | 31.12.08 | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.10 | 31.12.09 | 31.12.10 | 31.12.09 | 31.12.08 | |||||||||||||||||||||||||||||||||
1 USD | 1.04 | 1.07 | 1.08 | 1.06 | 1.22 | 0.93 | 1.04 | 1.04 | 1.08 | 1.06 | ||||||||||||||||||||||||||||||||
1 EUR | 1.48 | 1.49 | 1.51 | 1.58 | 1.65 | 1.25 | 1.48 | 1.37 | 1.51 | 1.58 | ||||||||||||||||||||||||||||||||
1 GBP | 1.67 | 1.56 | 1.70 | 1.96 | 2.31 | 1.46 | 1.67 | 1.62 | 1.70 | 1.96 | ||||||||||||||||||||||||||||||||
100 JPY | 1.11 | 1.17 | 1.16 | 0.98 | 1.02 | 1.15 | 1.11 | 1.18 | 1.16 | 0.98 |
361
Financial informationNotes to the consolidated financial statements
Note 40 Swiss banking law requirements
The consolidated Financial Statements of UBS are prepared in accordance with International Financial Reporting Standards (IFRS). The Guidelines of the Swiss Financial Market Supervisory Authority (FINMA) require banks which present their financial statements under IFRS to provide a narrative explanation of the main differences between IFRS and Swiss GAAP (FINMA circular 08/2) and the Banking Ordinance. Included in this note are the significant differences in regard to recognition and measurement between IFRS and the provisions of the Banking Ordinance and the Guidelines of the FINMA governing financial statement reporting pursuant to Article 23 through Article 27 of the Banking Ordinance. The differences outlined in points two through nine also apply to the Parent Bank statutory accounts.
1. Consolidation
Under IFRS, all entities which are controlled by the Group are consolidated.
2. Financial investments available-for-sale
Under IFRS, financialFinancial investments available-for-sale are carried at fair value. Changes in fair value are recorded directly in equity until an investment is sold, collected or otherwise disposed of, or until an investment is determined to be impaired. At the time an available-for-sale investment is determined to be impaired, the cumulative unrealized loss previously recognized in equity is included in net profit or loss for the period. On disposal of a financial investment available-for-sale, the cumulative unrecognized gain or loss previously recognized in equity is recognized in the income statement.
ductions to market value below cost and reversals of such reductions up to original cost as well as gains and losses on disposal are included inOther income. Equity Permanent equity investments that are considered permanent are carriedclassified on the balance sheet asInvestments in associated companies and are measured at cost less impairment with impairment losses recorded in the income statement. Permanent investments are classified on the balance sheet as investments in associated companies.
3. Cash flow hedges
The Group uses derivative instruments to hedge the exposure from varying cash flows. Under IFRS, when hedge ac-
countingaccounting is applied the fair value gain or loss on the effective portion of the derivative designated as a cash flow hedge is recognized in equity. When the hedged cash flows materialize, the accumulated unrecognized gain or loss is realized and released to income.
4. Investment property
Under IFRS, investment property is carried at fair value, with changes in fair value recognized in the income statement.
5. Fair value option
Under IFRS, the Group applies the fair value option to certain financial assets and financial liabilities, mainly to hybrid debt instruments. As a result, the entire hybrid instrument isHybrid instruments are accounted for at fair value with changes in fair value reflected in netNet trading income.Furthermore, UBS designated certain loans, loan commitments and fund
368
Financial information |
Note 40 Swiss banking law requirements (continued)
investments as financial assets designated at fair value through profit and loss.
6. Goodwill and intangible assets
Under IFRS, goodwill acquired in a business combination is not amortized but tested annually for impairment. Intangible assets acquired in a business combination with an indefinite useful life are also not amortized but tested annually for impairment.
7. Discontinued operations
Under certain conditions, IFRS requires that non-current assets or disposal groups be classified as held for sale. Disposal groups that meet the criteria of discontinued operations are presented in the income statement in a single line asNet net income from discontinued operations.
362
Note 40 Swiss banking law requirements (continued)
8. Extraordinary income and expense
Certain items of income and expense are classified as extraordinary items under Swiss law, whereas in the Group Income Statement the amounts are classified as operating income or expense or are included in net profit from discontinued operations, if required.
9. Netting of replacement values
Under IFRS, replacement values are reported on a gross basis, unless certain restrictive requirements are met. Under Swiss law, replacement values and the related cash collateral are reported on a net basis, provided the master netting and the related collateral agreements are legally enforceable.
369
Financial information
Notes to the consolidated financial statements
Note 41 Supplemental guarantor information required under SEC rules
Guarantee of PaineWebber securities
Following the acquisition of Paine Webber Group Inc., UBS made a full and unconditional guarantee of the senior and subordinated notes and trust preferred securities (“Debt Securities”) of PaineWebber. Prior to the acquisition, PaineWebber was ana SEC Registrant.registrant. Upon the acquisition, PaineWebber was merged into UBS Americas Inc., a wholly ownedwholly-owned subsidiary of UBS.
the holders of the Debt Securities or the Debt Securities trustee may demand payment from UBS without first proceeding against UBS Americas Inc. UBS’s obligations under the subordinated note guarantee are subordinated to the prior payment in full of the deposit liabilities of UBS and all other liabilities of UBS.
Supplemental guarantor consolidated income statement | ||||||||||||||||||||
CHF million | UBS AG | UBS | Consolidating | |||||||||||||||||
For the year ended 31 December 2009 | Parent Bank1 | Americas Inc. | Subsidiaries | entries | UBS Group | |||||||||||||||
Operating income | ||||||||||||||||||||
Interest income | 18,798 | 4,432 | 6,715 | (6,484 | ) | 23,461 | ||||||||||||||
Interest expense | (16,860 | ) | (1,982 | ) | (4,657 | ) | 6,484 | (17,016 | ) | |||||||||||
Net interest income | 1,939 | 2,450 | 2,058 | 0 | 6,446 | |||||||||||||||
Credit loss (expense)/recovery | (937 | ) | (897 | ) | 2 | 0 | (1,832 | ) | ||||||||||||
Net interest income after credit loss expense | 1,002 | 1,553 | 2,060 | 0 | 4,614 | |||||||||||||||
Net fee and commission income | 7,912 | 6,025 | 3,774 | 0 | 17,712 | |||||||||||||||
Net trading income | (1,487 | ) | (423 | ) | 1,586 | 0 | (324 | ) | ||||||||||||
Income from subsidiaries | 1,114 | 0 | 0 | (1,114 | ) | 0 | ||||||||||||||
Other income | 550 | (872 | ) | 921 | 0 | 599 | ||||||||||||||
Total operating income | 9,092 | 6,282 | 8,341 | (1,114 | ) | 22,601 | ||||||||||||||
Operating expenses | ||||||||||||||||||||
Personnel expenses | 8,577 | 5,566 | 2,400 | 0 | 16,543 | |||||||||||||||
General and administrative expenses | 2,351 | 2,512 | 1,385 | 0 | 6,248 | |||||||||||||||
Depreciation of property and equipment | 686 | 171 | 191 | 0 | 1,048 | |||||||||||||||
Impairment of goodwill | 0 | 0 | 1,123 | 0 | 1,123 | |||||||||||||||
Amortization of intangible assets | 3 | 96 | 101 | 0 | 200 | |||||||||||||||
Total operating expenses | 11,617 | 8,345 | 5,200 | 0 | 25,162 | |||||||||||||||
Operating profit from continuing operations before tax | (2,526 | ) | (2,063 | ) | 3,141 | (1,114 | ) | (2,561 | ) | |||||||||||
Tax expense | 210 | (549 | ) | (104 | ) | 0 | (443 | ) | ||||||||||||
Net profit from continuing operations | (2,736 | ) | (1,514 | ) | 3,245 | (1,114 | ) | (2,118 | ) | |||||||||||
Net profit from discontinued operations | 0 | 0 | (7 | ) | 0 | (7 | ) | |||||||||||||
Net profit | (2,736 | ) | (1,514 | ) | 3,238 | (1,114 | ) | (2,125 | ) | |||||||||||
Net profit attributable to minority interests | 0 | (3 | ) | 613 | 0 | 610 | ||||||||||||||
Net profit attributable to UBS shareholders | (2,736 | ) | (1,511 | ) | 2,625 | (1,114 | ) | (2,736 | ) | |||||||||||
363
Financial informationNotes to the consolidated financial statements
Note 41 Supplemental guarantor information required under SEC rules (continued)
Supplemental guarantor consolidated balance sheet | ||||||||||||||||||||
CHF million | UBS AG | UBS | Consolidating | |||||||||||||||||
As of 31 December 2009 | Parent Bank1 | Americas Inc. | Subsidiaries | entries | UBS Group | |||||||||||||||
Assets | ||||||||||||||||||||
Cash and balances with central banks | 15,177 | 75 | 5,647 | 0 | 20,899 | |||||||||||||||
Due from banks | 67,640 | 8,597 | 100,909 | (130,572 | ) | 46,574 | ||||||||||||||
Cash collateral on securities borrowed | 39,807 | 56,402 | 10,700 | (43,402 | ) | 63,507 | ||||||||||||||
Reverse repurchase agreements | 113,891 | 37,914 | 82,474 | (117,590 | ) | 116,689 | ||||||||||||||
Trading portfolio assets | 122,801 | 18,224 | 48,739 | (1,727 | ) | 188,037 | ||||||||||||||
Trading portfolio assets pledged as collateral | 47,954 | 11,422 | 859 | (16,014 | ) | 44,221 | ||||||||||||||
Positive replacement values | 413,822 | 8,260 | 145,265 | (145,654 | ) | 421,694 | ||||||||||||||
Financial assets designated at fair value | 5,831 | 5,876 | 11,283 | (12,768 | ) | 10,223 | ||||||||||||||
Loans | 296,497 | 45,774 | 22,749 | (58,193 | ) | 306,828 | ||||||||||||||
Financial investments available-for-sale | 63,459 | 15,441 | 2,857 | 0 | 81,757 | |||||||||||||||
Accrued income and prepaid expenses | 1,664 | 3,880 | 1,100 | (828 | ) | 5,816 | ||||||||||||||
Investments in associates | 61,551 | 24 | 49 | (60,754 | ) | 870 | ||||||||||||||
Property and equipment | 4,920 | 791 | 501 | 0 | 6,212 | |||||||||||||||
Goodwill and intangible assets | 494 | 9,101 | 1,413 | 0 | 11,008 | |||||||||||||||
Deferred tax assets | 6,352 | 2,037 | 479 | 0 | 8,868 | |||||||||||||||
Other assets | 7,131 | 2,115 | 2,169 | (4,078 | ) | 7,336 | ||||||||||||||
Total assets | 1,268,991 | 225,933 | 437,194 | (591,580 | ) | 1,340,538 | ||||||||||||||
Liabilities | ||||||||||||||||||||
Due to banks | 110,418 | 53,751 | 31,569 | (130,572 | ) | 65,166 | ||||||||||||||
Cash collateral on securities lent | 17,662 | 22,993 | 10,742 | (43,402 | ) | 7,995 | ||||||||||||||
Repurchase agreements | 38,563 | 66,545 | 76,657 | (117,590 | ) | 64,175 | ||||||||||||||
Trading portfolio liabilities | 41,884 | 10,792 | 610 | (5,817 | ) | 47,469 | ||||||||||||||
Negative replacement values | 400,432 | 8,173 | 146,992 | (145,654 | ) | 409,943 | ||||||||||||||
Financial liabilities designated at fair value | 100,768 | 276 | 27,953 | (16,344 | ) | 112,653 | ||||||||||||||
Due to customers | 341,200 | 54,470 | 72,999 | (58,193 | ) | 410,475 | ||||||||||||||
Accrued expenses and deferred income | 5,155 | 2,269 | 2,093 | (828 | ) | 8,689 | ||||||||||||||
Debt issued | 126,965 | 493 | 12,242 | (8,348 | ) | 131,352 | ||||||||||||||
Other liabilities | 8,229 | 3,380 | 26,455 | (4,078 | ) | 33,986 | ||||||||||||||
Total liabilities | 1,191,276 | 223,142 | 408,312 | (530,826 | ) | 1,291,905 | ||||||||||||||
Equity attributable to UBS shareholders | 77,715 | (234 | ) | 24,287 | (60,754 | ) | 41,013 | |||||||||||||
Equity attributable to minority interests | 0 | 3,025 | 4,595 | 0 | 7,620 | |||||||||||||||
Total equity | 77,715 | 2,791 | 28,882 | (60,754 | ) | 48,633 | ||||||||||||||
Total liabilities and equity | 1,268,991 | 225,933 | 437,194 | (591,580 | ) | 1,340,538 | ||||||||||||||
Supplemental guarantor consolidated income statement | ||||||||||||||||||||
CHF million | UBS AG | UBS | Consolidating | |||||||||||||||||
For the year ended 31 December 2010 | Parent Bank1 | Americas Inc. | Subsidiaries | entries | UBS Group | |||||||||||||||
Operating income | ||||||||||||||||||||
Interest income | 15,732 | 3,388 | 2,723 | (2,971 | ) | 18,872 | ||||||||||||||
Interest expense | (12,153 | ) | (1,409 | ) | (2,067 | ) | 2,971 | (12,657 | ) | |||||||||||
Net interest income | 3,579 | 1,980 | 656 | 0 | 6,215 | |||||||||||||||
Credit loss (expense) / recovery | (2 | ) | (16 | ) | (48 | ) | 0 | (66 | ) | |||||||||||
Net interest income after credit loss expense | 3,577 | 1,964 | 608 | 0 | 6,149 | |||||||||||||||
Net fee and commission income | 7,293 | 6,465 | 3,401 | 0 | 17,160 | |||||||||||||||
Net trading income | 6,979 | (117 | ) | 609 | 0 | 7,471 | ||||||||||||||
Income from subsidiaries | 1,384 | 0 | 0 | (1,384 | ) | 0 | ||||||||||||||
Other income | 1,515 | 1,296 | (1,597 | ) | 0 | 1,214 | ||||||||||||||
Total operating income | 20,749 | 9,608 | 3,022 | (1,384 | ) | 31,994 | ||||||||||||||
Operating expenses | ||||||||||||||||||||
Personnel expenses | 9,220 | 5,850 | 1,850 | 0 | 16,920 | |||||||||||||||
General and administrative expenses | 2,729 | 2,691 | 1,164 | 0 | 6,585 | |||||||||||||||
Depreciation of property and equipment | 628 | 172 | 117 | 0 | 918 | |||||||||||||||
Impairment of goodwill | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Amortization of intangible assets | 3 | 90 | 24 | 0 | 117 | |||||||||||||||
Total operating expenses | 12,581 | 8,804 | 3,154 | 0 | 24,539 | |||||||||||||||
Operating profit from continuing operations before tax | 8,168 | 804 | (132 | ) | (1,384 | ) | 7,455 | |||||||||||||
Tax expense / (benefit) | 633 | (1,150 | ) | 136 | 0 | (381 | ) | |||||||||||||
Net profit from continuing operations | 7,534 | 1,954 | (268 | ) | (1,384 | ) | 7,836 | |||||||||||||
Net profit from discontinued operations | 0 | 0 | 2 | (1,384 | ) | 2 | ||||||||||||||
Net profit | 7,534 | 1,954 | (266 | ) | (1,384 | ) | 7,838 | |||||||||||||
Net profit attributable to non-controlling interests | 0 | 0 | 304 | 0 | 304 | |||||||||||||||
Net profit attributable to UBS shareholders | 7,534 | 1,954 | (570 | ) | (1,384 | ) | 7,534 | |||||||||||||
364370
Financial information |
Note 41 Supplemental guarantor information required under SEC rules (continued)
Supplemental guarantor consolidated statement of cash flows | ||||||||||||||||
CHF million | UBS AG | UBS | ||||||||||||||
For the year ended 31 December 2009 | Parent Bank1 | Americas Inc. | Subsidiaries | UBS Group | ||||||||||||
Net cash flow from/(used in) operating activities | 4,841 | (6,469 | ) | 56,126 | 54,497 | |||||||||||
Cash flow from/(used in) investing activities | ||||||||||||||||
Purchase of subsidiaries and associates | (42 | ) | 0 | 0 | (42 | ) | ||||||||||
Disposal of subsidiaries and associates | 296 | 0 | 0 | 296 | ||||||||||||
Purchase of property and equipment | (656 | ) | (124 | ) | (75 | ) | (854 | ) | ||||||||
Disposal of property and equipment | 104 | 53 | 6 | 163 | ||||||||||||
Net (investment in)/divestment of financial investments available-for-sale | (22,319 | ) | (12,484 | ) | 14,677 | (20,127 | ) | |||||||||
Net cash flow from/(used in) investing activities | (22,616 | ) | (12,555 | ) | 14,608 | (20,563 | ) | |||||||||
Cash flow from /(used in) financing activities | ||||||||||||||||
Net money market papers issued/(repaid) | (7,020 | ) | (1,596 | ) | (51,424 | ) | (60,040 | ) | ||||||||
Net movements in treasury shares and own equity derivative activity | 673 | 0 | 0 | 673 | ||||||||||||
Capital issuance | 3,726 | 0 | 0 | 3,726 | ||||||||||||
Issuance of long-term debt, including financial liabilities designated at fair value | 64,956 | 0 | 2,106 | 67,062 | ||||||||||||
Repayment of long-term debt, including financial liabilities designated at fair value | (55,616 | ) | (1,548 | ) | (7,861 | ) | (65,024 | ) | ||||||||
Increase in minority interests | 0 | 0 | 3 | 3 | ||||||||||||
Dividends paid to/decrease in minority interests | 0 | (8 | ) | (576 | ) | (583 | ) | |||||||||
Net activity in investments in subsidiaries | (4,032 | ) | 2,419 | 1,614 | 0 | |||||||||||
Net cash flow from/(used in) financing activities | 2,686 | (733 | ) | (56,136 | ) | (54,183 | ) | |||||||||
Effects of exchange rate differences | 5,886 | 574 | (933 | ) | 5,529 | |||||||||||
Net increase/(decrease) in cash and cash equivalents | (9,202 | ) | (19,183 | ) | 13,664 | (14,721 | ) | |||||||||
Cash and cash equivalents at the beginning of the year | 132,782 | 24,421 | 22,490 | 179,693 | ||||||||||||
Cash and cash equivalents at the end of the year | 123,580 | 5,238 | 36,154 | 164,973 | ||||||||||||
Cash and cash equivalents comprise: | ||||||||||||||||
Cash and balances with central banks | 15,177 | 75 | 5,647 | 20,899 | ||||||||||||
Money market papers2 | 78,025 | 3,714 | 16,694 | 98,432 | ||||||||||||
Due from banks with original maturity of less than three months | 30,378 | 1,450 | 13,814 | 45,642 | ||||||||||||
Total | 123,580 | 5,238 | 36,154 | 164,973 | ||||||||||||
Supplemental guarantor consolidated balance sheet | ||||||||||||||||||||
CHF million | UBS AG | UBS | Consolidating | |||||||||||||||||
As of 31 December 2010 | Parent Bank1 | Americas Inc. | Subsidiaries | entries | UBS Group | |||||||||||||||
Assets | ||||||||||||||||||||
Cash and balances with central banks | 26,372 | 69 | 498 | 0 | 26,939 | |||||||||||||||
Due from banks | 30,941 | 5,038 | 68,198 | (87,044 | ) | 17,133 | ||||||||||||||
Cash collateral on securities borrowed | 39,315 | 61,314 | 9,572 | (47,746 | ) | 62,454 | ||||||||||||||
Reverse repurchase agreements | 130,977 | 53,203 | 85,331 | (126,721 | ) | 142,790 | ||||||||||||||
Trading portfolio assets | 108,678 | 22,853 | 37,652 | (1,719 | ) | 167,463 | ||||||||||||||
Trading portfolio assets pledged as collateral | 61,428 | 9,412 | 2,162 | (11,649 | ) | 61,352 | ||||||||||||||
Positive replacement values | 393,565 | 8,624 | 115,618 | (116,661 | ) | 401,146 | ||||||||||||||
Cash collateral receivables on derivative instruments | 42,940 | 5,010 | 23,861 | (33,740 | ) | 38,071 | ||||||||||||||
Financial assets designated at fair value | 4,778 | 4,788 | 8,850 | (9,911 | ) | 8,504 | ||||||||||||||
Loans | 258,378 | 37,828 | 12,778 | (46,107 | ) | 262,877 | ||||||||||||||
Financial investments available-for-sale | 59,269 | 11,647 | 3,853 | 0 | 74,768 | |||||||||||||||
Accrued income and prepaid expenses | 1,450 | 3,612 | 942 | (538 | ) | 5,466 | ||||||||||||||
Investments in associates | 62,095 | 6 | 0 | (61,311 | ) | 790 | ||||||||||||||
Property and equipment | 4,493 | 614 | 360 | 0 | 5,467 | |||||||||||||||
Goodwill and intangible assets | 448 | 8,150 | 1,224 | 0 | 9,822 | |||||||||||||||
Deferred tax assets | 6,054 | 2,897 | 571 | 0 | 9,522 | |||||||||||||||
Other assets | 18,504 | 5,938 | 1,914 | (3,675 | ) | 22,681 | ||||||||||||||
Total assets | 1,249,683 | 241,001 | 373,384 | (546,822 | ) | 1,317,247 | ||||||||||||||
Liabilities | ||||||||||||||||||||
Due to banks | 79,842 | 47,430 | 1,261 | (87,044 | ) | 41,490 | ||||||||||||||
Cash collateral on securities lent | 20,374 | 23,613 | 10,410 | (47,746 | ) | 6,651 | ||||||||||||||
Repurchase agreements | 40,713 | 79,920 | 80,883 | (126,721 | ) | 74,796 | ||||||||||||||
Trading portfolio liabilities | 45,191 | 13,433 | 1,215 | (4,865 | ) | 54,975 | ||||||||||||||
Negative replacement values | 383,892 | 8,667 | 117,863 | (116,661 | ) | 393,762 | ||||||||||||||
Cash collateral payables on derivative instruments | 45,024 | 10,543 | 37,097 | (33,740 | ) | 58,924 | ||||||||||||||
Financial liabilities designated at fair value | 94,864 | 295 | 18,457 | (12,859 | ) | 100,756 | ||||||||||||||
Due to customers | 301,976 | 29,266 | 47,166 | (46,107 | ) | 332,301 | ||||||||||||||
Accrued expenses and deferred income | 5,071 | 2,433 | 773 | (538 | ) | 7,738 | ||||||||||||||
Debt issued | 125,113 | 398 | 10,315 | (5,555 | ) | 130,271 | ||||||||||||||
Other liabilities | 23,286 | 20,580 | 23,529 | (3,675 | ) | 63,719 | ||||||||||||||
Total liabilities | 1,165,349 | 236,578 | 348,968 | (485,511 | ) | 1,265,384 | ||||||||||||||
Equity attributable to UBS shareholders | 84,334 | 4,408 | 19,388 | (61,311 | ) | 46,820 | ||||||||||||||
Equity attributable to non-controlling interests | 0 | 15 | 5,028 | 0 | 5,043 | |||||||||||||||
Total equity | 84,334 | 4,423 | 24,416 | (61,311 | ) | 51,863 | ||||||||||||||
Total liabilities and equity | 1,249,683 | 241,001 | 373,384 | (546,822 | ) | 1,317,247 | ||||||||||||||
371
Financial information
Notes to the consolidated financial statements
Note 41 Supplemental guarantor information required under SEC rules (continued)
Supplemental guarantor consolidated statement of cash flows | ||||||||||||||||
CHF million | UBS AG | UBS | ||||||||||||||
For the year ended 31 December 2010 | Parent Bank1 | Americas Inc. | Subsidiaries | UBS Group | ||||||||||||
Net cash flow from / (used in) operating activities | 7,233 | 4,036 | 695 | 11,963 | ||||||||||||
Cash flow from / (used in) investing activities | �� | |||||||||||||||
Purchase of subsidiaries and associates | (75 | ) | 0 | 0 | (75 | ) | ||||||||||
Disposal of subsidiaries and associates | 307 | 0 | 0 | 307 | ||||||||||||
Purchase of property and equipment | (367 | ) | (88 | ) | (86 | ) | (541 | ) | ||||||||
Disposal of property and equipment | 196 | 22 | 24 | 242 | ||||||||||||
Net (investment in) / divestment of financial investments available-for-sale | (17,374 | ) | 1,150 | (9,407 | ) | (25,631 | ) | |||||||||
Net cash flow from / (used in) investing activities | (17,312 | ) | 1,084 | (9,471 | ) | (25,698 | ) | |||||||||
Cash flow from / (used in) financing activities | ||||||||||||||||
Net money market papers issued / (repaid) | 3,241 | 0 | 1,218 | 4,459 | ||||||||||||
Net movements in treasury shares and own equity derivative activity | (1,456 | ) | 0 | 0 | (1,456 | ) | ||||||||||
Capital issuance | (113 | ) | 0 | 0 | (113 | ) | ||||||||||
Issuance of long-term debt, including financial liabilities designated at fair value | 75,842 | 8 | 2,568 | 78,418 | ||||||||||||
Repayment of long-term debt, including financial liabilities designated at fair value | (65,968 | ) | (82 | ) | (11,447 | ) | (77,497 | ) | ||||||||
Increase in non-controlling interests | 0 | 0 | 6 | 6 | ||||||||||||
Dividends paid to / decrease in non-controlling interests | 0 | (6 | ) | (2,047 | ) | (2,053 | ) | |||||||||
Net activity in investments in subsidiaries | (122 | ) | 235 | (113 | ) | 0 | ||||||||||
Net cash flow from / (used in) financing activities | 11,424 | 154 | (9,815 | ) | 1,764 | |||||||||||
Effects of exchange rate differences | (10,218 | ) | 1,482 | (3,444 | ) | (12,181 | ) | |||||||||
Net increase / (decrease) in cash and cash equivalents | (8,873 | ) | 6,756 | (22,034 | ) | (24,151 | ) | |||||||||
Cash and cash equivalents at the beginning of the year | 123,580 | 5,238 | 36,154 | 164,973 | ||||||||||||
Cash and cash equivalents at the end of the year | 114,707 | 11,994 | 14,120 | 140,822 | ||||||||||||
Cash and cash equivalents comprise: | ||||||||||||||||
Cash and balances with central banks | 26,372 | 69 | 498 | 26,939 | ||||||||||||
Money market papers2 | 65,688 | 3,737 | 8,573 | 77,998 | ||||||||||||
Due from banks with original maturity of less than three months3 | 22,647 | 8,188 | 5,050 | 35,885 | ||||||||||||
Total | 114,707 | 11,994 | 14,120 | 140,822 | ||||||||||||
365372
Financial informationNotes to the consolidated financial statements
Financial information |
Note 41 Supplemental guarantor information required under SEC rules (continued)
Supplemental guarantor consolidated income statement | Supplemental guarantor consolidated income statement | Supplemental guarantor consolidated income statement | ||||||||||||||||||||||||||||||||||||||
CHF million | UBS AG | UBS | Consolidating | UBS AG | UBS | Consolidating | ||||||||||||||||||||||||||||||||||
For the year ended 31 December 2008 | Parent Bank1 | Americas Inc. | Subsidiaries | entries | UBS Group | |||||||||||||||||||||||||||||||||||
For the year ended 31 December 2009 | Parent Bank1 | Americas Inc. | Subsidiaries | entries | UBS Group | |||||||||||||||||||||||||||||||||||
Operating income | ||||||||||||||||||||||||||||||||||||||||
Interest income | 49,699 | 21,343 | 27,354 | (32,717 | ) | 65,679 | 18,798 | 4,432 | 6,715 | (6,484 | ) | 23,461 | ||||||||||||||||||||||||||||
Interest expense | (48,686 | ) | (17,436 | ) | (26,282 | ) | 32,717 | (59,687 | ) | (16,860 | ) | (1,982 | ) | (4,657 | ) | 6,484 | (17,016 | ) | ||||||||||||||||||||||
Net interest income | 1,013 | 3,907 | 1,072 | 0 | 5,992 | 1,939 | 2,450 | 2,058 | 0 | 6,446 | ||||||||||||||||||||||||||||||
Credit loss (expense)/recovery | (861 | ) | (2,050 | ) | (85 | ) | 0 | (2,996 | ) | |||||||||||||||||||||||||||||||
Credit loss (expense) / recovery | (937 | ) | (897 | ) | 2 | 0 | (1,832 | ) | ||||||||||||||||||||||||||||||||
Net interest income after credit loss expense | 152 | 1,857 | 987 | 0 | 2,996 | 1,002 | 1,553 | 2,060 | 0 | 4,614 | ||||||||||||||||||||||||||||||
Net fee and commission income | 9,709 | 7,910 | 5,310 | 0 | 22,929 | 7,912 | 6,025 | 3,774 | 0 | 17,712 | ||||||||||||||||||||||||||||||
Net trading income | (8,129 | ) | (19,847 | ) | 2,156 | 0 | (25,820 | ) | (1,487 | ) | (423 | ) | 1,586 | 0 | (324 | ) | ||||||||||||||||||||||||
Income from subsidiaries | (19,882 | ) | 0 | 0 | 19,882 | 0 | 1,114 | 0 | 0 | (1,114 | ) | 0 | ||||||||||||||||||||||||||||
Other income | 2,836 | 1,058 | (3,202 | ) | 0 | 692 | 550 | (872 | ) | 921 | 0 | 599 | ||||||||||||||||||||||||||||
Total operating income | (15,314 | ) | (9,022 | ) | 5,251 | 19,882 | 796 | 9,092 | 6,282 | 8,341 | (1,114 | ) | 22,601 | |||||||||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||||||||||||||||
Personnel expenses | 8,738 | 5,169 | 2,355 | 0 | 16,262 | 8,577 | 5,566 | 2,400 | 0 | 16,543 | ||||||||||||||||||||||||||||||
General and administrative expenses | 3,918 | 4,604 | 1,976 | 0 | 10,498 | 2,351 | 2,512 | 1,385 | 0 | 6,248 | ||||||||||||||||||||||||||||||
Depreciation of property and equipment | 770 | 205 | 266 | 0 | 1,241 | 686 | 171 | 191 | 0 | 1,048 | ||||||||||||||||||||||||||||||
Impairment of goodwill | 0 | 341 | 0 | 0 | 341 | 0 | 0 | 1,123 | 0 | 1,123 | ||||||||||||||||||||||||||||||
Amortization of intangible assets | 1 | 93 | 119 | 0 | 213 | 3 | 96 | 101 | 0 | 200 | ||||||||||||||||||||||||||||||
Total operating expenses | 13,427 | 10,412 | 4,716 | 0 | 28,555 | 11,617 | 8,345 | 5,200 | 0 | 25,162 | ||||||||||||||||||||||||||||||
Operating profit from continuing operations before tax | (28,741 | ) | (19,434 | ) | 535 | 19,882 | (27,758 | ) | (2,526 | ) | (2,063 | ) | 3,141 | (1,114 | ) | (2,561 | ) | |||||||||||||||||||||||
Tax expense | (7,407 | ) | (4 | ) | 574 | 0 | (6,837 | ) | ||||||||||||||||||||||||||||||||
Tax expense / (benefit) | 210 | (549 | ) | (104 | ) | 0 | (443 | ) | ||||||||||||||||||||||||||||||||
Net profit from continuing operations | (21,335 | ) | (19,430 | ) | (39 | ) | 19,882 | (20,922 | ) | (2,736 | ) | (1,514 | ) | 3,245 | (1,114 | ) | (2,118 | ) | ||||||||||||||||||||||
Net profit from discontinued operations | 43 | 0 | 155 | 0 | 198 | 0 | 0 | (7 | ) | 0 | (7 | ) | ||||||||||||||||||||||||||||
Net profit | (21,292 | ) | (19,430 | ) | 116 | 19,882 | (20,724 | ) | (2,736 | ) | (1,514 | ) | 3,238 | (1,114 | ) | (2,125 | ) | |||||||||||||||||||||||
Net profit attributable to minority interests | 0 | (9 | ) | 577 | 0 | 568 | ||||||||||||||||||||||||||||||||||
Net profit attributable to non-controlling interests | 0 | (3 | ) | 613 | 0 | 610 | ||||||||||||||||||||||||||||||||||
Net profit attributable to UBS shareholders | (21,292 | ) | (19,421 | ) | (461 | ) | 19,882 | (21,292 | ) | (2,736 | ) | (1,511 | ) | 2,625 | (1,114 | ) | (2,736 | ) |
366373
Financial information
Note 41 Supplemental guarantor information required under SEC rules (continued)
Supplemental guarantor consolidated balance sheet | Supplemental guarantor consolidated balance sheet | Supplemental guarantor consolidated balance sheet | ||||||||||||||||||||||||||||||||||||||
CHF million | UBS AG | UBS | Consolidating | UBS AG | UBS | Consolidating | ||||||||||||||||||||||||||||||||||
As of 31 December 2008 | Parent Bank1 | Americas Inc. | Subsidiaries | entries | UBS Group | |||||||||||||||||||||||||||||||||||
As of 31 December 2009 | Parent Bank1 | Americas Inc. | Subsidiaries | entries | UBS Group | |||||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||||||
Cash and balances with central banks | 27,030 | 332 | 5,382 | 0 | 32,744 | 15,177 | 75 | 5,647 | 0 | 20,899 | ||||||||||||||||||||||||||||||
Due from banks | 111,563 | 11,490 | 192,206 | (250,808 | ) | 64,451 | 27,861 | 4,476 | 84,363 | (99,896 | ) | 16,804 | ||||||||||||||||||||||||||||
Cash collateral on securities borrowed | 48,874 | 109,783 | 16,914 | (52,674 | ) | 122,897 | 39,807 | 56,402 | 10,700 | (43,402 | ) | 63,507 | ||||||||||||||||||||||||||||
Reverse repurchase agreements | 206,087 | 79,178 | 145,851 | (206,468 | ) | 224,648 | 113,891 | 37,914 | 82,474 | (117,590 | ) | 116,689 | ||||||||||||||||||||||||||||
Trading portfolio assets | 145,012 | 47,558 | 57,230 | 22,038 | 271,838 | 122,801 | 18,224 | 48,739 | (1,727 | ) | 188,037 | |||||||||||||||||||||||||||||
Trading portfolio assets pledged as collateral | 71,736 | 12,655 | 1,531 | (45,706 | ) | 40,216 | 47,954 | 11,422 | 859 | (16,014 | ) | 44,221 | ||||||||||||||||||||||||||||
Positive replacement values | 862,459 | 18,215 | 293,896 | (320,470 | ) | 854,100 | 413,822 | 8,260 | 145,265 | (145,654 | ) | 421,694 | ||||||||||||||||||||||||||||
Cash collateral receivables on derivative instruments | 56,477 | 5,787 | 23,340 | (31,830 | ) | 53,774 | ||||||||||||||||||||||||||||||||||
Financial assets designated at fair value | 5,120 | 7,755 | 12,741 | (12,734 | ) | 12,882 | 5,831 | 5,876 | 11,283 | (12,768 | ) | 10,223 | ||||||||||||||||||||||||||||
Loans | 326,548 | 53,774 | 35,193 | (75,207 | ) | 340,308 | 265,689 | 41,871 | 15,955 | (57,039 | ) | 266,477 | ||||||||||||||||||||||||||||
Financial investments available-for-sale | 1,237 | 638 | 3,373 | 0 | 5,248 | 63,459 | 15,441 | 2,857 | 0 | 81,757 | ||||||||||||||||||||||||||||||
Accrued income and prepaid expenses | 3,684 | 2,700 | 2,666 | (2,909 | ) | 6,141 | 1,664 | 3,880 | 1,100 | (828 | ) | 5,816 | ||||||||||||||||||||||||||||
Investments in associates | 66,255 | 58 | 50 | (65,473 | ) | 892 | 61,551 | 24 | 49 | (60,754 | ) | 870 | ||||||||||||||||||||||||||||
Property and equipment | 5,093 | 971 | 642 | 0 | 6,706 | 4,920 | 791 | 501 | 0 | 6,212 | ||||||||||||||||||||||||||||||
Goodwill and intangible assets | 250 | 9,393 | 3,292 | 0 | 12,935 | 494 | 9,101 | 1,413 | 0 | 11,008 | ||||||||||||||||||||||||||||||
Deferred tax assets | 6,607 | 1,757 | 516 | 0 | 8,880 | 6,352 | 2,037 | 479 | 0 | 8,868 | ||||||||||||||||||||||||||||||
Other assets | 8,934 | 2,148 | 6,333 | (7,484 | ) | 9,931 | 21,241 | 4,352 | 2,169 | (4,078 | ) | 23,682 | ||||||||||||||||||||||||||||
Total assets | 1,896,489 | 358,405 | 777,816 | (1,017,895 | ) | 2,014,815 | 1,268,991 | 225,933 | 437,194 | (591,580 | ) | 1,340,538 | ||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||
Due to banks | 196,723 | 68,213 | 111,500 | (250,808 | ) | 125,628 | 79,245 | 51,091 | 1,482 | (99,896 | ) | 31,922 | ||||||||||||||||||||||||||||
Cash collateral on securities lent | 25,248 | 32,884 | 8,605 | (52,674 | ) | 14,063 | 17,662 | 22,993 | 10,742 | (43,402 | ) | 7,995 | ||||||||||||||||||||||||||||
Repurchase agreements | 30,988 | 140,197 | 137,844 | (206,468 | ) | 102,561 | 38,563 | 66,545 | 76,657 | (117,590 | ) | 64,175 | ||||||||||||||||||||||||||||
Trading portfolio liabilities | 51,034 | 17,086 | 903 | (6,592 | ) | 62,431 | 41,884 | 10,792 | 610 | (5,817 | ) | 47,469 | ||||||||||||||||||||||||||||
Negative replacement values | 855,005 | 16,792 | 300,537 | (320,470 | ) | 851,864 | 400,432 | 8,173 | 146,992 | (145,654 | ) | 409,943 | ||||||||||||||||||||||||||||
Cash collateral payables on derivative instruments | 49,328 | 9,847 | 38,752 | (31,830 | ) | 66,097 | ||||||||||||||||||||||||||||||||||
Financial liabilities designated at fair value | 88,505 | 1,716 | 35,973 | (24,648 | ) | 101,546 | 100,768 | 276 | 27,953 | (16,344 | ) | 112,653 | ||||||||||||||||||||||||||||
Due to customers | 422,688 | 70,242 | 48,018 | (75,207 | ) | 465,741 | 300,123 | 31,840 | 64,340 | (57,039 | ) | 339,263 | ||||||||||||||||||||||||||||
Accrued expenses and deferred income | 7,417 | 2,584 | 3,104 | (2,909 | ) | 10,196 | 5,155 | 2,269 | 2,093 | (828 | ) | 8,689 | ||||||||||||||||||||||||||||
Debt issued | 127,408 | 2,439 | 72,569 | (5,162 | ) | 197,254 | 126,965 | 493 | 12,242 | (8,348 | ) | 131,352 | ||||||||||||||||||||||||||||
Other liabilities | 12,598 | 4,313 | 33,571 | (7,484 | ) | 42,998 | 31,151 | 18,823 | 26,449 | (4,078 | ) | 72,344 | ||||||||||||||||||||||||||||
Total liabilities | 1,817,614 | 356,466 | 752,624 | (952,422 | ) | 1,974,282 | 1,191,276 | 223,142 | 408,312 | (530,826 | ) | 1,291,905 | ||||||||||||||||||||||||||||
Equity attributable to UBS shareholders | 78,875 | (1,097 | ) | 20,226 | (65,473 | ) | 32,531 | 77,715 | 2,770 | 21,283 | (60,754 | ) | 41,013 | |||||||||||||||||||||||||||
Equity attributable to minority interests | 0 | 3,036 | 4,966 | 0 | 8,002 | |||||||||||||||||||||||||||||||||||
Equity attributable to non-controlling interests | 0 | 21 | 7,599 | 0 | 7,620 | |||||||||||||||||||||||||||||||||||
Total equity | 78,875 | 1,939 | 25,192 | (65,473 | ) | 40,533 | 77,715 | 2,791 | 28,882 | (60,754 | ) | 48,633 | ||||||||||||||||||||||||||||
Total liabilities and equity | 1,896,489 | 358,405 | 777,816 | (1,017,895 | ) | 2,014,815 | 1,268,991 | 225,933 | 437,194 | (591,580 | ) | 1,340,538 |
367374
Financial informationNotes to the consolidated financial statements
Financial information |
Note 41 Supplemental guarantor information required under SEC rules (continued)
Supplemental guarantor consolidated statement of cash flows | Supplemental guarantor consolidated statement of cash flows | Supplemental guarantor consolidated statement of cash flows | ||||||||||||||||||||||||||||||
CHF million | UBS AG | UBS | UBS AG | UBS | ||||||||||||||||||||||||||||
For the year ended 31 December 2008 | Parent Bank1 | Americas Inc. | Subsidiaries | UBS Group | ||||||||||||||||||||||||||||
For the year ended 31 December 2009 | Parent Bank1 | Americas Inc. | Subsidiaries | UBS Group | ||||||||||||||||||||||||||||
Net cash flow from / (used in) operating activities | 69,799 | (438 | ) | 7,646 | 77,007 | 4,841 | (6,469 | ) | 56,126 | 54,497 | ||||||||||||||||||||||
Cash flow from / (used in) investing activities | ||||||||||||||||||||||||||||||||
Purchase of subsidiaries and associates | (1,502 | ) | 0 | 0 | (1,502 | ) | (42 | ) | 0 | 0 | (42 | ) | ||||||||||||||||||||
Disposal of subsidiaries and associates | 1,686 | 0 | 0 | 1,686 | 296 | 0 | 0 | 296 | ||||||||||||||||||||||||
Purchase of property and equipment | (819 | ) | (258 | ) | (140 | ) | (1,217 | ) | (656 | ) | (124 | ) | (75 | ) | (854 | ) | ||||||||||||||||
Disposal of property and equipment | 37 | 27 | 5 | 69 | 104 | 53 | 6 | 163 | ||||||||||||||||||||||||
Net (investment in) / divestment of financial investments available-for-sale | 330 | 156 | (1,198 | ) | (712 | ) | (22,319 | ) | (12,484 | ) | 14,677 | (20,127 | ) | |||||||||||||||||||
Net cash flow from / (used in) investing activities | (268 | ) | (75 | ) | (1,333 | ) | (1,676 | ) | (22,616 | ) | (12,555 | ) | 14,608 | (20,563 | ) | |||||||||||||||||
Cash flow from / (used in) financing activities | ||||||||||||||||||||||||||||||||
Net money market papers issued / (repaid) | (52,815 | ) | 914 | 11,264 | (40,637 | ) | (7,020 | ) | (1,596 | ) | (51,424 | ) | (60,040 | ) | ||||||||||||||||||
Net movements in treasury shares and own equity derivative activity | 623 | 0 | 0 | 623 | 673 | 0 | 0 | 673 | ||||||||||||||||||||||||
Capital issuance | 23,135 | 0 | 0 | 23,135 | 3,726 | 0 | 0 | 3,726 | ||||||||||||||||||||||||
Issuance of long-term debt, including financial liabilities designated at fair value | 91,961 | 0 | 11,126 | 103,087 | 64,956 | 0 | 2,106 | 67,062 | ||||||||||||||||||||||||
Repayment of long-term debt, including financial liabilities designated at fair value | (62,822 | ) | (14,500 | ) | (15,572 | ) | (92,894 | ) | (55,616 | ) | (1,548 | ) | (7,861 | ) | (65,024 | ) | ||||||||||||||||
Increase in minority interests | 0 | 842 | 819 | 1,661 | ||||||||||||||||||||||||||||
Increase in non-controlling interests | 0 | 0 | 3 | 3 | ||||||||||||||||||||||||||||
Dividends paid to / decrease in minority interests | 0 | (112 | ) | (420 | ) | (532 | ) | |||||||||||||||||||||||||
Dividends paid to / decrease in non-controlling interests | 0 | (8 | ) | (576 | ) | (583 | ) | |||||||||||||||||||||||||
Net activity in investments in subsidiaries | (11,978 | ) | 21,816 | (9,838 | ) | 0 | (4,032 | ) | 2,419 | 1,614 | 0 | |||||||||||||||||||||
Net cash flow from / (used in) financing activities | (11,896 | ) | 8,960 | (2,621 | ) | (5,557 | ) | 2,686 | (733 | ) | (56,136 | ) | (54,183 | ) | ||||||||||||||||||
Effects of exchange rate differences | (33,963 | ) | 442 | (5,665 | ) | (39,186 | ) | 5,886 | 574 | (933 | ) | 5,529 | ||||||||||||||||||||
Net increase / (decrease) in cash and cash equivalents | 23,672 | 8,889 | (1,973 | ) | 30,588 | (9,202 | ) | (19,183 | ) | 13,664 | (14,721 | ) | ||||||||||||||||||||
Cash and cash equivalents at the beginning of the year | 109,110 | 15,532 | 24,463 | 149,105 | 132,782 | 24,421 | 22,490 | 179,693 | ||||||||||||||||||||||||
Cash and cash equivalents at the end of the year | 132,782 | 24,421 | 22,490 | 179,693 | 123,580 | 5,238 | 36,154 | 164,973 | ||||||||||||||||||||||||
Cash and cash equivalents comprise: | ||||||||||||||||||||||||||||||||
Cash and balances with central banks | 27,030 | 332 | 5,382 | 32,744 | 15,177 | 75 | 5,647 | 20,899 | ||||||||||||||||||||||||
Money market papers2 | 62,777 | 19,875 | 4,080 | 86,732 | 78,025 | 3,714 | 16,694 | 98,432 | ||||||||||||||||||||||||
Due from banks with original maturity of less than three months | 42,975 | 4,214 | 13,028 | 60,217 | ||||||||||||||||||||||||||||
Due from banks with original maturity of less than three months3 | 30,378 | 1,450 | 13,814 | 45,642 | ||||||||||||||||||||||||||||
Total | 132,782 | 24,421 | 22,490 | 179,693 | 123,580 | 5,238 | 36,154 | 164,973 |
368375
Financial information
Note 41 Supplemental guarantor information required under SEC rules (continued)
Supplemental guarantor consolidated income statement | Supplemental guarantor consolidated income statement | Supplemental guarantor consolidated income statement | ||||||||||||||||||||||||||||||||||||||
CHF million | UBS AG | UBS | Consolidating | UBS AG | UBS | Consolidating | ||||||||||||||||||||||||||||||||||
For the year ended 31 December 2007 | Parent Bank1 | Americas Inc. | Subsidiaries | entries | UBS Group | |||||||||||||||||||||||||||||||||||
For the year ended 31 December 2008 | Parent Bank1 | Americas Inc. | Subsidiaries | entries | UBS Group | |||||||||||||||||||||||||||||||||||
Operating income | ||||||||||||||||||||||||||||||||||||||||
Interest income | 77,306 | 47,747 | 51,985 | (67,926 | ) | 109,112 | 49,699 | 21,343 | 27,354 | (32,717 | ) | 65,679 | ||||||||||||||||||||||||||||
Interest expense | (74,689 | ) | (46,420 | ) | (50,592 | ) | 67,926 | (103,775 | ) | (48,686 | ) | (17,436 | ) | (26,282 | ) | 32,717 | (59,687 | ) | ||||||||||||||||||||||
Net interest income | 2,617 | 1,327 | 1,393 | 0 | 5,337 | 1,013 | 3,907 | 1,072 | 0 | 5,992 | ||||||||||||||||||||||||||||||
Credit loss (expense) / recovery | 11 | (234 | ) | (15 | ) | 0 | (238 | ) | (861 | ) | (2,050 | ) | (85 | ) | 0 | (2,996 | ) | |||||||||||||||||||||||
Net interest income after credit loss expense | 2,628 | 1,093 | 1,378 | 0 | 5,099 | 152 | 1,857 | 987 | 0 | 2,996 | ||||||||||||||||||||||||||||||
Net fee and commission income | 12,852 | 10,119 | 7,663 | 0 | 30,634 | 9,709 | 7,910 | 5,310 | 0 | 22,929 | ||||||||||||||||||||||||||||||
Net trading income | 3,467 | (9,932 | ) | (1,888 | ) | 0 | (8,353 | ) | (8,129 | ) | (19,847 | ) | 2,156 | 0 | (25,820 | ) | ||||||||||||||||||||||||
Income from subsidiaries | 464 | 0 | 0 | (464 | ) | 0 | (19,882 | ) | 0 | 0 | 19,882 | 0 | ||||||||||||||||||||||||||||
Other income | (4,273 | ) | 8,369 | 245 | 0 | 4,341 | 2,836 | 1,058 | (3,202 | ) | 0 | 692 | ||||||||||||||||||||||||||||
Total operating income | 15,138 | 9,649 | 7,398 | (464 | ) | 31,721 | (15,314 | ) | (9,022 | ) | 5,251 | 19,882 | 796 | |||||||||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||||||||||||||||
Personnel expenses | 13,239 | 8,329 | 3,947 | 0 | 25,515 | 8,738 | 5,169 | 2,355 | 0 | 16,262 | ||||||||||||||||||||||||||||||
General and administrative expenses | 5,684 | 3,446 | (701 | ) | 0 | 8,429 | 3,918 | 4,604 | 1,976 | 0 | 10,498 | |||||||||||||||||||||||||||||
Depreciation of property and equipment | 930 | 138 | 175 | 0 | 1,243 | 770 | 205 | 266 | 0 | 1,241 | ||||||||||||||||||||||||||||||
Impairment of goodwill | 0 | 341 | 0 | 0 | 341 | |||||||||||||||||||||||||||||||||||
Amortization of intangible assets | 3 | 101 | 172 | 0 | 276 | 1 | 93 | 119 | 0 | 213 | ||||||||||||||||||||||||||||||
Total operating expenses | 19,856 | 12,014 | 3,593 | 0 | 35,463 | 13,427 | 10,412 | 4,716 | 0 | 28,555 | ||||||||||||||||||||||||||||||
Operating profit from continuing operations before tax | (4,718 | ) | (2,365 | ) | 3,805 | (464 | ) | (3,742 | ) | (28,741 | ) | (19,434 | ) | 535 | 19,882 | (27,758 | ) | |||||||||||||||||||||||
Tax expense | 794 | (486 | ) | 1,061 | 0 | 1,369 | ||||||||||||||||||||||||||||||||||
Tax expense / (benefit) | (7,407 | ) | (4 | ) | 574 | 0 | (6,837 | ) | ||||||||||||||||||||||||||||||||
Net profit from continuing operations | (5,512 | ) | (1,879 | ) | 2,744 | (464 | ) | (5,111 | ) | (21,335 | ) | (19,430 | ) | (39 | ) | 19,882 | (20,922 | ) | ||||||||||||||||||||||
Net profit from discontinued operations | 265 | 0 | 138 | 0 | 403 | 43 | 0 | 155 | 0 | 198 | ||||||||||||||||||||||||||||||
Net profit | (5,247 | ) | (1,879 | ) | 2,882 | (464 | ) | (4,708 | ) | (21,292 | ) | (19,430 | ) | 116 | 19,882 | (20,724 | ) | |||||||||||||||||||||||
Net profit attributable to minority interests | 0 | 18 | 521 | 0 | 539 | |||||||||||||||||||||||||||||||||||
Net profit attributable to non-controlling interests | 0 | (9 | ) | 577 | 0 | 568 | ||||||||||||||||||||||||||||||||||
Net profit attributable to UBS shareholders | (5,247 | ) | (1,897 | ) | 2,361 | (464 | ) | (5,247 | ) | (21,292 | ) | (19,421 | ) | (461 | ) | 19,882 | (21,292 | ) |
369376
Financial informationNotes to the consolidated financial statements
Financial information |
Note 41 Supplemental guarantor information required under SEC rules (continued)
Supplemental guarantor consolidated statement of cash flows | Supplemental guarantor consolidated statement of cash flows | Supplemental guarantor consolidated statement of cash flows | ||||||||||||||||||||||||||||||
CHF million | UBS AG | UBS | UBS AG | UBS | ||||||||||||||||||||||||||||
For the year ended 31 December 2007 | Parent Bank1 | Americas Inc. | Subsidiaries | UBS Group | ||||||||||||||||||||||||||||
For the year ended 31 December 2008 | Parent Bank1 | Americas Inc. | Subsidiaries | UBS Group | ||||||||||||||||||||||||||||
Net cash flow from / (used in) operating activities | (65,749 | ) | 19,670 | (5,999 | ) | (52,078 | ) | 69,799 | (438 | ) | 7,646 | 77,007 | ||||||||||||||||||||
Cash flow from / (used in) investing activities | ||||||||||||||||||||||||||||||||
Purchase of subsidiaries and associates | (2,337 | ) | 0 | 0 | (2,337 | ) | (1,502 | ) | 0 | 0 | (1,502 | ) | ||||||||||||||||||||
Disposal of subsidiaries and associates | 885 | 0 | 0 | 885 | 1,686 | 0 | 0 | 1,686 | ||||||||||||||||||||||||
Purchase of property and equipment | (1,022 | ) | (581 | ) | (307 | ) | (1,910 | ) | (819 | ) | (258 | ) | (140 | ) | (1,217 | ) | ||||||||||||||||
Disposal of property and equipment | 40 | 28 | 66 | 134 | 37 | 27 | 5 | 69 | ||||||||||||||||||||||||
Net (investment in) / divestment of financial investments available-for-sale | 4,027 | 34 | 1,920 | 5,981 | 330 | 156 | (1,198 | ) | (712 | ) | ||||||||||||||||||||||
Net cash flow from / (used in) investing activities | 1,593 | (519 | ) | 1,679 | 2,753 | (268 | ) | (75 | ) | (1,333 | ) | (1,676 | ) | |||||||||||||||||||
Cash flow from / (used in) financing activities | ||||||||||||||||||||||||||||||||
Net money market papers issued / (repaid) | 35,017 | (1,426 | ) | (919 | ) | 32,672 | (52,815 | ) | 914 | 11,264 | (40,637 | ) | ||||||||||||||||||||
Net movements in treasury shares and own equity derivative activity | (2,771 | ) | 0 | 0 | (2,771 | ) | 623 | 0 | 0 | 623 | ||||||||||||||||||||||
Dividends paid | (4,275 | ) | 0 | 0 | (4,275 | ) | ||||||||||||||||||||||||||
Capital issuance | 23,135 | 0 | 0 | 23,135 | ||||||||||||||||||||||||||||
Issuance of long-term debt, including financial liabilities designated at fair value | 105,197 | 1,022 | 4,655 | 110,874 | 91,961 | 0 | 11,126 | 103,087 | ||||||||||||||||||||||||
Repayment of long-term debt, including financial liabilities designated at fair value | (54,251 | ) | (7,022 | ) | (1,134 | ) | (62,407 | ) | (62,822 | ) | (14,500 | ) | (15,572 | ) | (92,894 | ) | ||||||||||||||||
Increase in minority interests | 0 | 32 | 1,062 | 1,094 | ||||||||||||||||||||||||||||
Increase in non-controlling interests | 0 | 842 | 819 | 1,661 | ||||||||||||||||||||||||||||
Dividends paid to / decrease in minority interests | 0 | (665 | ) | 46 | (619 | ) | ||||||||||||||||||||||||||
Dividends paid to / decrease in non-controlling interests | 0 | (112 | ) | (420 | ) | (532 | ) | |||||||||||||||||||||||||
Net activity in investments in subsidiaries | 871 | (6,627 | ) | 5,756 | 0 | (11,978 | ) | 21,816 | (9,838 | ) | 0 | |||||||||||||||||||||
Net cash flow from / (used in) financing activities | 79,788 | (14,686 | ) | 9,466 | 74,568 | (11,896 | ) | 8,960 | (2,621 | ) | (5,557 | ) | ||||||||||||||||||||
Effects of exchange rate differences | (9,070 | ) | (3,062 | ) | (96 | ) | (12,228 | ) | (33,963 | ) | 442 | (5,665 | ) | (39,186 | ) | |||||||||||||||||
Net increase / (decrease) in cash and cash equivalents | 6,562 | 1,403 | 5,050 | 13,015 | 23,672 | 8,889 | (1,973 | ) | 30,588 | |||||||||||||||||||||||
Cash and cash equivalents at the beginning of the year | 102,548 | 14,129 | 19,413 | 136,090 | 109,110 | 15,532 | 24,463 | 149,105 | ||||||||||||||||||||||||
Cash and cash equivalents at the end of the year | 109,110 | 15,532 | 24,463 | 149,105 | 132,782 | 24,421 | 22,490 | 179,693 | ||||||||||||||||||||||||
Cash and cash equivalents comprise: | ||||||||||||||||||||||||||||||||
Cash and balances with central banks | 8,530 | 109 | 10,154 | 18,793 | 27,030 | 332 | 5,382 | 32,744 | ||||||||||||||||||||||||
Money market papers2 | 60,266 | 13,202 | 3,747 | 77,215 | 62,777 | 19,875 | 4,080 | 86,732 | ||||||||||||||||||||||||
Due from banks with original maturity of less than three months | 40,314 | 2,221 | 10,562 | 53,097 | ||||||||||||||||||||||||||||
Due from banks with original maturity of less than three months3 | 42,975 | 4,214 | 13,028 | 60,217 | ||||||||||||||||||||||||||||
Total | 109,110 | 15,532 | 24,463 | 149,105 | 132,782 | 24,421 | 22,490 | 179,693 |
377
Financial information
Notes to the consolidated financial statements
Note 41 Supplemental guarantor information required under SEC rules (continued)
Guarantee of other securities
UBS AG, acting through wholly-owned US-domiciled finance subsidiaries, issued the following trust preferred securities:
USD billion, unless otherwise indicated | Outstanding as of 31.12.10 | |||||||
Issuing entity | Type of security | Date issued | Interest (%) | Amount | ||||
UBS Preferred Funding Trust II | Trust preferred securities1 | June 2001 | 7.247 | 0.5 | ||||
UBS Preferred Funding Trust IV | Floating rate non-cumulative trust preferred securities | May 2003 | one-month LIBOR+ 0.7% | 0.3 | ||||
UBS Preferred Funding Trust V | Trust preferred securities | May 2006 | 6.243 | 1.0 | ||||
USD billion, unless otherwise indicated | Outstanding as of 31.12.09 | |||||||||||||||
Issuing entity | Type of security | Date issued | Interest (%) | Amount | ||||||||||||
UBS Preferred Funding Trust I | Trust preferred securities | October 2000 | 8.622 | 1.5 | ||||||||||||
UBS Preferred Funding Trust II | Trust preferred securities1 | June 2001 | 7.247 | 0.5 | ||||||||||||
UBS Preferred Funding Trust IV | Floating rate non-cumulative trust | one-month LIBOR | ||||||||||||||
preferred securities | May 2003 | + 0.7 | 0.3 | |||||||||||||
UBS Preferred Funding Trust V | Trust preferred securities | May 2006 | 6.243 | 1.0 | ||||||||||||
UBS AG has fully and unconditionally guaranteed these securities. UBS’s obligations under the trust preferred securities guarantee are subordinated to the prior payment in full of the deposit liabilities of UBS and all other liabilities of
UBS. At 31 December 2009,2010, the amount of senior liabilities of UBS to which the holders of the subordinated debt securities would be subordinated is approximately CHF 1,2801,256 billion.
Guarantee to UBS Ltd.
UBS AG issued a guarantee to each counterparty of UBS Ltd. Under the guarantee UBS AG irrevocably and unconditionally guarantees, for the benefit of each counterparty, each and every obligation that UBS Ltd. entered into. UBS AG promises to pay to that counterpart on demand any unpaid balance of such liabilities under the terms of the guarantee.
370378
Financial information |
Financial information
UBS AG (Parent Bank)
UBS AG (Parent Bank)
Parent Bank review
Income statement
TheNet profit for the Parent Bank UBS AG net loss decreased bywas CHF 31,4486,123 million, from a lossan increase of CHF 36,48911,164 million, tocompared with a loss of CHF 5,041 million.million in 2009.
Balance sheet
In 2009, UBS’s overall balance sheet reduction initiatives led also to lower Parent Bank assets stood at CHF 863 billion on 31 December 2010, up slightly from CHF 848 billion on 31 December 2009. The total assets. In particularasset increased by CHF 15 billion due to UBS subsidiaries and third partythird-party banks in the Americas, European region,Asia and to lesser extent in Asia, reducedEurope increasing their assets and therefore their funding needs from the Parent Bank. The Parent Bank total assets stood at CHF 848 billion at 31 December 2009, a drop of CHF 342 billion from CHF 1,189 billion at 31 December 2008.
itive replacement valuesbank lending (up CHF 15 billion), liquid assets (up CHF 11 billion) due to larger holdings of cash and balances at central banks, and investments in associated companies (up CHF 2 billion) in the Americas and European region. These increases were partially offset by lower money market papers (down CHF 13319 billion), related to the aforementioned shift to financial investments, customer loans and collateral trading (down CHF 37 billion), trading balances (down CHF 2111 billion), and liquid assetspositive replacement values (down CHF 12 billion). These declines however were partially offset by higher positions in money market papers (up CHF 29 billion) and financial investments (up CHF 4 billion). Mortgage loans remained stable in 20092010 at CHF 141142 billion.
Interbank lending
During 2009,2010, interbank collateral trading increased by CHF 14 billion, due to higher trading volumes with UBS subsidiaries, in particular in Asia and Europe. Due from banks on time increased by CHF 4 billion, predominantly due to the higher funding needs of UBS bank subsidiaries in the Americas region. These increases were partially offset by due from banks on timedemand, which declined slightly by CHF 532 billion predominately due to lower funding needs of third party banks in the Americas and European region as well as UBS subsidiaries in the European region. Due from banks on demand declined by CHF 12 billion due to lower funding to bank subsidiaries in the European region. In addition, interbank collateral trading declined by CHF 100 billion, attributable to lower trading volumes and a shift into money market paper within UBS subsidiaries in the Americas, European region and Asia.
Customer lending
The customer loan drop ofCustomer loans decreased by CHF 3711 billion was theas a result of lower funding needs by clientsof UBS subsidiaries (non-banks) in the Americas region, as well as lower cash collateral requirements on derivative instruments in the Americas and in the European region, as well as UBS subsidiaries (non-banks), predominately in the Americas region.Europe.
Money market papers
The increasedecrease in money market papers iswas due to UBS’s strategic decision toa rebalance itsin our investment portfolio, which led to a shift from reverse repurchase agreements into money market papers available-for-sale.to financial investments. These instruments include highly liquid short-term securities issued by governments and government-controlled institutions in various currencies, mainly US dollar, euro and euro.British pound.
371379
Financial information
UBS AG (Parent Bank)
Parent Bankbank financial statements
Income statement
Income statement | ||||||||||||||||||||||||
For the year ended | % change from | For the year ended | % change from | |||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.08 | 31.12.10 | 31.12.09 | 31.12.09 | ||||||||||||||||||
Interest and discount income | 13,764 | 37,825 | (64 | ) | 10,853 | 13,764 | (21 | ) | ||||||||||||||||
Interest and dividend income from trading portfolio | 4,911 | 12,014 | (59 | ) | 4,441 | 4,911 | (10 | ) | ||||||||||||||||
Interest and dividend income from financial investments | 92 | 76 | 21 | 312 | 92 | 239 | ||||||||||||||||||
Interest expense | (16,901 | ) | (49,022 | ) | (66 | ) | (12,181 | ) | (16,901 | ) | (28 | ) | ||||||||||||
Net interest income | 1,866 | 893 | 109 | 3,426 | 1,866 | 84 | ||||||||||||||||||
Credit-related fees and commissions | 255 | 208 | 23 | 295 | 255 | 16 | ||||||||||||||||||
Fee and commission income from securities and investment business | 9,294 | 11,668 | (20 | ) | 8,433 | 9,294 | (9 | ) | ||||||||||||||||
Other fee and commission income | 624 | 610 | 2 | 645 | 624 | 3 | ||||||||||||||||||
Fee and commission expense | (2,264 | ) | (2,849 | ) | (21 | ) | (2,070 | ) | (2,264 | ) | (9 | ) | ||||||||||||
Net fee and commission income | 7,909 | 9,637 | (18 | ) | 7,304 | 7,909 | (8 | ) | ||||||||||||||||
Net trading income | (476 | ) | (9,466 | ) | 95 | 6,501 | (476 | ) | ||||||||||||||||
Net income from disposal of financial investments | 123 | 176 | (30 | ) | 228 | 123 | 85 | |||||||||||||||||
Income from investments in associated companies | 1,154 | 3,763 | (69 | ) | 1,703 | 1,154 | 48 | |||||||||||||||||
Income from real estate holdings | 26 | 29 | (10 | ) | 31 | 26 | 19 | |||||||||||||||||
Sundry income from ordinary activities | 4,761 | 3,384 | 41 | 3,632 | 4,761 | (24 | ) | |||||||||||||||||
Sundry ordinary expenses | (3,604 | ) | (2,767 | ) | 30 | (3,422 | ) | (3,604 | ) | (5 | ) | |||||||||||||
Other income from ordinary activities | 2,460 | 4,584 | (46 | ) | 2,172 | 2,460 | (12 | ) | ||||||||||||||||
Operating income | 11,759 | 5,648 | 108 | 19,402 | 11,759 | 65 | ||||||||||||||||||
Personnel expenses | 9,101 | 6,707 | 36 | 10,300 | 9,101 | 13 | ||||||||||||||||||
General and administrative expenses | 4,421 | 5,822 | (24 | ) | 4,502 | 4,421 | 2 | |||||||||||||||||
Operating expenses | 13,522 | 12,528 | 8 | 14,802 | 13,522 | 9 | ||||||||||||||||||
Operating profit | (1,763 | ) | (6,880 | ) | 74 | 4,601 | (1,763 | ) | ||||||||||||||||
Depreciation and write-offs on investments in associated companies and fixed assets | 2,405 | 26,900 | (91 | ) | 2,051 | 2,405 | (15 | ) | ||||||||||||||||
Allowances, provisions and losses | 1,432 | 3,071 | (53 | ) | 181 | 1,432 | (87 | ) | ||||||||||||||||
Profit before extraordinary items and taxes | (5,600 | ) | (36,852 | ) | 85 | 2,369 | (5,600 | ) | ||||||||||||||||
Extraordinary income | 688 | 1,002 | (31 | ) | 3,957 | 688 | 475 | |||||||||||||||||
Extraordinary expenses | (49 | ) | (482 | ) | (90 | ) | (178 | ) | (49 | ) | (263 | ) | ||||||||||||
Tax expense | (80 | ) | (157 | ) | (49 | ) | (25 | ) | (80 | ) | 69 | |||||||||||||
Profit/(loss) for the period | (5,041 | ) | (36,489 | ) | 86 | |||||||||||||||||||
Profit / (loss) for the period | 6,123 | (5,041 | ) |
372380
Balance sheet | ||||||||||||
% change from | ||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.08 | |||||||||
Assets | ||||||||||||
Liquid assets | 15,177 | 27,030 | (44 | ) | ||||||||
Money market papers | 91,988 | 62,777 | 47 | |||||||||
Due from banks | 191,002 | 355,679 | (46 | ) | ||||||||
Due from customers | 153,893 | 191,308 | (20 | ) | ||||||||
Mortgage loans | 140,671 | 141,328 | 0 | |||||||||
Trading balances in securities and precious metals | 138,160 | 158,741 | (13 | ) | ||||||||
Financial investments | 15,206 | 11,085 | 37 | |||||||||
Investments in associated companies | 19,225 | 22,001 | (13 | ) | ||||||||
Fixed assets | 4,986 | 5,032 | (1 | ) | ||||||||
Accrued income and prepaid expenses | 1,754 | 3,877 | (55 | ) | ||||||||
Positive replacement values | 68,977 | 201,801 | (66 | ) | ||||||||
Other assets | 6,504 | 8,697 | (25 | ) | ||||||||
Total assets | 847,543 | 1,189,356 | (29 | ) | ||||||||
Total subordinated assets | 2,617 | 3,924 | (33 | ) | ||||||||
Total amounts receivable from Group companies | 242,617 | 435,721 | (44 | ) | ||||||||
Liabilities and equity | ||||||||||||
Money market papers issued | 45,043 | 52,063 | (13 | ) | ||||||||
Due to banks | 184,010 | 292,730 | (37 | ) | ||||||||
Due to customers on savings and deposit accounts | 72,985 | 61,872 | 18 | |||||||||
Other amounts due to customers | 287,156 | 388,338 | (26 | ) | ||||||||
Medium-term bonds | 2,967 | 3,150 | (6 | ) | ||||||||
Bonds issued and loans from central mortgage institutions | 155,907 | 143,589 | 9 | |||||||||
Accruals and deferred income | 7,520 | 7,895 | (5 | ) | ||||||||
Negative replacement values | 54,468 | 193,108 | (72 | ) | ||||||||
Other liabilities | 6,641 | 14,181 | (53 | ) | ||||||||
Allowances and provisions | 2,277 | 2,724 | (16 | ) | ||||||||
Share capital | 356 | 293 | 22 | |||||||||
General statutory reserve | 30,377 | 40,910 | (26 | ) | ||||||||
Reserve for own shares | 835 | 2,877 | (71 | ) | ||||||||
Other reserves | 2,042 | 22,115 | (91 | ) | ||||||||
Profit/(loss) for the period | (5,041 | ) | (36,489 | ) | 86 | |||||||
Total liabilities and equity | 847,543 | 1,189,356 | (29 | ) | ||||||||
Total subordinated liabilities | 19,410 | 21,228 | (9 | ) | ||||||||
Total amounts payable to Group companies | 145,268 | 271,434 | (46 | ) | ||||||||
Financial information |
Balance sheet
% change from | ||||||||||||||||
CHF million | 31.12.101 | 31.12.102 | 31.12.09 | 31.12.09 | ||||||||||||
Assets | ||||||||||||||||
Liquid assets | 26,372 | 26,372 | 15,177 | 74 | ||||||||||||
Money market papers | 73,049 | 73,049 | 91,988 | (21 | ) | |||||||||||
Due from banks | 206,162 | 206,162 | 191,002 | 8 | ||||||||||||
Due from customers | 142,634 | 142,634 | 153,893 | (7 | ) | |||||||||||
Mortgage loans | 141,708 | 141,708 | 140,671 | 0 | ||||||||||||
Trading balances in securities and precious metals | 139,685 | 139,685 | 138,160 | 1 | ||||||||||||
Financial investments | 34,788 | 34,788 | 15,206 | 129 | ||||||||||||
Investments in associated companies | 21,075 | 21,075 | 19,225 | 10 | ||||||||||||
Fixed assets | 4,557 | 4,557 | 4,986 | (9 | ) | |||||||||||
Accrued income and prepaid expenses | 1,643 | 1,643 | 1,754 | (6 | ) | |||||||||||
Positive replacement values | 65,449 | 65,449 | 68,977 | (5 | ) | |||||||||||
Other assets | 6,373 | 6,373 | 6,504 | (2 | ) | |||||||||||
Total assets | 863,495 | 863,495 | 847,543 | 2 | ||||||||||||
Total subordinated assets | 2,287 | 2,287 | 2,617 | (13 | ) | |||||||||||
Total amounts receivable from Group companies | 254,762 | 254,762 | 242,617 | 5 | ||||||||||||
Liabilities and equity | ||||||||||||||||
Money market papers issued | 50,729 | 50,729 | 45,043 | 13 | ||||||||||||
Due to banks | 192,511 | 192,511 | 184,010 | 5 | ||||||||||||
Due to customers on savings and deposit accounts | 78,322 | 78,322 | 72,985 | 7 | ||||||||||||
Other amounts due to customers | 260,404 | 260,404 | 287,156 | (9 | ) | |||||||||||
Medium-term bonds | 2,605 | 2,605 | �� | 2,967 | (12 | ) | ||||||||||
Bonds issued and loans from central mortgage institutions | 89,860 | 89,860 | 155,907 | (42 | ) | |||||||||||
Financial liabilities designated at fair value | 79,847 | 79,847 | ||||||||||||||
Accruals and deferred income | 7,634 | 7,634 | 7,520 | 2 | ||||||||||||
Negative replacement values | 60,723 | 60,723 | 54,468 | 11 | ||||||||||||
Other liabilities | 4,717 | 4,717 | 6,641 | (29 | ) | |||||||||||
Allowances and provisions | 1,424 | 1,424 | 2,277 | (37 | ) | |||||||||||
Share capital | 383 | 383 | 356 | 8 | ||||||||||||
General statutory reserve | 31,904 | 27,379 | 30,377 | (10 | ) | |||||||||||
thereof capital contribution reserves3 | 42,091 | 42,091 | 41,689 | 1 | ||||||||||||
thereof retained earnings | (10,187 | ) | (14,712 | ) | (11,312 | ) | (30 | ) | ||||||||
Reserve for own shares | 432 | 432 | 835 | (48 | ) | |||||||||||
thereof capital contribution reserves3 | 432 | 432 | 835 | (48 | ) | |||||||||||
Other reserves | 2,000 | 402 | 2,042 | (80 | ) | |||||||||||
thereof retained earnings | 2,000 | 402 | 2,042 | (80 | ) | |||||||||||
Profit / (loss) for the period | 6,123 | (5,041 | ) | |||||||||||||
Total liabilities and equity | 863,495 | 863,495 | 847,543 | 2 | ||||||||||||
Total subordinated liabilities | 14,689 | 14,689 | 19,410 | (24 | ) | |||||||||||
Total amounts payable to Group companies | 129,243 | 129,243 | 145,268 | (11 | ) | |||||||||||
381
Financial information
UBS AG (Parent Bank)
Statement of appropriation of retained earnings
The Board of Directors proposes that the Annual General Meeting (AGM) on 1428 April 20102011 approves the following appropriation:
CHF million | ||||
402 | ||||
Profit / (loss) for the financial year | ||||
Total for appropriation | ||||
Appropriation to other reserves | ||||
Appropriation to general statutory | ||||
Total appropriation | ||||
373382
Financial informationUBS AG (Parent Bank)
Financial information |
Notes to the Parent Bank financial statements
Accounting policies
The Parent Bank Financial Statements are prepared in accordance with Swiss Federal banking law. The accounting policies are principally the same as for the Group Financial Statements outlined in Note“Note 1, Summary of Significant Accounting Policies.” Major differences between the Swiss Federal banking law requirements and International Financial Reporting Standards are described in Note 40 to the consolidated financial statements. The accounting policies applied for the statutory accounts of the Parent Bank are discussed below. The risk management of UBS AG is described in the context of the risk management for UBS Group. ReferFor the statutory required risk assessment refer to the “Risk and treasury management” section.section of this report. For a description of the business activities refer to the “UBS business divisions and Corporate Center” section of this report.
Treasury shares
Treasury shares are own equity instruments held by an entity. Under Swiss law, treasury shares are recognized in the balance sheet as trading balances.balances or asFinancial investments. Short positions in treasury shares are recognized in “DueDue to banks”. banks.Treasury shares recognized as trading balances and short positions in treasury shares are measured at fair value with unrealized gains or losses from remeasurement to fair value included in the income statement. Treasury shares recognized asFinancial investmentsare valued according to the principles of lower of cost or market value. Realized gains and losses on the sale or acquisition of treasury shares are recognized in the income statement.
Foreign currency translation
Assets and liabilities of foreign branches are translated into CHF at the spot exchange rate at the balance sheet date. Income and expense items are translated at weighted average exchange rates for the period. Gains resulting fromAny exchange differences arising on the translation of each of these foreign branches are credited to a provision account (other liabilities). Losses resulting from exchange differences are debited firstlyrecognized in the income statement.1
The main currency translation rates used by the Parent Bank can be found in Note 39 to the aforementioned provision account until such provision is fully utilized, and secondly to profit and loss.consolidated financial statements.
Investments in associated companies
Investments in associated companies are equity interests which are held for the purpose of the Parent Bank’s business activities or for strategic reasons. They include all directly held subsidiaries andthrough which UBS AG conducts its banking business on a global basis. The investments are carried at cost less impairment. The carrying value is tested for impairment when indications for a decrease in value exist, which include incurrence of significant operating losses or a severe depreciation of the currency in which the investment is denominated. If an investment in associate is impaired, its value is generally written down to the net asset value. Subsequent recoveries in value are recognized up to the original cost value based on either the increased net asset value or to a value above the net asset value if applicable.in the opinion of management forecasts of future profitability provide sufficient evidence that a carrying value above net asset value is supported. Management may exercise its discretion as to what extent and in which period a recovery in value is recognized.
Deferred taxes
Deferred tax assets are not recognized in the Parent Bank Financial Statements. DeferredStatements under Swiss Federal banking law. However, deferred tax liabilities aremay be recognized for all taxable temporary differences. The change in the deferred tax liability balance is recognized in profit or loss.
Equity participation and other compensation plans
Equity participation plans
383
Financial information
UBS AG (Parent Bank)
awards are classified as liabilities. The employee share option awards are remeasured to fair value at each balance sheet date. However, for employee share options that UBS intends to settle in shares from conditional capital, there is no impact on the income statement and no liability is recognized. Upon exercise of employee options, cash received for payment of the strike price is credited against share capital and general statutory reserve.
Other compensation plans
Changes in accounting policies, comparability and
other adjustments
Equity participation and other compensation plans
Own bonds held for trading and market making activities
as trading assets. Gains and losses from trading and market making activities are reported in trading income.
Financial liabilities designated at fair value
Capital contribution reserves
374384
Financial information |
Additional income statement information
Financial informationNet trading income
For the year ended | % change from | |||||||||||
CHF million | 31.12.10 | 31.12.09 | 31.12.09 | |||||||||
Investment Bank equities | 1,890 | 3,005 | (37 | ) | ||||||||
Investment Bank fixed income, currencies and commodities | 2,326 | (4,496 | ) | |||||||||
Other business divisions | 2,285 | 1,014 | 125 | |||||||||
Total | 6,501 | (476 | ) | |||||||||
Extraordinary income and expenses
ChangesExtraordinary income2010 was mainly comprised of the following items: merger gains and gains from sale of subsidiaries and associated companies of CHF 601 million; reversal of write-downs of investments in accounting policies, comparability and other adjustments
Nettingassociated companies of cash collateral against replacement values
CHF 28.3 billion inPositive replacement values,a decreasefair value through profit or loss according to FINMA circular 08/2, (iii) financial investments carried at lower of approximately CHF 29.4 billion inNegative replacement valuescost or market value, and (iv) miscellaneous other valuation adjustments; and a corresponding decrease release of other liabilities of CHF 227 million.
Subordinated liabilities
375385
Financial information
UBS AG (Parent Bank)
Additional income statement information
Net trading income | ||||||||||||
For the year ended | % change from | |||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.08 | |||||||||
Investment Bank equities | 3,005 | 3,930 | (24 | ) | ||||||||
Investment Bank fixed income, currencies and commodities1 | (4,496 | ) | (12,678 | ) | 65 | |||||||
Other business divisions1 | 1,014 | (718 | ) | |||||||||
Total | (476 | ) | (9,466 | ) | 95 | |||||||
Extraordinary income and expenses
Extraordinary income includes gains from sale of subsidiaries and associated companies of CHF 393 million in 2009, whereas 2008 included a gain on sale of Bank of China investment of approximately CHF 360 million. Further, 2009 includes write-up of investments in associated companies of CHF 265 million (2008: CHF 30 million). Amounts in 2008 included a
release on reserves on investments in subsidiaries of CHF 490 million and a release of provisions of CHF 72 million.
376
Additional balance sheet information
Allowances and provisions1 | ||||||||||||||||||||||||
Provisions applied | Recoveries, | |||||||||||||||||||||||
in accordance | doubtful interest, | |||||||||||||||||||||||
Balance at | with their | currency translation | Provisions released | New provisions | Balance at | |||||||||||||||||||
CHF million | 31.12.08 | specified purpose | differences | to income | charged to income | 31.12.09 | ||||||||||||||||||
Default risks (credit and country risk) | 1,556 | (1,408 | ) | 196 | (493 | ) | 1,405 | 1,256 | ||||||||||||||||
Litigation risks | 1,078 | (280 | ) | (100 | ) | (22 | ) | 134 | 810 | |||||||||||||||
Operational risks | 157 | (203 | ) | 0 | (57 | ) | 145 | 42 | ||||||||||||||||
Retirement benefit plans | 94 | (29 | ) | (1 | ) | 0 | 32 | 96 | ||||||||||||||||
Restructuring provisions | 74 | (205 | ) | 45 | (3 | ) | 303 | 214 | ||||||||||||||||
Deferred taxes | 36 | 0 | (15 | ) | (12 | ) | 0 | 9 | ||||||||||||||||
Other | 1,259 | (522 | ) | 2 | (173 | ) | 458 | 1,024 | ||||||||||||||||
Total allowances and provisions | 4,254 | (2,647 | ) | 127 | (760 | ) | 2,477 | 3,451 | ||||||||||||||||
Allowances deducted from assets | 1,530 | 1,174 | ||||||||||||||||||||||
Total provisions as per balance sheet | 2,724 | 2,277 | ||||||||||||||||||||||
Statement of shareholders' equity | ||||||||||||||||||||||||
Total | ||||||||||||||||||||||||
shareholders' | ||||||||||||||||||||||||
General statutory | General statutory | equity (before | ||||||||||||||||||||||
reserves: | reserves: | Reserves for own | distribution | |||||||||||||||||||||
CHF million | Share capital | Share premium | Retained earnings | shares | Other reserves | of profit | ||||||||||||||||||
As of 31.12.07 and 1.1.08 | 207 | 6,303 | 2,472 | 9,441 | 15,567 | 33,990 | ||||||||||||||||||
Capital increase1 | 86 | 15,911 | (15 | ) | 15,982 | |||||||||||||||||||
Capital increase related to MCNs | 16,223 | 16,223 | ||||||||||||||||||||||
Increase in reserves | 0 | |||||||||||||||||||||||
Prior year dividend | 0 | |||||||||||||||||||||||
Profit/(loss) for the period | (36,489 | ) | (36,489 | ) | ||||||||||||||||||||
Changes in reserves for own shares | (6,564 | ) | 6,564 | 0 | ||||||||||||||||||||
Transfers | (11,901 | ) | (2,472 | ) | 14,373 | 0 | ||||||||||||||||||
As of 31.12.08 and 1.1.09 | 293 | 26,536 | 0 | 2,877 | 0 | 29,706 | ||||||||||||||||||
Capital increase | 30 | 3,783 | 3,813 | |||||||||||||||||||||
Capital increase related to MCNs | 33 | 58 | 91 | |||||||||||||||||||||
Increase in reserves | 0 | |||||||||||||||||||||||
Prior year dividend | 0 | |||||||||||||||||||||||
Profit/(loss) for the period | (5,041 | ) | (5,041 | ) | ||||||||||||||||||||
Changes in reserves for own shares | (2,042 | ) | 2,042 | 0 | ||||||||||||||||||||
Transfers2 | (2,999 | ) | 2,999 | 0 | ||||||||||||||||||||
As of 31.12.09 | 356 | 27,378 | 0 | 835 | 0 | 28,569 | ||||||||||||||||||
377
Financial informationUBS AG (Parent Bank)
Share capital | ||||||||||||||||
Par value | Ranking for dividends | |||||||||||||||
No. of shares | Capital in CHF | No. of shares | Capital in CHF | |||||||||||||
As of 31.12.09 | ||||||||||||||||
Issued and paid up | 3,558,112,753 | 355,811,275 | 3,558,112,753 | 355,811,275 | ||||||||||||
Conditional share capital | 527,773,646 | 52,777,365 | ||||||||||||||
As of 31.12.08 | ||||||||||||||||
Issued and paid up | 2,932,580,549 | 293,258,055 | 2,932,580,549 | 293,258,055 | ||||||||||||
Conditional share capital | 792,844,711 | 79,284,471 | ||||||||||||||
On 25 June 2009, UBS increased its share capital by issuing 293,258,050 new registered shares. The shares were placed with a small number of large institutional investors. The shares were issued out of authorized capital which had been approved at the Annual General Meeting of shareholders (AGM) on 15 April 2009.
Conditional share capital
On 31 December 2009, a maximum of 29,350 shares could have been issued against the future exercise of options from former PaineWebber employee option plans and 149,994,296 shares could have been issued to fund UBS’s employee share option programs. In addition, conditional capital of up to 277,750,000 shares was available for the UBS share delivery obligation due to the issuance of the March 2008 mandatory convertible notes (MCNs) and conditional capital of up to 100,000,000 shares is available in connection with the transaction with the Swiss National Bank (SNB).
378
Off-balance-sheet and other information
Assets pledged or assigned as security for own obligations and assets subject to reservation of title | ||||||||||||||||||||||||
31.12.09 | 31.12.08 | Change in % | ||||||||||||||||||||||
CHF million | Book value | Effective liability | Book value | Effective liability | Book value | Effective liability | ||||||||||||||||||
Money market papers | 42,898 | 1,368 | 7,429 | 1,300 | 477 | 5 | ||||||||||||||||||
Mortgage loans1 | 21,741 | 12,321 | 3,699 | 2,418 | 488 | 410 | ||||||||||||||||||
Securities | 47,289 | 31,862 | 50,223 | 37,083 | (6 | ) | (14 | ) | ||||||||||||||||
Other | 8,578 | 0 | 8,149 | 0 | 5 | |||||||||||||||||||
Total | 120,506 | 45,551 | 69,500 | 40,801 | 73 | 12 | ||||||||||||||||||
31.12.10 | 31.12.09 | Change in % | ||||||||||||||||||||||
CHF million | Book value | Effective liability | Book value | Effective liability | Book value | Effective liability | ||||||||||||||||||
Money market papers1 | 31,575 | 7,876 | 42,898 | 1,368 | (26 | ) | 476 | |||||||||||||||||
Mortgage loans2 | 27,119 | 15,706 | 21,741 | 12,321 | 25 | 27 | ||||||||||||||||||
Securities1 | 60,989 | 26,308 | 47,289 | 31,862 | 29 | (17 | ) | |||||||||||||||||
Other | 5,790 | 0 | 8,578 | 0 | (33 | ) | ||||||||||||||||||
Total | 125,473 | 49,890 | 120,506 | 45,551 | 4 | 10 | ||||||||||||||||||
Financial assets are mainly pledged in securities borrowing and lending transactions, in repurchase and reverse repurchase transactions, under collateralized credit lines with central banks, against loans from mortgage institutions, in con-
nectionconnection with derivative transactions, as security deposits for stock exchanges and clearinghouse memberships or transferred for security purposepurposes in connection with the issuance of covered bonds.
Allowances and provisions
Provisions applied | Recoveries, | |||||||||||||||||||||||
in accordance | doubtful interest, | |||||||||||||||||||||||
Balance at | with their | currency translation | Provisions released | New provisions | Balance at | |||||||||||||||||||
CHF million | 31.12.09 | specified purpose | differences | to income | charged to income | 31.12.10 | ||||||||||||||||||
Default risks (credit and country risk) | 1,256 | (383 | ) | 90 | (378 | ) | 380 | 964 | ||||||||||||||||
Litigation risks | 810 | (764 | ) | (29 | ) | (37 | ) | 170 | 151 | |||||||||||||||
Operational risks | 42 | (20 | ) | (6 | ) | (7 | ) | 16 | 25 | |||||||||||||||
Retirement benefit plans | 96 | (30 | ) | (13 | ) | 37 | 90 | |||||||||||||||||
Restructuring provisions | 214 | (112 | ) | (13 | ) | (32 | ) | 21 | 80 | |||||||||||||||
Deferred taxes | 9 | 59 | (64 | ) | 4 | |||||||||||||||||||
Other | 1,024 | (75 | ) | (28 | ) | (74 | ) | 137 | 982 | |||||||||||||||
Total allowances and provisions | 3,451 | (1,384 | ) | 60 | (592 | ) | 761 | 2,296 | ||||||||||||||||
Allowances deducted from assets | 1,174 | 872 | ||||||||||||||||||||||
Total provisions as per balance sheet | 2,277 | 1,424 | ||||||||||||||||||||||
386
Financial information |
Statement of shareholders’ equity
Total shareholders' | ||||||||||||||||||||||||
Share | General statutory | Reserves for | Other | Profit / (loss) | equity (before | |||||||||||||||||||
CHF million | capital | reserves | own shares | reserves | for the period | distribution of profit) | ||||||||||||||||||
As of 31.12.08 and 1.1.09 | 293 | 40,910 | 2,877 | 22,115 | (36,489 | ) | 29,706 | |||||||||||||||||
Capital increase | 30 | 3,783 | 3,813 | |||||||||||||||||||||
Capital increase related to mandatory convertible notes (MCNs) | 33 | 58 | 91 | |||||||||||||||||||||
Profit / (loss) allocation | (14,374 | ) | (22,115 | ) | 36,489 | 0 | ||||||||||||||||||
Prior year dividend | 0 | |||||||||||||||||||||||
Profit / (loss) for the period | (5,041 | ) | (5,041 | ) | ||||||||||||||||||||
Changes in reserves for own shares | (2,042 | ) | 2,042 | 0 | ||||||||||||||||||||
As of 31.12.09 and 1.1.10 | 356 | 30,377 | 835 | 2,042 | (5,041 | ) | 28,569 | |||||||||||||||||
Capital increase | 1 | 1 | ||||||||||||||||||||||
Capital increase related to mandatory convertible notes (MCNs) | 27 | �� | 27 | |||||||||||||||||||||
Profit / (loss) allocation | (2,999 | ) | (2,042 | ) | 5,041 | 0 | ||||||||||||||||||
Prior year dividend | 0 | |||||||||||||||||||||||
Profit / (loss) for the period | 6,123 | 6,123 | ||||||||||||||||||||||
Changes in reserves for own shares | (402 | ) | 402 | 0 | ||||||||||||||||||||
As of 31.12.10 | 383 | 27,379 | 432 | 402 | 6,123 | 34,719 | ||||||||||||||||||
Share capital and significant shareholders
Par value | Ranking for dividends | |||||||||||||||
No. of shares | Capital in CHF | No. of shares | Capital in CHF | |||||||||||||
As of 31.12.10 | ||||||||||||||||
Issued and paid up | 3,830,840,513 | 383,084,051 | 3,830,840,513 | 383,084,051 | ||||||||||||
Conditional share capital | 629,920,712 | 62,992,071 | ||||||||||||||
As of 31.12.09 | ||||||||||||||||
Issued and paid up | 3,558,112,753 | 355,811,275 | 3,558,112,753 | 355,811,275 | ||||||||||||
Conditional share capital | 527,773,646 | 52,777,365 | ||||||||||||||
Shares issued
On 5 March 2010, the mandatory convertible notes (MCNs) with a notional value of CHF 13 billion issued in March 2008 to the Government of Singapore Investment Corporation Pte. Ltd. and an investor from the Middle East were converted into UBS shares. The notes were converted at a price of CHF 47.68 per share. As a result, UBS issued 272,651,005 new shares with a nominal value of CHF 0.10 each from existing conditional capital. The MCNs were treated as equity instruments and recognized inShare premium.
Conditional share capital
On 31 December 2010, 149,920,712 shares were available for issue to fund UBS’s employee share option programs. In addition, conditional capital of up to 100,000,000 shares was available in connection with the Swiss National Bank (SNB) transaction. Furthermore, on 14 April 2010 the annual general meeting of UBS AG approved the creation of conditional capital up to a maximum amount of 380,000,000 shares for conversion rights / warrants
granted in connection with the issuance of bonds or similar financial instruments.
Significant shareholders
According to disclosure notifications filed with UBS AG and the SIX Swiss Exchange, on 8 June 2010, The Capital Group Companies, Inc., Los Angeles, disclosed a holding of 4.90% of the total share capital of UBS AG. On 12 March 2010, the Government of Singapore, Singapore, as beneficial owner, disclosed under the Swiss Stock Exchange Act, a holding by the Government of Singapore Investment Corp. of 6.45% of the total share capital of UBS AG. On 17 December 2009, BlackRock Inc., New York, disclosed according to the Swiss Stock Exchange Act, a holding of 3.45% of the total share capital of UBS AG (3.21% of the total share capital as of 11 March 2010).
387
Financial information
UBS AG (Parent Bank)
Shareholders registered in the UBS shares register with 3% or more of shares issued
31.12.10 | 31.12.09 | |||||||||||||||||||||||
Total | Total | |||||||||||||||||||||||
nominal | nominal | |||||||||||||||||||||||
value CHF | value CHF | |||||||||||||||||||||||
Quantity | million | Share % | Quantity | million | Share % | |||||||||||||||||||
Chase Nominees Ltd, London | 409,822,353 | 41 | 10.70 | 413,857,854 | 41 | 11.63 | ||||||||||||||||||
DTC (Cede & Co.), New York1 | 280,355,684 | 28 | 7.32 | 299,489,003 | 30 | 8.42 | ||||||||||||||||||
Government of Singapore Investment Corp., Singapore | 245,481,682 | 25 | 6.41 | less than 3 | ||||||||||||||||||||
Nortrust Nominees Ltd, London | 145,038,407 | 15 | 3.79 | 109,365,321 | 11 | 3.07 | ||||||||||||||||||
è | Refer to the “Corporate governance and compensation” section of this report for more information on significant shareholders’ and shareholders participation rights |
Other assets
CHF million | 31.12.10 | 31.12.09 | ||||||
Settlement and clearing accounts | 499 | 592 | ||||||
VAT and other tax receivables | 203 | 128 | ||||||
Prepaid pension costs | 2,839 | 2,664 | ||||||
Other receivables | 2,832 | 3,120 | ||||||
Total other assets | 6,373 | 6,504 | ||||||
Other liabilities
CHF million | 31.12.10 | 31.12.09 | ||||||
VAT and other tax payables | 444 | 484 | ||||||
Settlement and clearing accounts | 581 | 883 | ||||||
Deferral position for hedging instruments | 1,443 | 782 | ||||||
Other payables | 2,250 | 4,493 | ||||||
Total other liabilities | 4,717 | 6,641 | ||||||
388
Commitments and contingent liabilities | ||||||||||||||||||||||||
% change from | % change from | |||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.08 | 31.12.10 | 31.12.09 | 31.12.09 | ||||||||||||||||||
Contingent liabilities | 139,319 | 286,451 | (51 | ) | 102,820 | 119,030 | (14 | ) | ||||||||||||||||
Irrevocable commitments | 73,270 | 68,660 | 7 | 106,304 | 113,027 | (6 | ) | |||||||||||||||||
Irrevocable securities delivery obligations related to forward starting repos and securities lending transactions | 27,215 | 18,623 | 46 | |||||||||||||||||||||
Liabilities for calls on shares and other equities | 151 | 145 | 4 | 168 | 151 | 11 | ||||||||||||||||||
Confirmed credits | 2,083 | 2,079 | 0 | |||||||||||||||||||||
Documentary credits | 4,278 | 2,083 | 105 |
Contingent liabilitiesinclude indemnities and guarantees issued by UBS AG for the benefit of subsidiaries and creditors of subsidiaries. In instances where the indemnity amount issued by the Parent Bank is not defined, the indemnity relates to the solvency or minimum capitalization of a subsidiary, and therefore no amount is included in the table above. This policy has been applied since 2010. The prior year amounts have been adjusted to conform to the current year’s presentation.
From 2010 onwards, collateralized forward starting transactions are presented in this table; the comparative period has been adjusted accordingly. Irrevocable commitments include cash payment obligations from forward starting reverse repos and securities borrowing transactions. Irrevocable securities delivery obligations related to forward starting repos and securities lending transactions are presented on a separate line.
Derivative instruments1
31.12.10 | 31.12.09 | |||||||||||||||||||||||
Notional | Notional | |||||||||||||||||||||||
amount | amount | |||||||||||||||||||||||
CHF million | PRV2 | NRV3 | CHF billion | PRV2 | NRV3 | CHF billion4 | ||||||||||||||||||
Interest rate contracts | 176,918 | 166,919 | 32,963 | 187,506 | 174,632 | 34,726 | ||||||||||||||||||
Credit derivative contracts | 57,812 | 50,578 | 2,345 | 80,008 | 70,586 | 2,525 | ||||||||||||||||||
Foreign exchange contracts | 113,514 | 122,843 | 6,561 | 97,925 | 101,800 | 6,051 | ||||||||||||||||||
Precious metal contracts | 3,784 | 3,755 | 71 | 3,442 | 3,378 | 78 | ||||||||||||||||||
Equity / Index contracts | 16,281 | 19,455 | 483 | 17,314 | 21,353 | 451 | ||||||||||||||||||
Commodities contracts, excluding precious metals contracts | 894 | 927 | 41 | 761 | 697 | 31 | ||||||||||||||||||
Total derivative instruments | 369,203 | 364,477 | 42,463 | 386,956 | 372,447 | 43,862 | ||||||||||||||||||
Replacement value netting | 303,754 | 303,754 | 317,979 | 317,979 | ||||||||||||||||||||
Replacement values after netting | 65,449 | 60,723 | 68,977 | 54,468 | ||||||||||||||||||||
Derivative instruments | ||||||||||||||||||||||||
31.12.09 | 31.12.08 | |||||||||||||||||||||||
Notional | Notional | |||||||||||||||||||||||
amount | amount | |||||||||||||||||||||||
CHF million, except where indicated | PRV1 | NRV2 | CHF billion | PRV1 | NRV2 | CHF billion | ||||||||||||||||||
Interest rate contracts | 187,506 | 174,632 | 33,787 | 377,307 | 370,346 | 36,476 | ||||||||||||||||||
Credit derivative contracts | 80,008 | 70,586 | 2,525 | 202,357 | 187,216 | 3,712 | ||||||||||||||||||
Foreign exchange contracts | 97,925 | 101,800 | 6,523 | 222,178 | 229,656 | 6,005 | ||||||||||||||||||
Precious metal contracts | 3,442 | 3,378 | 79 | 5,804 | 5,697 | 108 | ||||||||||||||||||
Equity/index contracts | 17,314 | 21,353 | 251 | 28,502 | 36,208 | 473 | ||||||||||||||||||
Commodities contracts, excluding precious metals contracts | 761 | 697 | 6 | 27,055 | 25,387 | 160 | ||||||||||||||||||
Total derivative instruments | 386,956 | 372,447 | 43,171 | 863,203 | 854,510 | 46,934 | ||||||||||||||||||
Replacement value netting | 317,979 | 317,979 | 661,402 | 661,402 | ||||||||||||||||||||
Replacement values after netting | 68,977 | 54,468 | 201,801 | 193,108 | ||||||||||||||||||||
379Fiduciary transactions
% change from | ||||||||||||
CHF million | 31.12.10 | 31.12.09 | 31.12.09 | |||||||||
Deposits: | ||||||||||||
with third-party banks | 11,529 | 17,088 | (33 | ) | ||||||||
with subsidiaries | 1,740 | 1,810 | (4 | ) | ||||||||
Total | 13,269 | 18,898 | (30 | ) | ||||||||
389
Financial information
UBS AG (Parent Bank)
Fiduciary transactions | ||||||||||||
% change from | ||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.08 | |||||||||
Deposits: | ||||||||||||
with third-party banks | 17,088 | 36,452 | (53 | ) | ||||||||
with subsidiaries | 1,810 | 2,738 | (34 | ) | ||||||||
Total | 18,898 | 39,190 | (52 | ) | ||||||||
Due to UBS pension plans
For the year ended | % change from | |||||||||||
CHF million | 31.12.10 | 31.12.09 | 31.12.09 | |||||||||
Obligations due to UBS pension plans1 | 682 | 543 | 26 | |||||||||
Due to UBS pension plans | ||||||||||||
For the year ended | % change from | |||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.08 | |||||||||
Due to UBS pension plans and UBS debt instruments held by pension plans | 397 | 876 | (55 | ) | ||||||||
Transactions with related parties
Transactions with related parties (such as securities transactions, payment transfer services, borrowing and compensation for deposits) are conducted at internally agreed transfer prices or at arm’s length.
Outsourcing
Outsourcing of IT and other services through agreements with external service providers is in compliance with FINMA circular 08/7 “Outsourcing banks”.
Dispensations in statutory financial statements
As UBS Group prepares consolidated financial statements in accordance with IFRS, UBS AG (Parent Bank) is exempted from various disclosures in the statutory financial statements. Refer to the IFRS “Consolidated financial statements” in the “Financial Information” section of this report for more information.
Personnel
The Parent Bank employed 36,381 personnel on 31 December 2010 compared with 36,182 personnel on 31 December 2009 and 40,998 personnel on 31 December 2008.
Significant shareholders | ||||||||||||
In % of shares issued | 31.12.09 | 31.12.08 | 31.12.07 | |||||||||
Chase Nominees Ltd, London | 11.63 | 7.19 | 7.99 | |||||||||
DTC (Cede & Co.), New York1 | 8.42 | 9.89 | 14.15 | |||||||||
Mellon Bank N.A., Everett | 3.21 | less than 3 | less than 3 | |||||||||
Nortrust Nominees Ltd, London | 3.07 | less than 3 | less than 3 | |||||||||
380390
Financial information |
Corporate governance and compensation report
Total compensation for all GEB members
Variable cash | ||||||||||||||||||||||||||||||||||||||
CHF, except where indicateda | compensation under CBP | |||||||||||||||||||||||||||||||||||||
Contribu- | ||||||||||||||||||||||||||||||||||||||
tions to | ||||||||||||||||||||||||||||||||||||||
Annual | Annual | Annual | retirement | |||||||||||||||||||||||||||||||||||
For the year | Immediate | Deferred | bonus | bonus under | bonus | Benefits in | benefits | |||||||||||||||||||||||||||||||
Name, function | ended | Base salary | cashb | cashb, 3 | under PEPc | SEEOPd | under IPPc | kinde | plansf | Total | ||||||||||||||||||||||||||||
Oswald J. Grübel, Group CEO | 2010 | 3,000,000 | 0 | 0 | 0 | 0 | – | 25,600 | 0 | 3,025,600 | ||||||||||||||||||||||||||||
Carsten Kengeter, CEO Investment Bank (highest-paid) | 2010 | 874,626 | 1,002,496 | 2,339,158 | 1,670,827 | 3,341,654 | – | 92,547 | 0 | 9,321,308 | ||||||||||||||||||||||||||||
Carsten Kengeter, CEO Investment Bank (highest-paid) | 2009 | 669,092 | 3,002,082 | 2,001,388 | 6,155,869 | – | 1,349,336 | 0 | 12,545 | 13,190,312 | ||||||||||||||||||||||||||||
Aggregate of all GEB members who were in office on 31 December 20101 | 2010 | 14,705,894 | 15,588,145 | 14,451,756 | 15,019,951 | 30,039,901 | – | 381,851 | 843,402 | 91,030,900 | ||||||||||||||||||||||||||||
Aggregate of all GEB members who were in office on 31 December 20091 | 2009 | 12,000,055 | 15,440,827 | 10,293,884 | 13,453,424 | 4 | – | 15,696,333 | 270,971 | 1,551,068 | 68,706,566 | |||||||||||||||||||||||||||
Aggregate of all GEB members who stepped down during 20102 | 2010 | 755,950 | 1,380,000 | 920,000 | 0 | 0 | – | 78,817 | 118,334 | 3,253,101 | ||||||||||||||||||||||||||||
Aggregate of all GEB members who stepped down during 20092 | 2009 | 2,447,544 | 23,065,858 | 15,377,239 | 0 | – | 0 | 215,151 | 171,122 | 41,276,914 | ||||||||||||||||||||||||||||
Compensation details and additional information for executive members of the BoD | ||||||||||||||||||||||||||||||||
CHF, except where indicateda | ||||||||||||||||||||||||||||||||
Annual incentive | Discretionary | Contributions to | ||||||||||||||||||||||||||||||
For the | Annual incentive | award (shares | award (options | Benefits | retirement | |||||||||||||||||||||||||||
Name, function1 | year ended | Base salary | award (cash) | – fair value)c | – fair value)d | in kinde | benefits plansf | Total | ||||||||||||||||||||||||
Kaspar Villiger, Chairman | 2009 | 602,083 | 0 | 0 | 0 | 74,488 | 0 | 676,571 | ||||||||||||||||||||||||
2008 | ||||||||||||||||||||||||||||||||
Peter Kurer, former Chairman | 2009 | 666,667 | 0 | 0 | 0 | 37,561 | 89,780 | 794,008 | ||||||||||||||||||||||||
2008 | 1,333,333 | 0 | 0 | 0 | 58,267 | 174,047 | 1,565,647 | |||||||||||||||||||||||||
Marcel Ospel, former Chairman | 2009 | |||||||||||||||||||||||||||||||
2008 | 666,667 | 0 | 0 | 0 | 80,755 | 87,023 | 834,445 | |||||||||||||||||||||||||
Stephan Haeringer, | 2009 | |||||||||||||||||||||||||||||||
former Executive Vice Chairman | 2008 | 1,125,000 | 0 | 0 | 0 | 108,846 | 195,802 | 1,429,648 | ||||||||||||||||||||||||
Explanation of the tables outlining compensation details of executivefor GEB members oftheand non-independent BoD and members of the GEB:
a. | Local currencies are converted into CHF using the exchange rates as detailed in | |
b. | ||
c. | ||
d. | ||
e. | Benefits in kind | |
f. | Swiss executives participate in the same pension plan as all other employees. Under this plan, | |
In both the US and the UK, |
381391
Financial information
UBS AG (Parent Bank)
Share and option ownership of GEB members on 31 December 2009 / 2010
Number of | Potentially | Potentially | ||||||||||||||||||||||||
For the | unvested | Number of | Total number of | conferred voting | Number of | conferred voting | ||||||||||||||||||||
Name, function1 | year ended | shares / at risk2 | vested shares | shares | rights in % | options held3 | rights in %4 | |||||||||||||||||||
Oswald J. Grübel, Group Chief Executive Officer | 2010 | 0 | 0 | 0 | 0.000 | 4,000,000 | 0.181 | |||||||||||||||||||
2009 | – | – | 0 | 0.000 | 4,000,000 | 0.217 | ||||||||||||||||||||
John Cryan, Group Chief Financial Officer | 2010 | 221,879 | 185,975 | 407,854 | 0.018 | 382,673 | 0.017 | |||||||||||||||||||
2009 | – | – | 235,929 | 0.013 | 382,673 | 0.021 | ||||||||||||||||||||
Markus U. Diethelm, Group General Counsel | 2010 | 178,619 | 75,700 | 254,319 | 0.012 | 0 | 0.000 | |||||||||||||||||||
2009 | – | – | 112,245 | 0.006 | 0 | 0.000 | ||||||||||||||||||||
John A. Fraser, | 2010 | 326,702 | 316,541 | 643,243 | 0.029 | 1,088,795 | 0.049 | |||||||||||||||||||
Chairman and CEO Global Asset Management | 2009 | – | – | 480,464 | 0.026 | 1,088,795 | 0.059 | |||||||||||||||||||
Lukas Gähwiler, CEO UBS Switzerland and | 2010 | 110,000 | 850 | 110,850 | 0.005 | 0 | 0.000 | |||||||||||||||||||
co-CEO Wealth Management & Swiss Bank | 2009 | – | – | – | – | |||||||||||||||||||||
Carsten Kengeter, CEO Investment Bank | 2010 | 916,201 | 363,047 | 1,279,248 | 0.058 | 905,000 | 0.041 | |||||||||||||||||||
2009 | – | – | 516,909 | 0.028 | 905,000 | 0.049 | ||||||||||||||||||||
Ulrich Körner, Group Chief Operating Officer | 2010 | 177,592 | 95,597 | 273,189 | 0.012 | 0 | 0.000 | |||||||||||||||||||
and CEO Corporate Center | 2009 | – | – | 0 | 0.000 | 0 | 0.000 | |||||||||||||||||||
Philip J. Lofts, Group Chief Risk Officer | 2010 | 200,009 | 144,603 | 344,612 | 0.016 | 577,723 | 0.026 | |||||||||||||||||||
2009 | – | – | 179,234 | 0.010 | 577,723 | 0.031 | ||||||||||||||||||||
Robert J. McCann, CEO Wealth Management | 2010 | 138,598 | 540,866 | 679,464 | 0.031 | 0 | 0.000 | |||||||||||||||||||
Americas | 2009 | – | – | 602,481 | 0.033 | 0 | 0.000 | |||||||||||||||||||
Francesco Morra, former CEO | 2010 | – | – | – | – | |||||||||||||||||||||
UBS Switzerland5 | 2009 | – | – | 153,860 | 0.008 | 325,086 | 0.018 | |||||||||||||||||||
Alexander Wilmot-Sitwell, co-Chairman and | 2010 | 274,739 | 213,613 | 488,352 | 0.022 | 353,807 | 0.016 | |||||||||||||||||||
co-CEO Group Asia Pacific | 2009 | – | – | 286,767 | 0.016 | 353,807 | 0.019 | |||||||||||||||||||
Robert Wolf, Chairman and CEO, UBS Group | 2010 | 242,805 | 635,382 | 878,187 | 0.040 | 948,473 | 0.043 | |||||||||||||||||||
Americas/President Investment Bank | 2009 | – | – | 785,631 | 0.043 | 948,473 | 0.051 | |||||||||||||||||||
Chi-Won Yoon, co-Chairman and | 2010 | 184,858 | 318,332 | 503,190 | 0.023 | 623,253 | 0.028 | |||||||||||||||||||
co-CEO Group Asia Pacific | 2009 | – | – | 367,573 | 0.020 | 623,253 | 0.034 | |||||||||||||||||||
Jürg Zeltner, CEO UBS Wealth Management | 2010 | 113,609 | 9,405 | 123,014 | 0.006 | 205,470 | 0.009 | |||||||||||||||||||
and co-CEO Wealth Management & Swiss Bank | 2009 | – | – | 16,502 | 0.001 | 205,470 | 0.011 | |||||||||||||||||||
392
Financial information |
Compensation details and additional information for non-independent BoD members
CHF, except where indicateda | ||||||||||||||||||||||||||
Contributions | ||||||||||||||||||||||||||
For the | Annual bonus | Annual | to retirement | |||||||||||||||||||||||
Name, function1 | year ended | Base salary | (cash) | share award | Benefits in kinde | benefits plansf | Total | |||||||||||||||||||
Kaspar Villiger, Chairman | 2010 | 850,000 | 0 | 500,000 | 2 | 141,308 | 0 | 1,491,308 | ||||||||||||||||||
2009 | 602,083 | 0 | 0 | 74,488 | 0 | 676,571 | ||||||||||||||||||||
Peter Kurer, former Chairman | 2010 | – | – | – | – | – | – | |||||||||||||||||||
2009 | 666,667 | 0 | 0 | 37,561 | 89,780 | 794,008 | ||||||||||||||||||||
Remuneration details and additional information for independent BoD members of the BoD
CHF, except where indicateda | ||||||||||||||||||||||||||||||||||||||||||
Human | For the | |||||||||||||||||||||||||||||||||||||||||
Resources | Governance & | Corporate | period | Share | ||||||||||||||||||||||||||||||||||||||
Audit | & Compensation | Nominating | Responsibility | Risk | AGM to | Committee | Benefits | Additional | percen- | Number of | ||||||||||||||||||||||||||||||||
Name, function1 | Committee | Committee | Committee | Committee | Committee | AGM | Base fee | retainer(s) | in kind | payments | Total | tage2 | shares3,4 | |||||||||||||||||||||||||||||
Michel Demaré, | M | M | 2010/2011 | 325,000 | 300,000 | 250,000 | 5 | 875,000 | 100 | 52,631 | ||||||||||||||||||||||||||||||||
Vice Chairman | M | 2009/2010 | 325,000 | 200,000 | 0 | 0 | 525,000 | 50 | 21,203 | |||||||||||||||||||||||||||||||||
David Sidwell, | C | 2010/2011 | 325,000 | 400,000 | 250,000 | 5 | 975,000 | 50 | 30,893 | |||||||||||||||||||||||||||||||||
Senior Independent Director | C | 2009/2010 | 325,000 | 400,000 | 0 | 0 | 725,000 | 50 | 29,281 | |||||||||||||||||||||||||||||||||
Sally Bott, | C | M | M | 2010/2011 | 325,000 | 450,000 | 775,000 | 50 | 24,556 | |||||||||||||||||||||||||||||||||
member | C | M | 2009/2010 | 325,000 | 350,000 | 0 | 0 | 675,000 | 50 | 27,261 | ||||||||||||||||||||||||||||||||
Rainer-Marc Frey, | M | M | 2010/2011 | 325,000 | 400,000 | 725,000 | 100 | 43,583 | ||||||||||||||||||||||||||||||||||
member | M | 2009/2010 | 325,000 | 200,000 | 0 | 0 | 525,000 | 100 | 40,301 | |||||||||||||||||||||||||||||||||
Bruno Gehrig, | M | M | 2010/2011 | 325,000 | 200,000 | 525,000 | 50 | 16,634 | ||||||||||||||||||||||||||||||||||
member | M | M | 2009/2010 | 325,000 | 200,000 | 0 | 0 | 525,000 | 50 | 21,203 | ||||||||||||||||||||||||||||||||
Ann F. Godbehere, | M | M | 2010/2011 | 325,000 | 250,000 | 575,000 | 50 | 18,219 | ||||||||||||||||||||||||||||||||||
member | M | M | 2009/2010 | 325,000 | 250,000 | 575,000 | 50 | 23,222 | ||||||||||||||||||||||||||||||||||
Axel P. Lehmann, | M | 2010/2011 | 325,000 | 200,000 | 525,000 | 100 | 31,519 | |||||||||||||||||||||||||||||||||||
member | M | 2009/2010 | 325,000 | 200,000 | 0 | �� | 0 | 525,000 | 100 | 40,301 | ||||||||||||||||||||||||||||||||
Sergio Marchionne, | 2010/2011 | – | ||||||||||||||||||||||||||||||||||||||||
former Senior Independent Director, | ||||||||||||||||||||||||||||||||||||||||||
former Vice Chairman | M | 2009/2010 | 325,000 | 100,000 | 0 | 250,000 | 5 | 675,000 | 100 | 51,845 | ||||||||||||||||||||||||||||||||
Wolfgang Mayrhuber, | M | M | 2010/2011 | 325,000 | 150,000 | 475,000 | 50 | 15,050 | ||||||||||||||||||||||||||||||||||
member | 2009/2010 | – | ||||||||||||||||||||||||||||||||||||||||
Helmut Panke, | M | M | 2010/2011 | 325,000 | 300,000 | 625,000 | 50 | 19,803 | ||||||||||||||||||||||||||||||||||
member | M | M | 2009/2010 | 325,000 | 300,000 | 0 | 0 | 625,000 | 50 | 25,242 | ||||||||||||||||||||||||||||||||
William G. Parrett, | C | 2010/2011 | 325,000 | 300,000 | 625,000 | 50 | 19,803 | |||||||||||||||||||||||||||||||||||
member | C | 2009/2010 | 325,000 | 300,000 | 0 | 0 | 625,000 | 50 | 25,242 | |||||||||||||||||||||||||||||||||
Peter R. Voser, | 2010/2011 | – | ||||||||||||||||||||||||||||||||||||||||
former member | M | 2009/2010 | 325,000 | 100,000 | 0 | 0 | 425,000 | 50 | 17,164 | |||||||||||||||||||||||||||||||||
Total 2010 | 6,700,000 | |||||||||||||||||||||||||||||||||||||||||
Total 2009 | 6,425,000 | |||||||||||||||||||||||||||||||||||||||||
Remuneration details and additional information for independent members of the BoD | ||||||||||||||||||||||||||||||||||||||||||
CHF, except where indicated3 | ||||||||||||||||||||||||||||||||||||||||||
For the | ||||||||||||||||||||||||||||||||||||||||||
HR & | Governance & | Corporate | period | Share | ||||||||||||||||||||||||||||||||||||||
Audit | Compensation | Nominating | Responsibility | Risk | Strategy | AGM to | Committee | Benefits | Additional | percent- | Number of | |||||||||||||||||||||||||||||||
Name, function1 | Committee | Committee | Committee | Committee | Committee | Committee | AGM | Base fee | retainer(s) | in kind | payments | Total | age3 | shares4,5 | ||||||||||||||||||||||||||||
Sergio Marchionne, | M | 2009/2010 | 325,000 | 100,000 | 0 | 250.000 | 6 | 675,000 | 100 | 51,845 | ||||||||||||||||||||||||||||||||
Senior Independent Director, Vice Chairman | M | M | 2008/2009 | 325,000 | 200,000 | 0 | 250.000 | 6 | 775,000 | 100 | 75,228 | |||||||||||||||||||||||||||||||
Ernesto Bertarelli, | 2009/2010 | |||||||||||||||||||||||||||||||||||||||||
former member | M | M | 2008/2009 | 325,000 | 200,000 | 0 | 0 | 525,000 | 100 | 51,596 | ||||||||||||||||||||||||||||||||
Sally Bott, | C | M | 2009/2010 | 325,000 | 350,000 | 0 | 0 | 675,000 | 50 | 27,261 | ||||||||||||||||||||||||||||||||
member2 | M | M | 2008/2009 | 162,500 | 75,000 | 0 | 0 | 237,500 | 50 | 12,280 | ||||||||||||||||||||||||||||||||
Michel Demaré, | M | 2009/2010 | 325,000 | 200,000 | 0 | 0 | 525,000 | 50 | 21,203 | |||||||||||||||||||||||||||||||||
member | 2008/2009 | |||||||||||||||||||||||||||||||||||||||||
Rainer-Marc Frey, | M | 2009/2010 | 325,000 | 200,000 | 0 | 0 | 525,000 | 100 | 40,301 | |||||||||||||||||||||||||||||||||
member2 | M | M | 2008/2009 | 162,500 | 150,000 | 0 | 0 | 312,500 | 50 | 16,158 | ||||||||||||||||||||||||||||||||
Bruno Gehrig, | M | M | 2009/2010 | 325,000 | 200,000 | 0 | 0 | 525,000 | 50 | 21,203 | ||||||||||||||||||||||||||||||||
member2 | M | 2008/2009 | 162,500 | 100,000 | 0 | 0 | 262,500 | 50 | 13,572 | |||||||||||||||||||||||||||||||||
Ann F. Godbehere, | M | M | 2009/2010 | 325,000 | 250,000 | 0 | 0 | 575,000 | 50 | 23,222 | ||||||||||||||||||||||||||||||||
member | 2008/2009 | |||||||||||||||||||||||||||||||||||||||||
Gabrielle Kaufmann- | 2009/2010 | |||||||||||||||||||||||||||||||||||||||||
Kohler, former member | C | M | 2008/2009 | 325,000 | 250,000 | 0 | 0 | 575,000 | 50 | 29,731 | ||||||||||||||||||||||||||||||||
Axel P. Lehmann, | M | 2009/2010 | 325,000 | 200,000 | 0 | 0 | 525,000 | 100 | 40,301 | |||||||||||||||||||||||||||||||||
member | 2008/2009 | |||||||||||||||||||||||||||||||||||||||||
Rolf A. Meyer, | 2009/2010 | |||||||||||||||||||||||||||||||||||||||||
former member2 | M | M | 2008/2009 | 162,500 | 150,000 | 0 | 0 | 312,500 | 50 | 16,158 | ||||||||||||||||||||||||||||||||
Helmut Panke, | M | M | 2009/2010 | 325,000 | 300,000 | 0 | 0 | 625,000 | 50 | 25,242 | ||||||||||||||||||||||||||||||||
member | M | M | 2008/2009 | 325,000 | 300,000 | 0 | 0 | 625,000 | 50 | 32,316 | ||||||||||||||||||||||||||||||||
William G. Parrett, | C | 2009/2010 | 325,000 | 300,000 | 0 | 0 | 625,000 | 50 | 25,242 | |||||||||||||||||||||||||||||||||
member2 | M | 2008/2009 | 162,500 | 100,000 | 0 | 0 | 262,500 | 50 | 13,572 | |||||||||||||||||||||||||||||||||
David Sidwell, | C | 2009/2010 | 325,000 | 400,000 | 0 | 0 | 725,000 | 50 | 29,281 | |||||||||||||||||||||||||||||||||
member | M | C | 2008/2009 | 325,000 | 450,000 | 0 | 0 | 775,000 | 50 | 40,072 | ||||||||||||||||||||||||||||||||
Peter Spuhler, | 2009/2010 | |||||||||||||||||||||||||||||||||||||||||
former member2 | 2008/2009 | 162,500 | 0 | 0 | 0 | 162,500 | 100 | 15,945 | ||||||||||||||||||||||||||||||||||
Peter R.Voser, | M | 2009/2010 | 325,000 | 100,000 | 0 | 0 | 425,000 | 50 | 17,164 | |||||||||||||||||||||||||||||||||
member | C | M | 2008/2009 | 325,000 | 400,000 | 0 | 0 | 725,000 | 50 | 37,487 | ||||||||||||||||||||||||||||||||
Lawrence A. Weinbach, | 2009/2010 | |||||||||||||||||||||||||||||||||||||||||
former member2 | M | 2008/2009 | 162,500 | 100,000 | 0 | 0 | 262,500 | 50 | 13,572 | |||||||||||||||||||||||||||||||||
Joerg Wolle, | 2009/2010 | |||||||||||||||||||||||||||||||||||||||||
former member | C | M | 2008/2009 | 325,000 | 300,000 | 0 | 0 | 625,000 | 50 | 32,316 | ||||||||||||||||||||||||||||||||
Total 2009 | 6,425,000 | |||||||||||||||||||||||||||||||||||||||||
Total 2008 | 6,437,500 | |||||||||||||||||||||||||||||||||||||||||
382
Total payments to all members of the BoD | ||||||
For the | ||||||
CHF, except where indicateda | year ended | Total | ||||
Aggregate of all members of the BoD | 2009 | 7,895,579 | ||||
Aggregate of all members of the BoD | 2008 | 10,267,240 | ||||
Total compensation for all members of the GEB | ||||||||||||||||||||||||||||||
CHF, except where indicateda | ||||||||||||||||||||||||||||||
Annual | Contributions | |||||||||||||||||||||||||||||
incentive | Annual | Annual | to retirement | |||||||||||||||||||||||||||
For the | award CBP | incentive | incentive | Benefits | benefits | |||||||||||||||||||||||||
Name, function | year ended | Base salary | and cashb | award PEPc | award IPPc | in kinde | plansf | Total | ||||||||||||||||||||||
Carsten Kengeter, co-CEO Investment Bank (highest-paid) | 2009 | 669,092 | 5,003,470 | 6,155,869 | 1,349,336 | 0 | 12,545 | 13,190,312 | ||||||||||||||||||||||
Marcel Rohner, Group Chief Executive Officer (highest-paid) | 2008 | 1,500,000 | 0 | 0 | 0 | 161,768 | 152,934 | 1,814,702 | ||||||||||||||||||||||
Aggregate of all members of the GEB who were in office on 31 December 20091 | 2009 | 12,000,055 | 25,734,711 | 13,453,424 | 3 | 15,696,333 | 270,971 | 1,551,068 | 68,706,562 | |||||||||||||||||||||
Aggregate of all members of the GEB who were in office on 31 December 20081 | 2008 | 7,815,943 | 0 | 0 | 0 | 457,652 | 817,315 | 9,090,911 | ||||||||||||||||||||||
Aggregate of all members of the GEB who stepped down during 20092 | 2009 | 2,447,544 | 38,443,097 | 0 | 0 | 215,151 | 171,122 | 41,276,914 | ||||||||||||||||||||||
Aggregate of all members of the GEB who stepped down during 20082 | 2008 | 1,614,871 | 0 | 0 | 0 | 234,838 | 258,423 | 2,108,132 | ||||||||||||||||||||||
383393
Financial information
UBS AG (Parent Bank)
Total payments to all BoD members
CHF, except where indicateda | For the year ended | Total | ||||||
Aggregate of all BoD members | 2010 | 8,191,310 | ||||||
2009 | 7,895,579 | |||||||
Share and option ownershipholdings of BoD members of the BoD on 31 December 2008/2009 / 2010
Share and option ownership of members of the BoD on 31 December 2008/2009 | ||||||||||||||||||||||||||||||||||
For the | Number of | Voting rights | Number of | Potentially conferred | Type and quantity | |||||||||||||||||||||||||||||
Name, function1 | year ended | shares held | in % | options held | voting rights in %2 | of options3 | For the year ended | Number of shares held | Voting rights in % | |||||||||||||||||||||||||
Kaspar Villiger, Chairman | 2009 | 22,500 | 0.001 | 0 | 0.000 | 2010 | 22,500 | 0.001 | ||||||||||||||||||||||||||
2008 | – | – | 2009 | 22,500 | 0.001 | |||||||||||||||||||||||||||||
Sergio Marchionne, | 2009 | 164,154 | 0.009 | 0 | 0.000 | |||||||||||||||||||||||||||||
Michel Demaré, Vice Chairman | 2010 | 23,703 | 0.001 | |||||||||||||||||||||||||||||||
Senior Independent Director, Vice Chairman | 2008 | 87,926 | 0.005 | 0 | 0.000 | |||||||||||||||||||||||||||||
2009 | 2,500 | 0.000 | ||||||||||||||||||||||||||||||||
Ernesto Bertarelli, former member4 | 2009 | – | – | |||||||||||||||||||||||||||||||
David Sidwell, Senior Independent Director | 2010 | 69,354 | 0.003 | |||||||||||||||||||||||||||||||
2008 | 89,434 | 0.005 | 0 | 0.000 | 2009 | 40,073 | 0.002 | |||||||||||||||||||||||||||
Sally Bott, member | 2009 | 12,281 | 0.001 | 0 | 0.000 | 2010 | 39,542 | 0.002 | ||||||||||||||||||||||||||
2008 | 1 | 0.000 | 0 | 0.000 | ||||||||||||||||||||||||||||||
Michel Demaré, member | 2009 | 2,500 | 0.000 | 0 | 0.000 | |||||||||||||||||||||||||||||
2008 | – | – | 2009 | 12,281 | 0.001 | |||||||||||||||||||||||||||||
Rainer-Marc Frey, member | 2009 | 16,158 | 0.001 | 0 | 0.000 | 2010 | 56,459 | 0.003 | ||||||||||||||||||||||||||
2008 | 0 | 0.000 | 0 | 0.000 | 2009 | 16,158 | 0.001 | |||||||||||||||||||||||||||
Bruno Gehrig, member | 2009 | 16,572 | 0.001 | 0 | 0.000 | 2010 | 37,775 | 0.002 | ||||||||||||||||||||||||||
2008 | 3,000 | 0.000 | 0 | 0.000 | 2009 | 16,572 | 0.001 | |||||||||||||||||||||||||||
Ann F. Godbehere, member | 2009 | 0 | 0.000 | 0 | 0.000 | 2010 | 23,222 | 0.001 | ||||||||||||||||||||||||||
2008 | – | – | 2009 | 0 | 0.000 | |||||||||||||||||||||||||||||
Gabrielle Kaufmann-Kohler, former member4 | 2009 | – | – | |||||||||||||||||||||||||||||||
Axel P. Lehmann, member | 2010 | 58,452 | 0.003 | |||||||||||||||||||||||||||||||
2008 | 18,713 | 0.001 | 0 | 0.000 | 2009 | 18,151 | 0.001 | |||||||||||||||||||||||||||
Peter Kurer, former Chairman4 | 2009 | – | – | |||||||||||||||||||||||||||||||
Sergio Marchionne, | 2010 | – | ||||||||||||||||||||||||||||||||
former Senior Independent Director, former Vice Chairman2 | 2009 | 164,154 | 0,009 | |||||||||||||||||||||||||||||||
2008 | 416,088 | 0.025 | 372,995 | 0.022 | xli: | 85,256 | ||||||||||||||||||||||||||||
xlvii: | 95,913 | |||||||||||||||||||||||||||||||||
lvi: | 95,913 | |||||||||||||||||||||||||||||||||
lxiv: | 95,913 | |||||||||||||||||||||||||||||||||
Axel P. Lehmann, member | 2009 | 18,151 | 0.001 | 0 | 0.000 | |||||||||||||||||||||||||||||
Wolfgang Mayrhuber, member | 2010 | 0 | 0.000 | |||||||||||||||||||||||||||||||
2008 | – | – | 2009 | – | ||||||||||||||||||||||||||||||
Helmut Panke, member | 2009 | 64,287 | 0.003 | 0 | 0.000 | 2010 | 89,529 | 0.004 | ||||||||||||||||||||||||||
2008 | 31,971 | 0.002 | 0 | 0.000 | 2009 | 64,287 | 0.003 | |||||||||||||||||||||||||||
William G. Parrett, member | 2009 | 17,573 | 0.001 | 0 | 0.000 | 2010 | 42,815 | 0.002 | ||||||||||||||||||||||||||
2008 | 4,000 | 0.000 | 0 | 0.000 | 2009 | 17,573 | 0.001 | |||||||||||||||||||||||||||
David Sidwell, member | 2009 | 40,073 | 0.002 | 0 | 0.000 | |||||||||||||||||||||||||||||
Peter R. Voser, former member2 | 2010 | – | ||||||||||||||||||||||||||||||||
2008 | 1 | 0.000 | 0 | 0.000 | 2009 | 68,310 | 0.004 | |||||||||||||||||||||||||||
Peter R. Voser, member | 2009 | 68,310 | 0.004 | 0 | 0.000 | |||||||||||||||||||||||||||||
2008 | 30,823 | 0.002 | 0 | 0.000 | ||||||||||||||||||||||||||||||
Joerg Wolle, former member4 | 2009 | – | – | |||||||||||||||||||||||||||||||
2008 | 41,509 | 0.002 | 0 | 0.000 | ||||||||||||||||||||||||||||||
394
Financial information |
Compensation paid to former BoD and GEB members1
CHF, except where indicateda | ||||||||||||||
For the | ||||||||||||||
Name, function | year ended | Compensation | Benefits in kind | Total | ||||||||||
Georges Blum, former BoD member | 2010 | 0 | 0 | 0 | ||||||||||
(Swiss Bank Corporation) | 2009 | 0 | 92,399 | 92,399 | ||||||||||
Franz Galliker, former BoD member | 2010 | 0 | 0 | 0 | ||||||||||
(Swiss Bank Corporation) | 2009 | 0 | 10,659 | 10,659 | ||||||||||
Walter G. Frehner, former BoD member | 2010 | 0 | 0 | 0 | ||||||||||
(Swiss Bank Corporation) | 2009 | 0 | 25,371 | 25,371 | ||||||||||
Hans (Liliane) Strasser, former BoD member | 2010 | 0 | 0 | 0 | ||||||||||
(Swiss Bank Corporation) | 2009 | 0 | 9,758 | 9,758 | ||||||||||
Robert Studer, former BoD member | 2010 | 0 | 0 | 0 | ||||||||||
(Union Bank of Switzerland) | 2009 | 0 | 18,751 | 18,751 | ||||||||||
Alberto Togni, former BoD member | 2010 | 0 | 20,493 | 20,493 | ||||||||||
(UBS) | 2009 | 320,136 | 355,983 | 676,119 | ||||||||||
Philippe (Alix) de Weck, former BoD member | 2010 | 0 | 0 | 0 | ||||||||||
(Union Bank of Switzerland) | 2009 | 0 | 93,135 | 93,135 | ||||||||||
Aggregate of all former GEB members2 | 2010 | 0 | 57,229 | 57,229 | ||||||||||
2009 | 0 | 18,293 | 18,293 | |||||||||||
Aggregate of all former BoD and GEB members | 2010 | 0 | 77,722 | 77,722 | ||||||||||
2009 | 320,136 | 624,349 | 944,485 | |||||||||||
395
Financial information
UBS AG (Parent Bank)
Vested and unvested options held by GEB members of the BoDon 31 December 2009 / 20101
Total | ||||||||||||||||||||||||
For the | number of | Number of | Year of | Vesting | Expiry | Strike | ||||||||||||||||||
year ended | options held2 | options3 | grant | date | date | price | ||||||||||||||||||
Oswald J. Grübel, Group Chief Executive Officer | ||||||||||||||||||||||||
2010 | 4,000,000 | 4,000,000 | 2009 | 26/02/2009 | 25/02/2014 | CHF 10.10 | ||||||||||||||||||
2009 | 4,000,000 | 4,000,000 | 2009 | 26/02/2009 | 25/02/2014 | CHF 10.10 | ||||||||||||||||||
John Cryan, Group Chief Financial Officer | ||||||||||||||||||||||||
2010 | 382,673 | 21,362 | 2002 | 31/01/2003 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||
20,731 | 2002 | 31/01/2004 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||||
20,725 | 2002 | 31/01/2005 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||||
5,454 | 2002 | 28/02/2003 | 28/02/2012 | CHF 36.65 | ||||||||||||||||||||
5,294 | 2002 | 28/02/2004 | 28/02/2012 | CHF 36.65 | ||||||||||||||||||||
5,292 | 2002 | 28/02/2005 | 28/02/2012 | CHF 36.65 | ||||||||||||||||||||
23,626 | 2003 | 01/03/2004 | 31/01/2013 | CHF 27.81 | ||||||||||||||||||||
23,620 | 2003 | 01/03/2005 | 31/01/2013 | CHF 27.81 | ||||||||||||||||||||
23,612 | 2003 | 01/03/2006 | 31/01/2013 | CHF 27.81 | ||||||||||||||||||||
5,526 | 2003 | 01/03/2004 | 28/02/2013 | CHF 26.39 | ||||||||||||||||||||
5,524 | 2003 | 01/03/2005 | 28/02/2013 | CHF 26.39 | ||||||||||||||||||||
5,524 | 2003 | 01/03/2006 | 28/02/2013 | CHF 26.39 | ||||||||||||||||||||
17,072 | 2004 | 01/03/2005 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
17,068 | 2004 | 01/03/2006 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
17,063 | 2004 | 01/03/2007 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
14,210 | 2005 | 01/03/2006 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
14,210 | 2005 | 01/03/2007 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
14,207 | 2005 | 01/03/2008 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
5,330 | 2006 | 01/03/2007 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
5,328 | 2006 | 01/03/2008 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
5,326 | 2006 | 01/03/2009 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
17,762 | 2007 | 01/03/2008 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
17,762 | 2007 | 01/03/2009 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
17,760 | 2007 | 01/03/2010 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
53 285 | 2008 | 01/03/2011 | 28/02/2018 | CHF 32.45 | ||||||||||||||||||||
2009 | 382,673 | 21,362 | 2002 | 31/01/2003 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||
20,731 | 2002 | 31/01/2004 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||||
20,725 | 2002 | 31/01/2005 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||||
5,454 | 2002 | 28/02/2003 | 28/02/2012 | CHF 36.65 | ||||||||||||||||||||
5,294 | 2002 | 28/02/2004 | 28/02/2012 | CHF 36.65 | ||||||||||||||||||||
5,292 | 2002 | 28/02/2005 | 28/02/2012 | CHF 36.65 | ||||||||||||||||||||
23,626 | 2003 | 01/03/2004 | 31/01/2013 | CHF 27.81 | ||||||||||||||||||||
23,620 | 2003 | 01/03/2005 | 31/01/2013 | CHF 27.81 | ||||||||||||||||||||
23,612 | 2003 | 01/03/2006 | 31/01/2013 | CHF 27.81 | ||||||||||||||||||||
5,526 | 2003 | 01/03/2004 | 28/02/2013 | CHF 26.39 | ||||||||||||||||||||
5,524 | 2003 | 01/03/2005 | 28/02/2013 | CHF 26.39 | ||||||||||||||||||||
5,524 | 2003 | 01/03/2006 | 28/02/2013 | CHF 26.39 | ||||||||||||||||||||
17,072 | 2004 | 01/03/2005 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
17,068 | 2004 | 01/03/2006 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
17,063 | 2004 | 01/03/2007 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
14,210 | 2005 | 01/03/2006 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
14,210 | 2005 | 01/03/2007 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
14,207 | 2005 | 01/03/2008 | 28/02/2015 | CHF 47.58 |
Total | ||||||||||||||||||||||||
For the | number of | Number of | Year of | Vesting | Expiry | Strike | ||||||||||||||||||
year ended | options held2 | options3 | grant | date | date | price | ||||||||||||||||||
John Cryan, Group Chief Financial Officer (continued) | ||||||||||||||||||||||||
2009 | 382,673 | 5,330 | 2006 | 01/03/2007 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||
5,328 | 2006 | 01/03/2008 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
5,326 | 2006 | 01/03/2009 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
17,762 | 2007 | 01/03/2008 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
17,762 | 2007 | 01/03/2009 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
17,760 | 2007 | 01/03/2010 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
53,285 | 2008 | 01/03/2011 | 28/02/2018 | CHF 32.45 | ||||||||||||||||||||
Markus U. Diethelm, Group General Counsel | ||||||||||||||||||||||||
2010 | 0 | |||||||||||||||||||||||
2009 | 0 | |||||||||||||||||||||||
John A. Fraser, Chairman and CEO Global Asset Management | ||||||||||||||||||||||||
2010 | 1,088,795 | 76,380 | 2002 | 31/01/2005 | 31/01/2012 | USD 21.24 | ||||||||||||||||||
127,884 | 2002 | 28/06/2005 | 28/06/2012 | CHF 37.90 | ||||||||||||||||||||
127,884 | 2003 | 31/01/2006 | 31/01/2013 | USD 22.53 | ||||||||||||||||||||
170,512 | 2004 | 01/03/2007 | 27/02/2014 | USD 38.13 | ||||||||||||||||||||
202,483 | 2005 | 01/03/2008 | 28/02/2015 | USD 44.81 | ||||||||||||||||||||
213,140 | 2006 | 01/03/2009 | 28/02/2016 | CHF 72.57 | ||||||||||||||||||||
170,512 | 2007 | 01/03/2010 | 28/02/2017 | CHF 73.67 | ||||||||||||||||||||
2009 | 1,088,795 | 76,380 | 2002 | 31/01/2005 | 31/01/2012 | USD 21.24 | ||||||||||||||||||
127,884 | 2002 | 28/06/2005 | 28/06/2012 | CHF 37.90 | ||||||||||||||||||||
127,884 | 2003 | 31/01/2006 | 31/01/2013 | USD 22.53 | ||||||||||||||||||||
170,512 | 2004 | 01/03/2007 | 27/02/2014 | USD 38.13 | ||||||||||||||||||||
202,483 | 2005 | 01/03/2008 | 28/02/2015 | USD 44.81 | ||||||||||||||||||||
213,140 | 2006 | 01/03/2009 | 28/02/2016 | CHF 72.57 | ||||||||||||||||||||
170,512 | 2007 | 01/03/2010 | 28/02/2017 | CHF 73.67 | ||||||||||||||||||||
Lukas Gähwiler, CEO UBS Switzerland and | ||||||||||||||||||||||||
co-CEO Wealth Management & Swiss Bank | ||||||||||||||||||||||||
2010 | 0 | |||||||||||||||||||||||
2009 | – | |||||||||||||||||||||||
Carsten Kengeter, CEO Investment Bank | ||||||||||||||||||||||||
2010 | 905,000 | 905,000 | 2009 | 01/03/2012 | 27/12/2019 | CHF 40.00 | ||||||||||||||||||
2009 | 905,000 | 905,000 | 2009 | 01/03/2012 | 27/12/2019 | CHF 40.00 | ||||||||||||||||||
Ulrich Körner, Group Chief Operating Officer and CEO Corporate Center | ||||||||||||||||||||||||
2010 | 0 | |||||||||||||||||||||||
2009 | 0 | |||||||||||||||||||||||
Philip J. Lofts, Group Chief Risk Officer | ||||||||||||||||||||||||
2010 | 577,723 | 11,445 | 2002 | 31/01/2003 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||
11,104 | 2002 | 31/01/2004 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||||
11,098 | 2002 | 31/01/2005 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||||
1,240 | 2002 | 28/02/2003 | 28/02/2012 | CHF 36.65 | ||||||||||||||||||||
5,464 | 2002 | 28/02/2004 | 28/02/2012 | CHF 36.65 | ||||||||||||||||||||
1,199 | 2002 | 28/02/2005 | 28/02/2012 | CHF 36.65 |
384396
Financial information |
Financial information
Compensation paid to former members of the BoD and GEB1 | ||||||||||||||
CHF, except where indicateda | ||||||||||||||
For the | Benefits | |||||||||||||
Name, function | year ended | Compensation | in kind | Total | ||||||||||
Georges Blum, former member of the BoD | 2009 | 92,399 | 92,399 | |||||||||||
(Swiss Bank Corporation) | 2008 | 101,579 | 101,579 | |||||||||||
Franz Galliker, former member of the BoD | 2009 | 10,659 | 10,659 | |||||||||||
(Swiss Bank Corporation) | 2008 | 69,596 | 69,596 | |||||||||||
Walter G. Frehner, former member of the BoD | 2009 | 25,371 | 25,371 | |||||||||||
(Swiss Bank Corporation) | 2008 | 74,663 | 74,663 | |||||||||||
Hans (Liliane) Strasser, former member of the BoD | 2009 | 9,758 | 9,758 | |||||||||||
(Swiss Bank Corporation) | 2008 | 32,673 | 32,673 | |||||||||||
Robert Studer, former member of the BoD | 2009 | 18,751 | 18,751 | |||||||||||
(Union Bank of Switzerland) | 2008 | 126,208 | 126,208 | |||||||||||
Alberto Togni, former member of the BoD | 2009 | 320,136 | 355,983 | 676,119 | ||||||||||
(UBS) | 2008 | 318,461 | 427,949 | 746,410 | ||||||||||
Philippe (Alix) de Weck, former member of the BoD | 2009 | 93,135 | 93,135 | |||||||||||
(Union Bank of Switzerland) | 2008 | 109,703 | 109,703 | |||||||||||
Aggregate of all former members of the GEB2 | 2009 | 0 | 18,293 | 18,293 | ||||||||||
2008 | 0 | 171,180 | 171,180 | |||||||||||
Aggregate of all former members of the BoD and GEB | 2009 | 320,136 | 624,349 | 944,485 | ||||||||||
2008 | 318,461 | 1,113,551 | 1,432,012 | |||||||||||
385
Financial informationUBS AG (Parent Bank)
Share and option ownership of members of the GEB on 31 December 2008/2009 | ||||||||||||||||||||||||
Type and | ||||||||||||||||||||||||
For the | Number of | Voting rights | Number of | Potentially conferred | quantity of | |||||||||||||||||||
Name, function1 | year ended | shares held | in % | options held | voting rights in %2 | options3 | ||||||||||||||||||
Oswald J. Grübel, | 2009 | 0 | 0.000 | 4,000,000 | 0.217 | lxx: | 4,000,000 | |||||||||||||||||
Group Chief Executive Officer | 2008 | – | – | |||||||||||||||||||||
Marcel Rohner, | 2009 | – | – | |||||||||||||||||||||
former Group Chief Executive Officer4 | 2008 | 711,366 | 0.042 | 1,055,043 | 0.063 | xxxii: | 31,971 | |||||||||||||||||
xli: | 213,140 | |||||||||||||||||||||||
xlvii: | 277,082 | |||||||||||||||||||||||
lvi: | 319,710 | |||||||||||||||||||||||
lxiv: | 213,140 | |||||||||||||||||||||||
John Cryan, | 2009 | 235,929 | 0.013 | 382,673 | 0.021 | iii: | 21,362 | |||||||||||||||||
Group Chief Financial Officer | iv: | 20,731 | ||||||||||||||||||||||
vii: | 20,725 | |||||||||||||||||||||||
xii: | 5,454 | |||||||||||||||||||||||
xiii: | 5,294 | |||||||||||||||||||||||
xvi: | 5,292 | |||||||||||||||||||||||
xxi: | 23,626 | |||||||||||||||||||||||
xxiii: | 23,620 | |||||||||||||||||||||||
xxvi: | 23,612 | |||||||||||||||||||||||
xxviii: | 5,526 | |||||||||||||||||||||||
xxix: | 5,524 | |||||||||||||||||||||||
xxx: | 5,524 | |||||||||||||||||||||||
xxxviii: | 17,072 | |||||||||||||||||||||||
xl: | 17,068 | |||||||||||||||||||||||
xlii: | 17,063 | |||||||||||||||||||||||
xliv: | 14,210 | |||||||||||||||||||||||
xlv: | 14,210 | |||||||||||||||||||||||
xlvi: | 14,207 | |||||||||||||||||||||||
liii: | 5,330 | |||||||||||||||||||||||
liv: | 5,328 | |||||||||||||||||||||||
lv: | 5,326 | |||||||||||||||||||||||
lxi: | 17,762 | |||||||||||||||||||||||
lxii: | 17,762 | |||||||||||||||||||||||
lxiii: | 17,760 | |||||||||||||||||||||||
lxvi: | 53,285 | |||||||||||||||||||||||
2008 | 235,929 | 0.014 | 382,673 | 0.023 | iii: | 21,362 | ||||||||||||||||||
iv: | 20,731 | |||||||||||||||||||||||
vii: | 20,725 | |||||||||||||||||||||||
xii: | 5,454 | |||||||||||||||||||||||
xiii: | 5,294 | |||||||||||||||||||||||
xvi: | 5,292 | |||||||||||||||||||||||
xxi: | 23,626 | |||||||||||||||||||||||
xxiii: | 23,620 | |||||||||||||||||||||||
xxvi: | 23,612 | |||||||||||||||||||||||
xxviii: | 5,526 | |||||||||||||||||||||||
xxix: | 5,524 | |||||||||||||||||||||||
xxx: | 5,524 | |||||||||||||||||||||||
xxxviii: | 17,072 | |||||||||||||||||||||||
xl: | 17,068 | |||||||||||||||||||||||
xlii: | 17,063 | |||||||||||||||||||||||
xliv: | 14,210 | |||||||||||||||||||||||
xlv: | 14,210 | |||||||||||||||||||||||
xlvi: | 14,207 | |||||||||||||||||||||||
liii: | 5,330 | |||||||||||||||||||||||
liv: | 5,328 | |||||||||||||||||||||||
lv: | 5,326 | |||||||||||||||||||||||
lxi: | 17,762 | |||||||||||||||||||||||
lxii: | 17,762 | |||||||||||||||||||||||
lxiii: | 17,760 | |||||||||||||||||||||||
lxvi: | 53,285 | |||||||||||||||||||||||
Markus U. Diethelm, | 2009 | 112,245 | 0.006 | 0 | 0.000 | |||||||||||||||||||
Group General Counsel | 2008 | 112,245 | 0.007 | 0 | 0.000 | |||||||||||||||||||
John A. Fraser, | 2009 | 480,464 | 0.027 | 1,088,795 | 0.059 | viii: | 76,380 | |||||||||||||||||
Chairman and CEO Global Asset Management | xix: | 127,884 | ||||||||||||||||||||||
xxv: | 127,884 | |||||||||||||||||||||||
xliii: | 170,512 | |||||||||||||||||||||||
xlviii: | 202,483 | |||||||||||||||||||||||
lvi: | 213,140 | |||||||||||||||||||||||
lxiv: | 170,512 | |||||||||||||||||||||||
386
/ 20101 (continued)
Share and option ownership of members of the GEB on 31 December 2008/2009 (continued) | |||||||||||||||||||||||||
Type and | |||||||||||||||||||||||||
For the | Number of | Voting rights | Number of | Potentially conferred | quantity of | ||||||||||||||||||||
Name, function1 | year ended | shares held | in % | options held | voting rights in %2 | options3 | |||||||||||||||||||
John A. Fraser, | 2008 | 561,216 | 0.035 | 1,144,808 | 0.068 | i: | 56,013 | ||||||||||||||||||
Chairman and CEO Global Asset Management | viii: | 76,380 | |||||||||||||||||||||||
xix: | 127,884 | ||||||||||||||||||||||||
xxv: | 127,884 | ||||||||||||||||||||||||
xliii: | 170,512 | ||||||||||||||||||||||||
xlviii: | 202,483 | ||||||||||||||||||||||||
lvi: | 213,140 | ||||||||||||||||||||||||
lxiv: | 170,512 | ||||||||||||||||||||||||
Marten Hoekstra, | 2009 | – | – | ||||||||||||||||||||||
former CEO Wealth Management US4 | 2008 | 245,397 | 0.015 | 684,168 | 0.041 | ii: | 8,679 | ||||||||||||||||||
vi: | 8,421 | ||||||||||||||||||||||||
ix: | 8,421 | ||||||||||||||||||||||||
xi: | 8,823 | ||||||||||||||||||||||||
xiv: | 4,262 | ||||||||||||||||||||||||
xv: | 8,563 | ||||||||||||||||||||||||
xviii: | 8,561 | ||||||||||||||||||||||||
xxxiii: | 42,628 | ||||||||||||||||||||||||
xliii: | 53,285 | ||||||||||||||||||||||||
xlviii: | 53,285 | ||||||||||||||||||||||||
lvi: | 85,256 | ||||||||||||||||||||||||
lxiv: | 154,931 | ||||||||||||||||||||||||
lxvii: | 239,053 | ||||||||||||||||||||||||
Jerker Johansson, | 2009 | – | – | ||||||||||||||||||||||
former Chairman and CEO Investment Bank4 | 2008 | 521,544 | 0.031 | 753,410 | 0.045 | lxviii: | 745,990 | ||||||||||||||||||
lxix: | 7,420 | ||||||||||||||||||||||||
Carsten Kengeter, | 2009 | 516,909 | 0.028 | 905,000 | 0.049 | lxxi: | 905,000 | ||||||||||||||||||
co-CEO Investment Bank | 2008 | – | – | ||||||||||||||||||||||
Ulrich Körner, | 2009 | 0 | 0.000 | 0 | 0.000 | ||||||||||||||||||||
Group Chief Operating Officer | 2008 | – | – | ||||||||||||||||||||||
Philip J. Lofts, | 2009 | 179,234 | 0.010 | 577,723 | 0.031 | iii: | 11,445 | ||||||||||||||||||
Group Chief Risk Officer | iv: | 11,104 | |||||||||||||||||||||||
vii: | 11,098 | ||||||||||||||||||||||||
xii: | 1,240 | ||||||||||||||||||||||||
xiii: | 5,464 | ||||||||||||||||||||||||
xvi: | 1,199 | ||||||||||||||||||||||||
xxi: | 9,985 | ||||||||||||||||||||||||
xxiii: | 9,980 | ||||||||||||||||||||||||
xxvi: | 9,974 | ||||||||||||||||||||||||
xxviii: | 1,833 | ||||||||||||||||||||||||
xxix: | 1,830 | ||||||||||||||||||||||||
xxx: | 1,830 | ||||||||||||||||||||||||
xxxviii: | 35,524 | ||||||||||||||||||||||||
xl: | 35,524 | ||||||||||||||||||||||||
xlii: | 35,521 | ||||||||||||||||||||||||
xlvii: | 117,090 | ||||||||||||||||||||||||
lvi: | 117,227 | ||||||||||||||||||||||||
lxiv: | 85,256 | ||||||||||||||||||||||||
lxvii: | 74,599 | ||||||||||||||||||||||||
2008 | 186,434 | 0.011 | 577,723 | 0.034 | iii: | 11,445 | |||||||||||||||||||
iv: | 11,104 | ||||||||||||||||||||||||
vii: | 11,098 | ||||||||||||||||||||||||
xii: | 1,240 | ||||||||||||||||||||||||
xiii: | 5,464 | ||||||||||||||||||||||||
xvi: | 1,199 | ||||||||||||||||||||||||
xxi: | 9,985 | ||||||||||||||||||||||||
xxiii: | 9,980 | ||||||||||||||||||||||||
xxvi: | 9,974 | ||||||||||||||||||||||||
xxviii: | 1,833 | ||||||||||||||||||||||||
xxix: | 1,830 | ||||||||||||||||||||||||
xxx: | 1,830 | ||||||||||||||||||||||||
xxxviii: | 35,524 | ||||||||||||||||||||||||
xl: | 35,524 | ||||||||||||||||||||||||
xlii: | 35,521 | ||||||||||||||||||||||||
xlvii: | 117,090 | ||||||||||||||||||||||||
lvi: | 117,227 | ||||||||||||||||||||||||
lxiv: | 85,256 | ||||||||||||||||||||||||
lxvii: | 74,599 | ||||||||||||||||||||||||
387
Financial informationUBS AG (Parent Bank)
Share and option ownership of members of the GEB on 31 December 2008/2009 (continued) | ||||||||||||||||||||||||
Type and | ||||||||||||||||||||||||
For the | Number of | Voting rights | Number of | Potentially conferred | quantity of | |||||||||||||||||||
Name, function1 | year ended | shares held | in % | options held | voting rights in %2 | options3 | ||||||||||||||||||
Robert J. McCann, | 2009 | 602,481 | 0.033 | 0 | 0.000 | |||||||||||||||||||
CEO Wealth Management Americas | 2008 | – | – | |||||||||||||||||||||
Franco Morra, | 2009 | 153,860 | 0.008 | 325,086 | 0.018 | lvi: | 43,911 | |||||||||||||||||
CEO UBS Switzerland | lxiv: | 66,866 | ||||||||||||||||||||||
lxvii: | 114,309 | |||||||||||||||||||||||
lxxii: | 100,000 | |||||||||||||||||||||||
2008 | – | – | ||||||||||||||||||||||
Walter H. Stürzinger, | 2009 | – | – | |||||||||||||||||||||
former Chief Operating Officer, Corporate Center4 | 2008 | 296,886 | 0.018 | 372,995 | 0.022 | xx: | 31,971 | |||||||||||||||||
xli: | 63,942 | |||||||||||||||||||||||
xlvii: | 85,256 | |||||||||||||||||||||||
lvi: | 95,913 | |||||||||||||||||||||||
lxiv: | 95,913 | |||||||||||||||||||||||
Rory Tapner, | 2009 | – | – | |||||||||||||||||||||
former Chairman and CEO Asia Pacific4 | 2008 | 827,809 | 0.049 | 1,379,533 | 0.082 | vii: | 281,862 | |||||||||||||||||
xix: | 213,140 | |||||||||||||||||||||||
xxxi: | 213,140 | |||||||||||||||||||||||
xli: | 170,512 | |||||||||||||||||||||||
xlvii: | 159,855 | |||||||||||||||||||||||
lvi: | 170,512 | |||||||||||||||||||||||
lxiv: | 170,512 | |||||||||||||||||||||||
Raoul Weil, | 2009 | – | – | |||||||||||||||||||||
former Chairman and CEO Global Wealth | 2008 | 315,698 | 0.019 | 432,409 | 0.026 | xix: | 53,285 | |||||||||||||||||
Management & Business Banking4 | xlvii: | 102,281 | ||||||||||||||||||||||
lvi: | 127,884 | |||||||||||||||||||||||
lxiv: | 148,959 | |||||||||||||||||||||||
Alexander Wilmot-Sitwell, | 2009 | 286,767 | 0.016 | 353,807 | 0.019 | xlvi: | 53,282 | |||||||||||||||||
co-CEO Investment Bank | xlix: | 2,130 | ||||||||||||||||||||||
liii: | 35,524 | |||||||||||||||||||||||
liv: | 35,524 | |||||||||||||||||||||||
lv: | 35,521 | |||||||||||||||||||||||
lxiv: | 106,570 | |||||||||||||||||||||||
lxvii: | 85,256 | |||||||||||||||||||||||
2008 | 304,655 | 0.018 | 353,807 | 0.021 | xlvi: | 53,282 | ||||||||||||||||||
xlix: | 2,130 | |||||||||||||||||||||||
liii: | 35,524 | |||||||||||||||||||||||
liv: | 35,524 | |||||||||||||||||||||||
lv: | 35,521 | |||||||||||||||||||||||
lxiv: | 106,570 | |||||||||||||||||||||||
lxvii: | 85,256 | |||||||||||||||||||||||
Robert Wolf, | 2009 | 785,631 | 0.043 | 948,473 | 0.051 | xxv: | 287,739 | |||||||||||||||||
Chairman and CEO, UBS Group Americas/ | xliii: | 213,140 | ||||||||||||||||||||||
President Investment Bank | xlviii: | 127,884 | ||||||||||||||||||||||
lvi: | 106,570 | |||||||||||||||||||||||
lxiv: | 106,570 | |||||||||||||||||||||||
lxvii: | 106,570 | |||||||||||||||||||||||
2008 | 827,307 | 0.049 | 948,473 | 0.056 | xxv: | 287,739 | ||||||||||||||||||
xliii: | 213,140 | |||||||||||||||||||||||
xlviii: | 127,884 | |||||||||||||||||||||||
lvi: | 106,570 | |||||||||||||||||||||||
lxiv: | 106,570 | |||||||||||||||||||||||
lxvii: | 106,570 | |||||||||||||||||||||||
388
Share and option ownership of members of the GEB on 31 December 2008/2009 (continued) | ||||||||||||||||||||||||
Type and | ||||||||||||||||||||||||
For the | Number of | Voting rights | Number | Potentially conferred | quantity of | |||||||||||||||||||
Name, function1 | year ended | shares held | in % | options held | voting rights in %2 | options3 | ||||||||||||||||||
Chi-Won Yoon, | 2009 | 367,573 | 0.020 | 623,253 | 0.034 | i: | 11,577 | |||||||||||||||||
Chairman and CEO Asia Pacific | v: | 11,229 | ||||||||||||||||||||||
viii: | 11,227 | |||||||||||||||||||||||
x: | 2,252 | |||||||||||||||||||||||
xiv: | 6,446 | |||||||||||||||||||||||
xvii: | 2,184 | |||||||||||||||||||||||
xxii: | 8,648 | |||||||||||||||||||||||
xxiv: | 8,642 | |||||||||||||||||||||||
xxvii: | 8,635 | |||||||||||||||||||||||
xxxiv: | 4,262 | |||||||||||||||||||||||
xxxv: | 3,374 | |||||||||||||||||||||||
xxxvi: | 3,371 | |||||||||||||||||||||||
xxxvii: | 3,371 | |||||||||||||||||||||||
xxxviii: | 6,200 | |||||||||||||||||||||||
xxxix: | 4,262 | |||||||||||||||||||||||
xl: | 6,198 | |||||||||||||||||||||||
xlii: | 6,195 | |||||||||||||||||||||||
xliv: | 10,659 | |||||||||||||||||||||||
xlv: | 10,657 | |||||||||||||||||||||||
xlvi: | 10,654 | |||||||||||||||||||||||
liii: | 21,316 | |||||||||||||||||||||||
liv: | 21,314 | |||||||||||||||||||||||
lv: | 21,311 | |||||||||||||||||||||||
lxi: | 8,881 | |||||||||||||||||||||||
lxii: | 8,880 | |||||||||||||||||||||||
lxiii: | 8,880 | |||||||||||||||||||||||
lxvi: | 42,628 | |||||||||||||||||||||||
lxxii: | 350,000 | |||||||||||||||||||||||
2008 | – | – | ||||||||||||||||||||||
Jürg Zeltner, | 2009 | 16,502 | 0.001 | 205,470 | 0.011 | iii: | 809 | |||||||||||||||||
CEO Wealth Management | iv: | 784 | ||||||||||||||||||||||
vii: | 784 | |||||||||||||||||||||||
xlii: | 4,972 | |||||||||||||||||||||||
xliv: | 7,106 | |||||||||||||||||||||||
xlv: | 7,103 | |||||||||||||||||||||||
xlvi: | 7,103 | |||||||||||||||||||||||
xlix: | 93 | |||||||||||||||||||||||
l: | 161 | |||||||||||||||||||||||
li: | 149 | |||||||||||||||||||||||
lii: | 127 | |||||||||||||||||||||||
liii: | 7,106 | |||||||||||||||||||||||
liv: | 7,103 | |||||||||||||||||||||||
lv: | 7,103 | |||||||||||||||||||||||
lvii: | 110 | |||||||||||||||||||||||
lviii: | 242 | |||||||||||||||||||||||
lix: | 230 | |||||||||||||||||||||||
lx: | 221 | |||||||||||||||||||||||
lxi: | 7,105 | |||||||||||||||||||||||
lxii: | 7,105 | |||||||||||||||||||||||
lxiii: | 7,103 | |||||||||||||||||||||||
lxv: | 223 | |||||||||||||||||||||||
lxvii: | 42,628 | |||||||||||||||||||||||
lxxii: | 90,000 | |||||||||||||||||||||||
2008 | – | – | ||||||||||||||||||||||
Total | ||||||||||||||||||||||||
For the | number of | Number of | Year of | Vesting | Expiry | Strike | ||||||||||||||||||
year ended | options held2 | options3 | grant | date | date | price | ||||||||||||||||||
Philip J. Lofts, Group Chief Risk Officer (continued) | ||||||||||||||||||||||||
2010 | 577,723 | 9,985 | 2003 | 01/03/2004 | 31/01/2013 | CHF 27.81 | ||||||||||||||||||
9,980 | 2003 | 01/03/2005 | 31/01/2013 | CHF 27.81 | ||||||||||||||||||||
9,974 | 2003 | 01/03/2006 | 31/01/2013 | CHF 27.81 | ||||||||||||||||||||
1,833 | 2003 | 01/03/2004 | 28/02/2013 | CHF 26.39 | ||||||||||||||||||||
1,830 | 2003 | 01/03/2005 | 28/02/2013 | CHF 26.39 | ||||||||||||||||||||
1,830 | 2003 | 01/03/2006 | 28/02/2013 | CHF 26.39 | ||||||||||||||||||||
35,524 | 2004 | 01/03/2005 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
35,524 | 2004 | 01/03/2006 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
35,521 | 2004 | 01/03/2007 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
117,090 | 2005 | 01/03/2008 | 28/02/2015 | CHF 52.32 | ||||||||||||||||||||
117,227 | 2006 | 01/03/2009 | 28/02/2016 | CHF 72.57 | ||||||||||||||||||||
85,256 | 2007 | 01/03/2010 | 28/02/2017 | CHF 73.67 | ||||||||||||||||||||
74,599 | 2008 | 01/03/2011 | 28/02/2018 | CHF 35.66 | ||||||||||||||||||||
2009 | 577,723 | 11,445 | 2002 | 31/01/2003 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||
11,104 | 2002 | 31/01/2004 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||||
11,098 | 2002 | 31/01/2005 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||||
1,240 | 2002 | 28/02/2003 | 28/02/2012 | CHF 36.65 | ||||||||||||||||||||
5,464 | 2002 | 28/02/2004 | 28/02/2012 | CHF 36.65 | ||||||||||||||||||||
1,199 | 2002 | 28/02/2005 | 28/02/2012 | CHF 36.65 | ||||||||||||||||||||
9,985 | 2003 | 01/03/2004 | 31/01/2013 | CHF 27.81 | ||||||||||||||||||||
9,980 | 2003 | 01/03/2005 | 31/01/2013 | CHF 27.81 | ||||||||||||||||||||
9,974 | 2003 | 01/03/2006 | 31/01/2013 | CHF 27.81 | ||||||||||||||||||||
1,833 | 2003 | 01/03/2004 | 28/02/2013 | CHF 26.39 | ||||||||||||||||||||
1,830 | 2003 | 01/03/2005 | 28/02/2013 | CHF 26.39 | ||||||||||||||||||||
1,830 | 2003 | 01/03/2006 | 28/02/2013 | CHF 26.39 | ||||||||||||||||||||
35,524 | 2004 | 01/03/2005 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
35,524 | 2004 | 01/03/2006 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
35,521 | 2004 | 01/03/2007 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
117,090 | 2005 | 01/03/2008 | 28/02/2015 | CHF 52.32 | ||||||||||||||||||||
117,227 | 2006 | 01/03/2009 | 28/02/2016 | CHF 72.57 | ||||||||||||||||||||
85,256 | 2007 | 01/03/2010 | 28/02/2017 | CHF 73.67 | ||||||||||||||||||||
74,599 | 2008 | 01/03/2011 | 28/02/2018 | CHF 35.66 | ||||||||||||||||||||
Robert J. McCann, CEO Wealth Management Americas | ||||||||||||||||||||||||
2010 | 0 | |||||||||||||||||||||||
2009 | 0 | |||||||||||||||||||||||
Francesco Morra, former CEO UBS Switzerland4 | ||||||||||||||||||||||||
2010 | – | |||||||||||||||||||||||
2009 | 325,086 | 43,911 | 2006 | 01/03/2009 | 28/02/2016 | CHF 72.57 | ||||||||||||||||||
66,866 | 2007 | 01/03/2010 | 28/02/2017 | CHF 73.67 | ||||||||||||||||||||
114,309 | 2008 | 01/03/2011 | 28/02/2018 | CHF 35.66 | ||||||||||||||||||||
100,000 | 2009 | 01/03/2012 | 27/02/2019 | CHF 11.35 | ||||||||||||||||||||
Alexander Wilmot-Sitwell, co-Chairman and co-CEO Group Asia Pacific | ||||||||||||||||||||||||
2010 | 353,807 | 53,282 | 2005 | 01/03/2008 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||
2,130 | 2005 | 04/03/2007 | 04/03/2015 | CHF 47.89 |
Total | ||||||||||||||||||||||||
For the | number of | Number of | Year of | Vesting | Expiry | Strike | ||||||||||||||||||
year ended | options held2 | options3 | grant | date | date | price | ||||||||||||||||||
Alexander Wilmot-Sitwell, co-Chairman und co-CEO Group Asia Pacific (cont.) | ||||||||||||||||||||||||
2010 | 353,807 | 35,524 | 2006 | 01/03/2007 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||
35,524 | 2006 | 01/03/2008 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
35,521 | 2006 | 01/03/2009 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
106,570 | 2007 | 01/03/2010 | 28/02/2017 | CHF 73.67 | ||||||||||||||||||||
85,256 | 2008 | 01/03/2011 | 28/02/2018 | CHF 35.66 | ||||||||||||||||||||
2009 | 353,807 | 53,282 | 2005 | 01/03/2008 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||
2,130 | 2005 | 04/03/2007 | 04/03/2015 | CHF 47.89 | ||||||||||||||||||||
35,524 | 2006 | 01/03/2007 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
35,524 | 2006 | 01/03/2008 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
35,521 | 2006 | 01/03/2009 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
106,570 | 2007 | 01/03/2010 | 28/02/2017 | CHF 73.67 | ||||||||||||||||||||
85,256 | 2008 | 01/03/2011 | 28/02/2018 | CHF 35.66 | ||||||||||||||||||||
Robert Wolf, Chairman and CEO, UBS Group Americas / | ||||||||||||||||||||||||
President Investment Bank | ||||||||||||||||||||||||
2010 | 948,473 | 287,739 | 2003 | 31/01/2006 | 31/01/2013 | USD 22.53 | ||||||||||||||||||
213,140 | 2004 | 01/03/2007 | 27/02/2014 | USD 38.13 | ||||||||||||||||||||
127,884 | 2005 | 01/03/2008 | 28/02/2015 | USD 44.81 | ||||||||||||||||||||
106,570 | 2006 | 01/03/2009 | 28/02/2016 | CHF 72.57 | ||||||||||||||||||||
106,570 | 2007 | 01/03/2010 | 28/02/2017 | CHF 73.67 | ||||||||||||||||||||
106,570 | 2008 | 01/03/2011 | 28/02/2018 | CHF 35.66 | ||||||||||||||||||||
2009 | 948,473 | 287,739 | 2003 | 31/01/2006 | 31/01/2013 | USD 22.53 | ||||||||||||||||||
213,140 | 2004 | 01/03/2007 | 27/02/2014 | USD 38.13 | ||||||||||||||||||||
127,884 | 2005 | 01/03/2008 | 28/02/2015 | USD 44.81 | ||||||||||||||||||||
106,570 | 2006 | 01/03/2009 | 28/02/2016 | CHF 72.57 | ||||||||||||||||||||
106,570 | 2007 | 01/03/2010 | 28/02/2017 | CHF 73.67 | ||||||||||||||||||||
106,570 | 2008 | 01/03/2011 | 28/02/2018 | CHF 35.66 | ||||||||||||||||||||
Chi-Won Yoon, co-Chairman and co-CEO Group Asia Pacific | ||||||||||||||||||||||||
2010 | 623,253 | 11,577 | 2002 | 31/01/2002 | 31/01/2012 | USD 21.24 | ||||||||||||||||||
11,229 | 2002 | 31/01/2004 | 31/01/2012 | USD 21.24 | ||||||||||||||||||||
11,227 | 2002 | 31/01/2005 | 31/01/2012 | USD 21.24 | ||||||||||||||||||||
2,252 | 2002 | 28/02/2002 | 28/02/2012 | USD 21.70 | ||||||||||||||||||||
6,446 | 2002 | 29/02/2004 | 28/02/2012 | USD 21.70 | ||||||||||||||||||||
2,184 | 2002 | 28/02/2005 | 28/02/2012 | USD 21.70 | ||||||||||||||||||||
8,648 | 2003 | 01/03/2004 | 31/01/2013 | USD 20.49 | ||||||||||||||||||||
8,642 | 2003 | 01/03/2005 | 31/01/2013 | USD 20.49 | ||||||||||||||||||||
8,635 | 2003 | 01/03/2006 | 31/01/2013 | USD 20.49 | ||||||||||||||||||||
4,262 | 2003 | 28/02/2005 | 28/02/2013 | USD 19.53 | ||||||||||||||||||||
3,374 | 2003 | 01/03/2004 | 28/02/2013 | USD 19.53 | ||||||||||||||||||||
3,371 | 2003 | 01/03/2005 | 28/02/2013 | USD 19.53 | ||||||||||||||||||||
3,371 | 2003 | 01/03/2006 | 28/02/2013 | USD 19.53 | ||||||||||||||||||||
6,200 | 2004 | 01/03/2005 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
4,262 | 2004 | 27/02/2006 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
6,198 | 2004 | 01/03/2006 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
6,195 | 2004 | 01/03/2007 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
10,659 | 2005 | 01/03/2006 | 28/02/2015 | CHF 47.58 |
397
Financial information
UBS AG (Parent Bank)
Vested and unvested options held by GEB members on 31 December 2009 / 20101 (continued)
Total | ||||||||||||||||||||||||
For the | number of | Number of | Year of | Vesting | Expiry | Strike | ||||||||||||||||||
year ended | options held2 | options3 | grant | date | date | price | ||||||||||||||||||
Chi-Won Yoon, co-Chairman und co-CEO Group Asia Pacific (continued) | ||||||||||||||||||||||||
2010 | 623,253 | 10,657 | 2005 | 01/03/2007 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||
10,654 | 2005 | 01/03/2008 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
21,316 | 2006 | 01/03/2007 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
21,314 | 2006 | 01/03/2008 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
21,311 | 2006 | 01/03/2009 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
8,881 | 2007 | 01/03/2008 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
8,880 | 2007 | 01/03/2009 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
8,880 | 2007 | 01/03/2010 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
42,628 | 2008 | 01/03/2011 | 28/02/2018 | CHF 32.45 | ||||||||||||||||||||
350,000 | 2009 | 01/03/2012 | 27/02/2019 | CHF 11.35 | ||||||||||||||||||||
2009 | 623,253 | 11,577 | 2002 | 31/01/2002 | 31/01/2012 | USD 21.24 | ||||||||||||||||||
11,229 | 2002 | 31/01/2004 | 31/01/2012 | USD 21.24 | ||||||||||||||||||||
11,227 | 2002 | 31/01/2005 | 31/01/2012 | USD 21.24 | ||||||||||||||||||||
2,252 | 2002 | 28/02/2002 | 28/02/2012 | USD 21.70 | ||||||||||||||||||||
6,446 | 2002 | 29/02/2004 | 28/02/2012 | USD 21.70 | ||||||||||||||||||||
2,184 | 2002 | 28/02/2005 | 28/02/2012 | USD 21.70 | ||||||||||||||||||||
8,648 | 2003 | 01/03/2004 | 31/01/2013 | USD 20.49 | ||||||||||||||||||||
8,642 | 2003 | 01/03/2005 | 31/01/2013 | USD 20.49 | ||||||||||||||||||||
8,635 | 2003 | 01/03/2006 | 31/01/2013 | USD 20.49 | ||||||||||||||||||||
4,262 | 2003 | 28/02/2005 | 28/02/2013 | USD 19.53 | ||||||||||||||||||||
3,374 | 2003 | 01/03/2004 | 28/02/2013 | USD 19.53 | ||||||||||||||||||||
3,371 | 2003 | 01/03/2005 | 28/02/2013 | USD 19.53 | ||||||||||||||||||||
3,371 | 2003 | 01/03/2006 | 28/02/2013 | USD 19.53 | ||||||||||||||||||||
6,200 | 2004 | 01/03/2005 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
4,262 | 2004 | 27/02/2006 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
6,198 | 2004 | 01/03/2006 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
6,195 | 2004 | 01/03/2007 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
10,659 | 2005 | 01/03/2006 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
10,657 | 2005 | 01/03/2007 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
10,654 | 2005 | 01/03/2008 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
21,316 | 2006 | 01/03/2007 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
21,314 | 2006 | 01/03/2008 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
21,311 | 2006 | 01/03/2009 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
8,881 | 2007 | 01/03/2008 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
8,880 | 2007 | 01/03/2009 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
8,880 | 2007 | 01/03/2010 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
42,628 | 2008 | 01/03/2011 | 28/02/2018 | CHF 32.45 | ||||||||||||||||||||
350,000 | 2009 | 01/03/2012 | 27/02/2019 | CHF 11.35 | ||||||||||||||||||||
Jürg Zeltner, CEO UBS Wealth Management and | ||||||||||||||||||||||||
co-CEO Wealth Management & Swiss Bank | ||||||||||||||||||||||||
2010 | 205,470 | 809 | 2002 | 31/01/2003 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||
784 | 2002 | 31/01/2004 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||||
784 | 2002 | 31/01/2005 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||||
4,972 | 2004 | 01/03/2007 | 27/02/2014 | CHF 44.32 |
Total | ||||||||||||||||||||||||
For the | number of | Number of | Year of | Vesting | Expiry | Strike | ||||||||||||||||||
year ended | options held2 | options3 | grant | date | date | price | ||||||||||||||||||
Jürg Zeltner, CEO UBS Wealth Management and | ||||||||||||||||||||||||
co-CEO Wealth Management & Swiss Bank (continued) | ||||||||||||||||||||||||
2010 | 205,470 | 7,106 | 2005 | 01/03/2006 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||
7,103 | 2005 | 01/03/2007 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
7,103 | 2005 | 01/03/2008 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
93 | 2005 | 04/03/2007 | 04/03/2015 | CHF 47.89 | ||||||||||||||||||||
161 | 2005 | 06/06/2007 | 06/06/2015 | CHF 45.97 | ||||||||||||||||||||
149 | 2005 | 09/09/2007 | 09/09/2015 | CHF 50.47 | ||||||||||||||||||||
127 | 2005 | 05/12/2007 | 05/12/2015 | CHF 59.03 | ||||||||||||||||||||
7,106 | 2006 | 01/03/2007 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
7,103 | 2006 | 01/03/2008 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
7,103 | 2006 | 01/03/2009 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
110 | 2006 | 03/03/2008 | 03/03/2016 | CHF 65.91 | ||||||||||||||||||||
242 | 2006 | 09/06/2008 | 09/06/2016 | CHF 61.84 | ||||||||||||||||||||
230 | 2006 | 08/09/2008 | 08/09/2016 | CHF 65.76 | ||||||||||||||||||||
221 | 2006 | 08/12/2008 | 08/12/2016 | CHF 67.63 | ||||||||||||||||||||
7,105 | 2007 | 01/03/2008 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
7,105 | 2007 | 01/03/2009 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
7,103 | 2007 | 01/03/2010 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
223 | 2007 | 02/03/2009 | 02/03/2017 | CHF 67.08 | ||||||||||||||||||||
42,628 | 2008 | 01/03/2011 | 28/02/2018 | CHF 35.66 | ||||||||||||||||||||
90,000 | 2009 | 01/03/2012 | 27/02/2019 | CHF 11.35 | ||||||||||||||||||||
2009 | 205,470 | 809 | 2002 | 31/01/2003 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||
784 | 2002 | 31/01/2004 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||||
784 | 2002 | 31/01/2005 | 31/01/2012 | CHF 36.49 | ||||||||||||||||||||
4,972 | 2004 | 01/03/2007 | 27/02/2014 | CHF 44.32 | ||||||||||||||||||||
7,106 | 2005 | 01/03/2006 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
7,103 | 2005 | 01/03/2007 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
7,103 | 2005 | 01/03/2008 | 28/02/2015 | CHF 47.58 | ||||||||||||||||||||
93 | 2005 | 04/03/2007 | 04/03/2015 | CHF 47.89 | ||||||||||||||||||||
161 | 2005 | 06/06/2007 | 06/06/2015 | CHF 45.97 | ||||||||||||||||||||
149 | 2005 | 09/09/2007 | 09/09/2015 | CHF 50.47 | ||||||||||||||||||||
127 | 2005 | 05/12/2007 | 05/12/2015 | CHF 59.03 | ||||||||||||||||||||
7,106 | 2006 | 01/03/2007 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
7,103 | 2006 | 01/03/2008 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
7,103 | 2006 | 01/03/2009 | 28/02/2016 | CHF 65.97 | ||||||||||||||||||||
110 | 2006 | 03/03/2008 | 03/03/2016 | CHF 65.91 | ||||||||||||||||||||
242 | 2006 | 09/06/2008 | 09/06/2016 | CHF 61.84 | ||||||||||||||||||||
230 | 2006 | 08/09/2008 | 08/09/2016 | CHF 65.76 | ||||||||||||||||||||
221 | 2006 | 08/12/2008 | 08/12/2016 | CHF 67.63 | ||||||||||||||||||||
7,105 | 2007 | 01/03/2008 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
7,105 | 2007 | 01/03/2009 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
7,103 | 2007 | 01/03/2010 | 28/02/2017 | CHF 67.00 | ||||||||||||||||||||
223 | 2007 | 02/03/2009 | 02/03/2017 | CHF 67.08 | ||||||||||||||||||||
42,628 | 2008 | 01/03/2011 | 28/02/2018 | CHF 35.66 | ||||||||||||||||||||
90,000 | 2009 | 01/03/2012 | 27/02/2019 | CHF 11.35 |
398
Financial information |
Loans granted to GEB members on 31 December 2009 / 2010
CHF, except where indicateda | ||||||||
Name, function1 | For the year ended | Loans2 | ||||||
Jürg Zeltner, CEO UBS Wealth Management, co-CEO Wealth Management & Swiss Bank3 | 2010 | 5,739,862 | ||||||
Jürg Zeltner, CEO UBS Wealth Management, co-CEO Wealth Management & Swiss Bank3 | 2009 | 5,800,202 | ||||||
Aggregate of all GEB members | 2010 | 20,696,569 | ||||||
2009 | 15,356,483 | |||||||
Loans granted to BoD members on 31 December 2009 / 2010 GEB
CHF, except where indicateda | ||||||||
Name, function1 | For the year ended | Loans2 | ||||||
Kaspar Villiger, Chairman | 2010 | 0 | ||||||
2009 | 0 | |||||||
Michel Demaré, Vice Chairman | 2010 | 850,000 | ||||||
2009 | 850,000 | |||||||
David Sidwell, Senior Independent Director | 2010 | 0 | ||||||
2009 | 0 | |||||||
Sergio Marchionne, former Senior Independent Director, former Vice Chairman3 | 2010 | – | ||||||
2009 | 0 | |||||||
Sally Bott, member | 2010 | 0 | ||||||
2009 | 0 | |||||||
Rainer-Marc Frey, member | 2010 | 0 | ||||||
2009 | 0 | |||||||
Bruno Gehrig, member4 | 2010 | 798,000 | ||||||
2009 | 798,000 | |||||||
Ann F. Godbehere, member | 2010 | 0 | ||||||
2009 | 0 | |||||||
Axel P. Lehmann, member | 2010 | 0 | ||||||
2009 | 0 | |||||||
Wolfgang Mayrhuber, member | 2010 | 0 | ||||||
2009 | 0 | |||||||
Helmut Panke, member | 2010 | 0 | ||||||
2009 | 0 | |||||||
William G. Parrett, member4 | 2010 | 0 | ||||||
2009 | 1,260,731 | |||||||
Peter R. Voser, member3 | 2010 | – | ||||||
2009 | 0 | |||||||
Aggregate of all BoD members | 2010 | 1,648,000 | ||||||
2009 | 2,908,731 | |||||||
389399
Financial information
UBS AG (Parent Bank)
Ernst & Young Ltd | ||||
Aeschengraben 9 | ||||
CH-4002 Basel | ||||
Phone | +41 58 286 86 86 | |||
Fax | +41 58 286 86 00 | |||
www.ey.com/ch | ||||
To the General Meeting of
UBS AG, Zurich and Basel
Basel, 3 March 2011
Report of the BoDstatutory auditor on the financial statements
As statutory auditor, we have audited the financial statements which comprise the balance sheet, income statement andby members notes on pages 380 to 399 of UBS AG for the year ended 31 December 2010.
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation of the GEBfinancial statements in accordance with the requirements of Swiss law and the Company’s articles of association. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements for the year ended 31 December 2008/20092010 comply with Swiss law and the Company’s articles of association.
Vested and unvested options held by independent members of the BoD and by members of the GEB on 31 December 2008/2009 | ||||||||||||||||||||||||
Type | Number of options | Year of grant | Vesting date | Expiry date | Subscription ratio | Strike price | ||||||||||||||||||
i | 11,577 | 2002 | 31.01.2002 | 31.01.2012 | 1:1 | USD 21.24 | ||||||||||||||||||
ii | 8,679 | 2002 | 31.01.2002 | 31.07.2012 | 1:1 | USD 21.24 | ||||||||||||||||||
iii | 33,616 | 2002 | 31.01.2003 | 31.01.2012 | 1:1 | CHF 36.49 | ||||||||||||||||||
iv | 32,619 | 2002 | 31.01.2004 | 31.01.2012 | 1:1 | CHF 36.49 | ||||||||||||||||||
v | 11,229 | 2002 | 31.01.2004 | 31.01.2012 | 1:1 | USD 21.24 | ||||||||||||||||||
vi | 8,421 | 2002 | 31.01.2004 | 31.07.2012 | 1:1 | USD 21.24 | ||||||||||||||||||
vii | 314,469 | 2002 | 31.01.2005 | 31.01.2012 | 1:1 | CHF 36.49 | ||||||||||||||||||
viii | 87,607 | 2002 | 31.01.2005 | 31.01.2012 | 1:1 | USD 21.24 | ||||||||||||||||||
ix | 8,421 | 2002 | 31.01.2005 | 31.07.2012 | 1:1 | USD 21.24 | ||||||||||||||||||
x | 2,252 | 2002 | 28.02.2002 | 28.02.2012 | 1:1 | USD 21.70 | ||||||||||||||||||
xi | 8,823 | 2002 | 28.02.2002 | 28.08.2012 | 1:1 | USD 21.70 | ||||||||||||||||||
xii | 6,694 | 2002 | 28.02.2003 | 28.02.2012 | 1:1 | CHF 36.65 | ||||||||||||||||||
xiii | 10,758 | 2002 | 28.02.2004 | 28.02.2012 | 1:1 | CHF 36.65 | ||||||||||||||||||
xiv | 10,708 | 2002 | 29.02.2004 | 28.02.2012 | 1:1 | USD 21.70 | ||||||||||||||||||
xv | 8,563 | 2002 | 29.02.2004 | 28.08.2012 | 1:1 | USD 21.70 | ||||||||||||||||||
xvi | 6,491 | 2002 | 28.02.2005 | 28.02.2012 | 1:1 | CHF 36.65 | ||||||||||||||||||
xvii | 2,184 | 2002 | 28.02.2005 | 28.02.2012 | 1:1 | USD 21.70 | ||||||||||||||||||
xviii | 8,561 | 2002 | 28.02.2005 | 28.08.2012 | 1:1 | USD 21.70 | ||||||||||||||||||
xix | 394,309 | 2002 | 28.06.2005 | 28.06.2012 | 1:1 | CHF 37.90 | ||||||||||||||||||
xx | 31,971 | 2002 | 28.06.2005 | 28.12.2012 | 1:1 | CHF 37.90 | ||||||||||||||||||
xxi | 33,611 | 2003 | 01.03.2004 | 31.01.2013 | 1:1 | CHF 27.81 | ||||||||||||||||||
xxii | 8,648 | 2003 | 01.03.2004 | 31.01.2013 | 1:1 | USD 20.49 | ||||||||||||||||||
xxiii | 33,600 | 2003 | 01.03.2005 | 31.01.2013 | 1:1 | CHF 27.81 | ||||||||||||||||||
xxiv | 8,642 | 2003 | 01.03.2005 | 31.01.2013 | 1:1 | USD 20.49 | ||||||||||||||||||
xxv | 415,623 | 2003 | 31.01.2006 | 31.01.2013 | 1:1 | USD 22.53 | ||||||||||||||||||
xxvi | 33,586 | 2003 | 01.03.2006 | 31.01.2013 | 1:1 | CHF 27.81 | ||||||||||||||||||
xxvii | 8,635 | 2003 | 01.03.2006 | 31.01.2013 | 1:1 | USD 20.49 | ||||||||||||||||||
xxviii | 7,359 | 2003 | 01.03.2004 | 28.02.2013 | 1:1 | CHF 26.39 | ||||||||||||||||||
xxix | 7,354 | 2003 | 01.03.2005 | 28.02.2013 | 1:1 | CHF 26.39 | ||||||||||||||||||
xxx | 7,354 | 2003 | 01.03.2006 | 28.02.2013 | 1:1 | CHF 26.39 | ||||||||||||||||||
xxxi | 213,140 | 2003 | 31.01.2006 | 31.01.2013 | 1:1 | CHF 30.50 | ||||||||||||||||||
xxxii | 31,971 | 2003 | 31.01.2006 | 31.07.2013 | 1:1 | CHF 30.50 | ||||||||||||||||||
xxxiii | 42,628 | 2003 | 31.01.2006 | 31.07.2013 | 1:1 | USD 22.53 | ||||||||||||||||||
xxxiv | 4,262 | 2003 | 28.02.2005 | 28.02.2013 | 1:1 | USD 19.53 | ||||||||||||||||||
xxxv | 3,374 | 2003 | 01.03.2004 | 28.02.2013 | 1:1 | USD 19.53 | ||||||||||||||||||
xxxvi | 3,371 | 2003 | 01.03.2005 | 28.02.2013 | 1:1 | USD 19.53 | ||||||||||||||||||
xxxvii | 3,371 | 2003 | 01.03.2006 | 28.02.2013 | 1:1 | USD 19.53 | ||||||||||||||||||
xxxviii | 58,796 | 2004 | 01.03.2005 | 27.02.2014 | 1:1 | CHF 44.32 | ||||||||||||||||||
xxxix | 4,262 | 2004 | 27.02.2006 | 27.02.2014 | 1:1 | CHF 44.32 | ||||||||||||||||||
xl | 58,790 | 2004 | 01.03.2006 | 27.02.2014 | 1:1 | CHF 44.32 | ||||||||||||||||||
xli | 532,850 | 2004 | 28.02.2007 | 27.02.2014 | 1:1 | CHF 48.69 | ||||||||||||||||||
xlii | 63,751 | 2004 | 01.03.2007 | 27.02.2014 | 1:1 | CHF 44.32 | ||||||||||||||||||
xliii | 436,937 | 2004 | 01.03.2007 | 27.02.2014 | 1:1 | USD 38.13 | ||||||||||||||||||
xliv | 31,975 | 2005 | 01.03.2006 | 28.02.2015 | 1:1 | CHF 47.58 | ||||||||||||||||||
xlv | 31,970 | 2005 | 01.03.2007 | 28.02.2015 | 1:1 | CHF 47.58 | ||||||||||||||||||
xlvi | 85,246 | 2005 | 01.03.2008 | 28.02.2015 | 1:1 | CHF 47.58 | ||||||||||||||||||
xlvii | 837,477 | 2005 | 01.03.2008 | 28.02.2015 | 1:1 | CHF 52.32 | ||||||||||||||||||
xlviii | 383,652 | 2005 | 01.03.2008 | 28.02.2015 | 1:1 | USD 44.81 | ||||||||||||||||||
xlix | 2,223 | 2005 | 04.03.2007 | 04.03.2015 | 1:1 | CHF 47.89 | ||||||||||||||||||
l | 161 | 2005 | 06.06.2007 | 06.06.2015 | 1:1 | CHF 45.97 | ||||||||||||||||||
li | 149 | 2005 | 09.09.2007 | 09.09.2015 | 1:1 | CHF 50.47 | ||||||||||||||||||
390400
Financial information |
Vested and unvested options held by independent members of the BoD and by members of the GEB on 31 December 2008/2009 (continued) | ||||||||||||||||||||||||
Type | Number of options | Year of grant | Vesting date | Expiry date | Subscription ratio | Strike price | ||||||||||||||||||
lii | 127 | 2005 | 05.12.2007 | 05.12.2015 | 1:1 | CHF 59.03 | ||||||||||||||||||
liii | 69,276 | 2006 | 01.03.2007 | 28.02.2016 | 1:1 | CHF 65.97 | ||||||||||||||||||
liv | 69,269 | 2006 | 01.03.2008 | 28.02.2016 | 1:1 | CHF 65.97 | ||||||||||||||||||
lv | 69,261 | 2006 | 01.03.2009 | 28.02.2016 | 1:1 | CHF 65.97 | ||||||||||||||||||
lvi | 1,376,036 | 2006 | 01.03.2009 | 28.02.2016 | 1:1 | CHF 72.57 | ||||||||||||||||||
lvii | 110 | 2006 | 03.03.2008 | 03.03.2016 | 1:1 | CHF 65.91 | ||||||||||||||||||
lviii | 242 | 2006 | 09.06.2008 | 09.06.2016 | 1:1 | CHF 61.84 | ||||||||||||||||||
lix | 230 | 2006 | 08.09.2008 | 08.09.2016 | 1:1 | CHF 65.76 | ||||||||||||||||||
lx | 221 | 2006 | 08.12.2008 | 08.12.2016 | 1:1 | CHF 67.63 | ||||||||||||||||||
lxi | 33,748 | 2007 | 01.03.2008 | 28.02.2017 | 1:1 | CHF 67.00 | ||||||||||||||||||
lxii | 33,747 | 2007 | 01.03.2009 | 28.02.2017 | 1:1 | CHF 67.00 | ||||||||||||||||||
lxiii | 33,743 | 2007 | 01.03.2010 | 28.02.2017 | 1:1 | CHF 67.00 | ||||||||||||||||||
lxiv | 1,415,142 | 2007 | 01.03.2010 | 28.02.2017 | 1:1 | CHF 73.67 | ||||||||||||||||||
lxv | 223 | 2007 | 02.03.2009 | 02.03.2017 | 1:1 | CHF 67.08 | ||||||||||||||||||
lxvi | 95,913 | 2008 | 01.03.2011 | 28.02.2018 | 1:1 | CHF 32.45 | ||||||||||||||||||
lxvii | 662,415 | 2008 | 01.03.2011 | 28.02.2018 | 1:1 | CHF 35.66 | ||||||||||||||||||
lxviii | 745,990 | 2008 | 01.03.2011 | 07.04.2018 | 1:1 | CHF 36.46 | ||||||||||||||||||
lxix | 7,420 | 2008 | 01.03.2011 | 06.06.2018 | 1:1 | CHF 28.10 | ||||||||||||||||||
lxx | 4,000,000 | 2009 | 26.02.2009 | 25.02.2014 | 1:1 | CHF 10.10 | ||||||||||||||||||
lxxi | 905,000 | 2009 | 01.03.2012 | 27.12.2019 | 1:1 | CHF 40.00 | ||||||||||||||||||
lxxii | 540,000 | 2009 | 01.03.2012 | 27.02.2019 | 1:1 | CHF 11.35 | ||||||||||||||||||
2 |
391Report on other legal requirements
We confirm that we meet the Swiss legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (Art. 728 Code of Obligations (CO) and Art. 11 AOA) and that there are no circumstances incompatible with our independence.
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of financial statements in accordance with the instructions of the Board of Directors.
We further confirm that the proposed appropriation of available earnings complies with Swiss law and the Company’s articles of association. We recommend that the financial statements submitted to you be approved.
Ernst & Young Ltd | ||
Jonathan Bourne | Dr. Andreas Blumer | |
Licensed audit expert | Licensed audit expert | |
(Auditor in charge) |
401
Financial information
UBS AG (Parent Bank)
Phone 044 444 36 44 | BDO Ltd | |||
Fax 044 444 37 84 | Fabrikstrasse 50 | |||
www.bdo.ch | 8031 Zurich | |||
Confirmation of the BoD on 31 December 2008 / 2009auditors concerning conditional capital increase
Loans granted to members of the BoD on 31 December 2008 / 2009 | ||||||||||||||
CHF, except where indicateda | ||||||||||||||
For the | Other loans | |||||||||||||
Name, function1 | year ended | Secured loans | granted | Total | ||||||||||
Kaspar Villiger, Chairman | 2009 | 0 | 0 | 0 | ||||||||||
2008 | 0 | 0 | 0 | |||||||||||
Sergio Marchionne, Senior Independent Director, Vice Chairman | 2009 | 0 | 0 | 0 | ||||||||||
2008 | 0 | 0 | 0 | |||||||||||
Ernesto Bertarelli, former member3 | 2009 | – | – | – | ||||||||||
2008 | 0 | 0 | 0 | |||||||||||
Sally Bott, member | 2009 | 0 | 0 | 0 | ||||||||||
2008 | 0 | 0 | 0 | |||||||||||
Michel Demaré, member | 2009 | 850,000 | 0 | 850,000 | ||||||||||
2008 | 0 | 0 | 0 | |||||||||||
Rainer-Marc Frey, member | 2009 | 0 | 0 | 0 | ||||||||||
2008 | 0 | 0 | 0 | |||||||||||
Bruno Gehrig, member2 | 2009 | 798,000 | 0 | 798,000 | ||||||||||
2008 | 798,000 | 0 | 798,000 | |||||||||||
Ann F. Godbehere, member | 2009 | 0 | 0 | 0 | ||||||||||
2008 | 0 | 0 | 0 | |||||||||||
Gabrielle Kaufmann-Kohler, former member3 | 2009 | – | – | – | ||||||||||
2008 | 0 | 0 | 0 | |||||||||||
Peter Kurer, former Chairman2,3 | 2009 | – | – | – | ||||||||||
2008 | 1,261,000 | 0 | 1,261,000 | |||||||||||
Axel P. Lehmann, member | 2009 | 0 | 0 | 0 | ||||||||||
2008 | 0 | 0 | 0 | |||||||||||
Helmut Panke, member | 2009 | 0 | 0 | 0 | ||||||||||
2008 | 0 | 0 | 0 | |||||||||||
William G. Parrett, member2 | 2009 | 1,260,731 | 0 | 1,260,731 | ||||||||||
2008 | 1,167,659 | 0 | 1,167,659 | |||||||||||
David Sidwell, member | 2009 | 0 | 0 | 0 | ||||||||||
2008 | 0 | 0 | 0 | |||||||||||
Peter R. Voser, member | 2009 | 0 | 0 | 0 | ||||||||||
2008 | 0 | 0 | 0 | |||||||||||
Joerg Wolle, former member3 | 2009 | – | – | – | ||||||||||
2008 | 0 | 0 | 0 | |||||||||||
Aggregate of all members of the BoD | 2009 | 2,908,731 | 0 | 2,908,731 | ||||||||||
Aggregate of all members of the BoD | 2008 | 3,226,659 | 0 | 3,226,659 | ||||||||||
As special auditors of UBS AG, we have been granted to related partiesaudited the issue of new shares and the preconditions for the adjustment of the membersprovisions regarding the conditional capital increase according to article 4a of the BoD at conditions not customaryarticles of association in the market. 2 Secured loans granted priorperiod from 1 January 2010 to their election5 March 2010 in accordance with the provisions of article 653f paragraph 1 of the Swiss code of obligations.
According to article 4a of the articles of association, the following possibilities for the issue of conditional capital exist:
• | Paragraph 1; employee stock option plans of Paine Webber Group Inc., New York, based on the resolution of the annual general meeting of 7 September 2000. | ||
• | Paragraph 2; employee stock option plans of UBS AG, based on the resolution of the annual general meeting of 19 April 2006. | ||
• | Paragraph 3; 9% mandatory convertible notes due 2010, based on the resolution of the general meeting of shareholders of 27 February 2008. | ||
• | Paragraph 4; options granted to the Swiss National Bank in connection with its loan granted to the 5NB StabFund Limited Partnership for Collective Investment, based on the resolution of the general meeting of shareholders of 27 November 2008. |
In addition we have audited the expiration of options relating to the BoD. 3 Including those membersemployee stock option plans of Paine Webber Group Inc., New York, in accordance with the provisions of article 653i paragraph 1 of the BoD who stepped down atSwiss code of obligations.
The issue of new shares in accordance with the AGM 2009.
Loans granted to members of the GEB on 31 December 2008 / 2009 | ||||||||||||||
CHF, except where indicateda | ||||||||||||||
For the | Other loans | |||||||||||||
Name, function1 | year ended | Secured loans | granted2 | Total | ||||||||||
Jürg Zeltner, CEO Wealth Management | 2009 | 5,800,202 | 0 | 5,800,202 | ||||||||||
Markus U. Diethelm, Group General Counsel | 2008 | 3,900,000 | 0 | 3,900,000 | ||||||||||
Aggregate of all members of the GEB3 | 2009 | 15,356,483 | 0 | 15,356,483 | ||||||||||
Aggregate of all members of the GEB4 | 2008 | 7,740,562 | 0 | 7,740,562 | ||||||||||
Our audit was conducted in accordance with the Swiss auditing standards, which require that an audit be planned and performed to obtain reasonable assurance as to whether the issue of new shares, and whether the conclusion as to the expired option rights, were both free of material error. We have performed the audit procedures considered appropriate in the market. 2 Guarantees. 3 Including those members of the GEB who stepped down during 2009. 4 Including those members of the GEB who stepped down during 2008. circumstances. We believe that our audit provides a reasonable basis for our opinion.
In our opinion
• | the issue of 3’171 new registered shares of a nominal value of CHF 0.10 per share relating to the employee stock option plans of Paine Webber Group Inc., New York, according to article 4a paragraph 1 of the articles of association, was in accordance with the provisions of Swiss law and the company’s articles of association. Furthermore, no option rights relating to registered shares of a nominal value of CHF 0.10 per share have expired during the reporting period; | ||
• | the issue of 24’561 new registered shares of a nominal value of CHF 0.10 per share relating to the employee stock option plans of UBS AG, according to article 4a paragraph 2 of the articles of association, was in accordance with the provisions of Swiss taw and the company’s articles of association; | ||
• | the issue of 272’651’005 registered shares of a nominal value of CHF 0.10 per share in conjunction with the total conversion of the 9%mandatory convertible notes due in 2010, according to article 4a paragraph 3 of the articles of association, was in accordance with the provisions of Swiss law and the company’s articles of association as well as the defined conditions of the conversion rights; | ||
• | no new registered shares relating to the options granted to the Swiss National Bank, according to article 4a paragraph 4 of the articles of association, were issued in the reporting period. |
Zurich, 8 March 2010 | ||
BDO Ltd | ||
Werner Schiesser | Markus Egli | |
Licensed Audit Expert | Licensed Audit Expert |
392402
Financial information |
Phone 044 444 36 44 | BDO Ltd | |||
Fax 044 444 37 84 | Fabrikstrasse 50 | |||
www.bdo.ch | 8031 Zurich | |||
Confirmation of the statutory auditorauditors concerning conditional capital increase
to the Board of Directors of
UBS AG, Zurich and Basel
As special auditors of UBS AG, we have audited the issue of new shares and the preconditions for the adjustment of the provisions regarding the conditional capital increase according to article 4a of the articles of association in the period from 6 March 2010 to 31 August 2010 in accordance with the provisions of article 653f paragraph 1 of the Swiss code of obligations.
According to article 4a of the articles of association, the following possibilities for the issue of conditional capital exist:
• | Paragraph 1; employee stock option plans of Paine Webber Group Inc., New York, based on the resolution of the annual general meeting of 7 September 2000. | ||
• | Paragraph 2; employee stock option plans of UBS AG, based on the resolution of the annual general meeting of 19 April 2006. | ||
• | Paragraph 3; options granted to the Swiss National Bank in connection with its loan granted to the SNB StabFund Limited Partnership for Collective Investment, based on the resolution of the general meeting of shareholders of 27 November 2008. | ||
• | Paragraph 4; conversion rights and/or warrants granted in connection with the issuance of bonds or similar financial instruments, based on the resolution of the annual general meeting of 14 April 2010. |
In addition we have audited the expiration of options relating to the employee stock option plans of Paine Webber Group Inc., New York, in accordance with the provisions of article 653i paragraph 1 of the Swiss code of obligations.
The issue of new shares in accordance with the provisions of the company’s articles of association is the responsibility of the board of directors. Our responsibility is to express an opinion on whether the issue of new shares is in accordance with the provisions of Swiss law and the company’s articles of association. In addition, the provision of evidence that the option rights have expired is also the responsibility of the board of directors. Our responsibility is to express an opinion on the financial statementsaccuracy of this statement, based on our audit. We confirm that we meet the legal requirements on licensing and independence.
Our audit was conducted in accordance with the Swiss auditing standards, which require that an audit be planned and performed to obtain reasonable assurance as to whether the issue of new shares, and whether the conclusion as to the expired option rights, were both free of material error. We have performed the audit procedures considered appropriate in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
In our opinion
• | the cancellation of 26’179 option rights relating to registered shares of a nominal value of CHF 0.10 per share in connection with the employee stock option plans of Paine Webber Group Inc., New York, according to article 4a paragraph 1 of the articles of association, and the repeal of the related clause of the articles of association, are in accordance with the provisions of Swiss law; | ||
• | the issue of 13’778 new registered shares of a nominal value of CHF 0.10 per share relating to the employee stock option plans of UBS AG, according to article 4a paragraph 2 of the articles of association, was in accordance with the provisions of Swiss law and the company’s articles of association; | ||
• | no new registered shares relating to the options granted to the Swiss National Bank, according to article 4a paragraph 3 of the articles of association, were issued in the reporting period; | ||
• | no new registered shares relating to the conversion rights and/or warrants granted in connection with the issuance of bonds or similar financial instruments, according to article 4a paragraph 4 of the articles of association, were issued in the reporting period. |
Zurich, 7 September 2010 | ||
BDO Ltd | ||
Werner Schiesser | Markus Egli | |
Licensed Audit Expert | Licensed Audit Expert |
393403
Financial information
UBS AG (Parent Bank)
Phone 044 444 36 44 | BDO Ltd | |||
Fax 044 444 37 84 | Fabrikstrasse 50 | |||
www.bdo.ch | 8031 Zurich | |||
Confirmation of the auditors concerning conditional capital increase
to the Board of Directors of
UBS AG, Zurich and Basel
As special auditors of UBS AG, we have audited the issue of new shares and the preconditions for the adjustment of the provisions regarding the conditional capital increase according to article 4a of the articles of association in the period from 1 September 2010 to 31 December 2010 in accordance with the provisions of article 653f paragraph 1 of the Swiss code of obligations.
394According to article 4a of the articles of association, the following possibilities for the issue of conditional capital exist:
• | Paragraph 1; employee stock option plans of UBS AG, based on the resolution of the annual general meeting of 19 April 2006. | ||
• | Paragraph 2; options granted to the Swiss National Bank in connection with its loan granted to the SNB StabFund Limited Partnership for Collective Investment, based on the resolution of the general meeting of shareholders of 27 November 2008. | ||
• | Paragraph 3; conversion rights and/or warrants granted in connection with the issuance of bonds or similar financial instruments, based on the resolution of the annual general meeting of 14 April 2010. |
The issue of new shares in accordance with the provisions of the company’s articles of association is the responsibility of the board of directors. Our responsibility is to express an opinion on whether the issue of new shares is in accordance with the provisions of Swiss law and the company’s articles of association. We confirm that we meet the legal requirements on licensing and independence.
Our audit was conducted in accordance with the Swiss auditing standards, which require that an audit be planned and performed to obtain reasonable assurance as to whether the issue of new shares was free of material error. We have performed the audit procedures considered appropriate in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
In our opinion
• | the issue of 35’245 new registered shares of a nominal value of CHF 0.10 per share relating to the employee stock option plans of UBS AG, according to article 4a paragraph 1 of the articles of association, was in accordance with the provisions of Swiss law and the company’s articles of association; | ||
• | no new registered shares relating to the options granted to the Swiss National Bank, according to article 4a paragraph 2 of the articles of association, were issued in the reporting period; | ||
• | no new registered shares relating to the conversion rights and/or warrants granted in connection with the issuance of bonds or similar financial instruments, according to article 4a paragraph 3 of the articles of association, were issued in the reporting period. |
Zurich, 24 January 2011 | ||
BDO Ltd | ||
Werner Schiesser | Markus Egli | |
Licensed Audit Expert | Licensed Audit Expert |
404
Financial information |
Financial information
395
Financial information UBS AG (Parent Bank)
396
397
Additional disclosure required
under SEC regulations
A – Introduction
The following pages contain additional disclosures about UBS Group which are required under SEC regulations.
399405
Financial information
Additional disclosure required under SEC regulations
B – Selected financial data
The tables below set forth, for the periods and dates indicated,provide information concerning the noon buyingpurchase rate for the Swiss franc, expressed in United States dollars or USD, per one Swiss franc. The noon buyingpurchase rate is the rate in New York
City for cable transfers in foreign currencies as certifiedcer-
tified for customs purposes by the Federal Reserve Bank of New York.
Average rate1 | ||||||||||||||||
Year ended 31 December | High | Low | (USD per 1 CHF) | At period end | ||||||||||||
2005 | 0.8721 | 0.7544 | 0.8010 | 0.7606 | ||||||||||||
2006 | 0.8396 | 0.7575 | 0.8034 | 0.8200 | ||||||||||||
2007 | 0.9087 | 0.7978 | 0.8381 | 0.8827 | ||||||||||||
2008 | 1.0142 | 0.8171 | 0.9298 | 0.9369 | ||||||||||||
2009 | 1.0016 | 0.8408 | 0.9260 | 0.9654 | ||||||||||||
Month | High | Low | ||||||||||||||
September 2009 | 0.9768 | 0.9387 | ||||||||||||||
October 2009 | 0.9936 | 0.9593 | ||||||||||||||
November 2009 | 0.9996 | 0.9703 | ||||||||||||||
December 2009 | 1.0016 | 0.9532 | ||||||||||||||
January 2010 | 0.9848 | 0.9472 | ||||||||||||||
February 2010 | 0.9472 | 0.9210 | ||||||||||||||
Average rate1 | ||||||||||||||||
Year ended 31 December | High | Low | (USD per 1 CHF) | At period end | ||||||||||||
2006 | 0.8396 | 0.7575 | 0.8034 | 0.8200 | ||||||||||||
2007 | 0.9087 | 0.7978 | 0.8381 | 0.8827 | ||||||||||||
2008 | 1.0142 | 0.8171 | 0.9298 | 0.9369 | ||||||||||||
2009 | 1.0016 | 0.8408 | 0.9260 | 0.9654 | ||||||||||||
2010 | 1.0673 | 0.8610 | 0.9670 | 1.0673 | ||||||||||||
Month | High | Low | ||||||||||||||
September 2010 | 1.0254 | 0.9828 | ||||||||||||||
October 2010 | 1.0493 | 1.0108 | ||||||||||||||
November 2010 | 1.0438 | 0.9984 | ||||||||||||||
December 2010 | 1.0673 | 1.0003 | ||||||||||||||
January 2011 | 1.0719 | 1.0251 | ||||||||||||||
February 20112 | 1.0808 | 1.0251 | ||||||||||||||
400406
Financial information |
Key figures | Key figures | Key figures | ||||||||||||||||||||||||||||||||||||||
As of or for the year ended | As of or for the year ended | |||||||||||||||||||||||||||||||||||||||
CHF million, except where indicated | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | 31.12.05 | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | ||||||||||||||||||||||||||||||
Balance sheet data | ||||||||||||||||||||||||||||||||||||||||
Total assets | 1,340,538 | 2,014,815 | 2,274,891 | 2,348,733 | 2,001,099 | 1,317,247 | 1,340,538 | 2,014,815 | 2,274,891 | 2,348,733 | ||||||||||||||||||||||||||||||
Equity attributable to UBS shareholders | 41,013 | 32,531 | 36,875 | 51,037 | 45,633 | 46,820 | 41,013 | 32,531 | 36,875 | 51,037 | ||||||||||||||||||||||||||||||
Average equity to average assets (%) | 1.9 | 1.5 | 1.8 | 2.0 | 1.9 | 3.0 | 1.9 | 1.5 | 1.8 | 2.0 | ||||||||||||||||||||||||||||||
Market capitalization | 57,108 | 43,519 | 108,654 | 154,222 | 131,949 | 58,803 | 57,108 | 43,519 | 108,654 | 154,222 | ||||||||||||||||||||||||||||||
Shares | ||||||||||||||||||||||||||||||||||||||||
Registered ordinary shares | 3,558,112,753 | 2,932,580,549 | 2,073,547,344 | 2,105,273,286 | 2,177,265,044 | 3,830,840,513 | 3,558,112,753 | 2,932,580,549 | 2,073,547,344 | 2,105,273,286 | ||||||||||||||||||||||||||||||
Treasury shares | 37,553,872 | 61,903,121 | 158,105,524 | 164,475,699 | 208,519,748 | 38,892,031 | 37,553,872 | 61,903,121 | 158,105,524 | 164,475,699 | ||||||||||||||||||||||||||||||
BIS capital ratios | ||||||||||||||||||||||||||||||||||||||||
Tier 1 (%) | 15.4 | 11.0 | 9.1 | 1 | 12.2 | 1 | 13.3 | 1 | ||||||||||||||||||||||||||||||||
Tier 1 (%)1 | 17.8 | 15.4 | 11.0 | 9.1 | 12.2 | |||||||||||||||||||||||||||||||||||
Total BIS (%) | 19.8 | 15.0 | 12.2 | 1 | 15.0 | 1 | 14.5 | 1 | ||||||||||||||||||||||||||||||||
Total BIS (%)1 | 20.4 | 19.8 | 15.0 | 12.2 | 15.0 | |||||||||||||||||||||||||||||||||||
Risk-weighted assets | 206,525 | 302,273 | 374,421 | 1 | 344,015 | 1 | 312,532 | 1 | ||||||||||||||||||||||||||||||||
Risk-weighted assets1 | 198,875 | 206,525 | 302,273 | 374,421 | 344,015 | |||||||||||||||||||||||||||||||||||
Invested assets (CHF billion) | 2,233 | 2,174 | 3,189 | 2,989 | 2,652 | 2,152 | 2,233 | 2,174 | 3,189 | 2,989 | ||||||||||||||||||||||||||||||
Personnel (full-time equivalents) | ||||||||||||||||||||||||||||||||||||||||
Switzerland | 24,050 | 26,406 | 27,884 | 27,022 | 26,029 | 23,284 | 24,050 | 26,406 | 27,884 | 27,022 | ||||||||||||||||||||||||||||||
United Kingdom | 6,204 | 7,071 | 8,813 | 8,243 | 7,135 | 6,634 | 6,204 | 7,071 | 8,813 | 8,243 | ||||||||||||||||||||||||||||||
Rest of Europe | 4,145 | 4,817 | 4,776 | 4,338 | 3,759 | 4,122 | 4,145 | 4,817 | 4,776 | 4,338 | ||||||||||||||||||||||||||||||
Middle East/Africa | 134 | 145 | 139 | 102 | 112 | |||||||||||||||||||||||||||||||||||
Middle East / Africa | 137 | 134 | 145 | 139 | 102 | |||||||||||||||||||||||||||||||||||
United States | 22,702 | 27,362 | 29,921 | 29,076 | 25,999 | 22,031 | 22,702 | 27,362 | 29,921 | 29,076 | ||||||||||||||||||||||||||||||
Rest of Americas | 1,132 | 1,984 | 2,054 | 1,743 | 1,137 | 1,147 | 1,132 | 1,984 | 2,054 | 1,743 | ||||||||||||||||||||||||||||||
Asia Pacific | 6,865 | 9,998 | 9,973 | 7,616 | 5,398 | 7,263 | 6,865 | 9,998 | 9,973 | 7,616 | ||||||||||||||||||||||||||||||
Total | 65,233 | 77,783 | 83,560 | 78,140 | 69,569 | 64,617 | 65,233 | 77,783 | 83,560 | 78,140 | ||||||||||||||||||||||||||||||
Long-term ratings2 | ||||||||||||||||||||||||||||||||||||||||
Fitch, London | A+ | A+ | AA | AA+ | AA+ | |||||||||||||||||||||||||||||||||||
Moody’s, New York | Aa3 | Aa2 | Aaa | Aa2 | Aa2 | |||||||||||||||||||||||||||||||||||
Standard & Poor’s, New York | A+ | A+ | AA | AA+ | AA+ | |||||||||||||||||||||||||||||||||||
401407
Financial information
Additional disclosure required under SEC regulations
Income statement data | ||||||||||||||||||||
For the year ended | ||||||||||||||||||||
CHF million, except where indicated | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | 31.12.05 | |||||||||||||||
Interest income | 23,461 | 65,679 | 109,112 | 87,401 | 59,286 | |||||||||||||||
Interest expense | (17,016 | ) | (59,687 | ) | (103,775 | ) | (80,880 | ) | (49,758 | ) | ||||||||||
Net interest income | 6,446 | 5,992 | 5,337 | 6,521 | 9,528 | |||||||||||||||
Credit loss (expense)/recovery | (1,832 | ) | (2,996 | ) | (238 | ) | 156 | 375 | ||||||||||||
Net interest income after credit loss (expense)/recovery | 4,614 | 2,996 | 5,099 | 6,677 | 9,903 | |||||||||||||||
Net fee and commission income | 17,712 | 22,929 | 30,634 | 25,456 | 21,184 | |||||||||||||||
Net trading income | (324 | ) | (25,820 | ) | (8,353 | ) | 13,743 | 8,248 | ||||||||||||
Other income | 599 | 692 | 4,341 | 1,608 | 1,135 | |||||||||||||||
Total operating income | 22,601 | 796 | 31,721 | 47,484 | 40,470 | |||||||||||||||
Total operating expenses | 25,162 | 28,555 | 35,463 | 33,365 | 28,533 | |||||||||||||||
Operating profit from continuing operations before tax | (2,561 | ) | (27,758 | ) | (3,742 | ) | 14,119 | 11,937 | ||||||||||||
Tax expense | (443 | ) | (6,837 | ) | 1,369 | 2,998 | 2,270 | |||||||||||||
Net profit from continuing operations | (2,118 | ) | (20,922 | ) | (5,111 | ) | 11,121 | 9,667 | ||||||||||||
Net profit from discontinued operations | (7 | ) | 198 | 403 | 899 | 4,526 | ||||||||||||||
Net profit | (2,125 | ) | (20,724 | ) | (4,708 | ) | 12,020 | 14,193 | ||||||||||||
Net profit attributable to minority interests | 610 | 568 | 539 | 493 | 661 | |||||||||||||||
Net profit attributable to UBS shareholders | (2,736 | ) | (21,292 | ) | (5,247 | ) | 11,527 | 13,532 | ||||||||||||
Cost/income ratio (%)1 | 103.0 | 753.0 | 111.0 | 70.5 | 71.2 | |||||||||||||||
Per share data (CHF) | ||||||||||||||||||||
Basic earnings per share2 | (0.75 | ) | (7.63 | ) | (2.40 | ) | 5.15 | 5.93 | ||||||||||||
Diluted earnings per share2 | (0.75 | ) | (7.63 | ) | (2.41 | ) | 4.95 | 5.70 | ||||||||||||
Operating profit before tax per share | (0.70 | ) | (9.94 | ) | (1.71 | ) | 6.30 | 5.23 | ||||||||||||
Cash dividends declared per share (CHF)3,4 | N/A | N/A | N/A | 2.20 | 1.60 | |||||||||||||||
Cash dividend declared per share (USD)3,4 | N/A | N/A | N/A | 1.83 | 1.26 | |||||||||||||||
Dividend payout ratio (%)3,4 | N/A | N/A | N/A | 42.7 | 27.0 | |||||||||||||||
Rates of return (%) | ||||||||||||||||||||
Return on equity attributable to UBS shareholders5 | (7.8 | ) | (58.7 | ) | (10.5 | ) | 23.8 | 34.0 | ||||||||||||
Return on average equity | (7.9 | ) | (60.6 | ) | (10.6 | ) | 24.0 | 34.4 | ||||||||||||
Return on average assets | (0.1 | ) | (0.9 | ) | (0.2 | ) | 0.5 | 0.7 | ||||||||||||
Income statement data | ||||||||||||||||||||
For the year ended | ||||||||||||||||||||
CHF million, except where indicated | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | |||||||||||||||
Interest income | 18,872 | 23,461 | 65,679 | 109,112 | 87,401 | |||||||||||||||
Interest expense | (12,657 | ) | (17,016 | ) | (59,687 | ) | (103,775 | ) | (80,880 | ) | ||||||||||
Net interest income | 6,215 | 6,446 | 5,992 | 5,337 | 6,521 | |||||||||||||||
Credit loss (expense) / recovery | (66 | ) | (1,832 | ) | (2,996 | ) | (238 | ) | 156 | |||||||||||
Net interest income after credit loss (expense) / recovery | 6,149 | 4,614 | 2,996 | 5,099 | 6,677 | |||||||||||||||
Net fee and commission income | 17,160 | 17,712 | 22,929 | 30,634 | 25,456 | |||||||||||||||
Net trading income | 7,471 | (324 | ) | (25,820 | ) | (8,353 | ) | 13,743 | ||||||||||||
Other income | 1,214 | 599 | 692 | 4,341 | 1,608 | |||||||||||||||
Total operating income | 31,994 | 22,601 | 796 | 31,721 | 47,484 | |||||||||||||||
Total operating expenses | 24,539 | 25,162 | 28,555 | 35,463 | 33,365 | |||||||||||||||
Operating profit from continuing operations before tax | 7,455 | (2,561 | ) | (27,758 | ) | (3,742 | ) | 14,119 | ||||||||||||
Tax expense / (benefit) | (381 | ) | (443 | ) | (6,837 | ) | 1,369 | 2,998 | ||||||||||||
Net profit from continuing operations | 7,836 | (2,118 | ) | (20,922 | ) | (5,111 | ) | 11,121 | ||||||||||||
Net profit from discontinued operations | 2 | (7 | ) | 198 | 403 | 899 | ||||||||||||||
Net profit | 7,838 | (2,125 | ) | (20,724 | ) | (4,708 | ) | 12,020 | ||||||||||||
Net profit attributable to non-controlling interests | 304 | 610 | 568 | 539 | 493 | |||||||||||||||
Net profit attributable to UBS shareholders | 7,534 | (2,736 | ) | (21,292 | ) | (5,247 | ) | 11,527 | ||||||||||||
Cost / income ratio (%)1 | 76.5 | 103.0 | 753.0 | 111.0 | 70.5 | |||||||||||||||
Per share data (CHF) | ||||||||||||||||||||
Basic earnings per share2 | 1.99 | (0.75 | ) | (7.63 | ) | (2.40 | ) | 5.15 | ||||||||||||
Diluted earnings per share2 | 1.96 | (0.75 | ) | (7.63 | ) | (2.41 | ) | 4.95 | ||||||||||||
Operating profit before tax per share | 1.97 | (0.70 | ) | (9.94 | ) | (1.71 | ) | 6.30 | ||||||||||||
Cash dividends declared per share (CHF)3,4 | N/A | N/A | N/A | N/A | 2.20 | |||||||||||||||
Cash dividend declared per share (USD)3,4 | N/A | N/A | N/A | N/A | 1.83 | |||||||||||||||
Dividend payout ratio (%)3,4 | N/A | N/A | N/A | N/A | 42.7 | |||||||||||||||
Rates of return (%) | ||||||||||||||||||||
Return on equity attributable to UBS shareholders5 | 16.7 | (7.8 | ) | (58.7 | ) | (10.5 | ) | 23.8 | ||||||||||||
Return on average equity | 16.6 | (7.9 | ) | (60.6 | ) | (10.6 | ) | 24.0 | ||||||||||||
Return on average assets | 0.5 | (0.1 | ) | (0.9 | ) | (0.2 | ) | 0.5 | ||||||||||||
402408
Balance sheet data | ||||||||||||||||||||
For the year ended | ||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | 31.12.05 | |||||||||||||||
Assets | ||||||||||||||||||||
Total assets | 1,340,538 | 2,014,815 | 2,274,891 | 2,348,733 | 2,001,099 | |||||||||||||||
Due from banks | 46,574 | 64,451 | 60,907 | 50,426 | 33,644 | |||||||||||||||
Cash collateral on securities borrowed | 63,507 | 122,897 | 207,063 | 351,590 | 288,435 | |||||||||||||||
Reverse repurchase agreements | 116,689 | 224,648 | 376,928 | 405,834 | 404,432 | |||||||||||||||
Trading portfolio assets | 188,037 | 271,838 | 660,182 | 648,346 | 499,297 | |||||||||||||||
Trading portfolio assets pledged as collateral | 44,221 | 40,216 | 114,190 | 230,168 | 154,759 | |||||||||||||||
Positive replacement values | 421,694 | 854,100 | 428,217 | 292,975 | 273,889 | |||||||||||||||
Loans | 306,828 | 340,308 | 335,864 | 297,842 | 279,910 | |||||||||||||||
Liabilities | ||||||||||||||||||||
Due to banks | 65,166 | 125,628 | 145,762 | 203,689 | 124,328 | |||||||||||||||
Cash collateral on securities lent | 7,995 | 14,063 | 31,621 | 63,088 | 59,938 | |||||||||||||||
Repurchase agreements | 64,175 | 102,561 | 305,887 | 545,480 | 478,508 | |||||||||||||||
Trading portfolio liabilities | 47,469 | 62,431 | 164,788 | 204,773 | 188,631 | |||||||||||||||
Negative replacement values | 409,943 | 851,864 | 443,539 | 297,063 | 277,770 | |||||||||||||||
Financial liabilities designated at fair value | 112,653 | 101,546 | 191,853 | 145,687 | 117,401 | |||||||||||||||
Due to customers | 410,475 | 465,741 | 630,105 | 546,154 | 461,425 | |||||||||||||||
Debt issued | 131,352 | 197,254 | 222,077 | 190,143 | 160,710 | |||||||||||||||
Equity attributable to UBS shareholders | 41,013 | 32,531 | 36,875 | 51,037 | 45,633 | |||||||||||||||
Financial information |
Balance sheet data | ||||||||||||||||||||
For the year ended | ||||||||||||||||||||
CHF million | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | |||||||||||||||
Assets | ||||||||||||||||||||
Total assets | 1,317,247 | 1,340,538 | 2,014,815 | 2,274,891 | 2,348,733 | |||||||||||||||
Due from banks | 17,133 | 16,804 | 17,694 | 25,976 | 32,156 | |||||||||||||||
Cash collateral on securities borrowed | 62,454 | 63,507 | 122,897 | 207,063 | 351,590 | |||||||||||||||
Reverse repurchase agreements | 142,790 | 116,689 | 224,648 | 376,928 | 405,834 | |||||||||||||||
Trading portfolio assets | 167,463 | 188,037 | 271,838 | 660,182 | 648,346 | |||||||||||||||
Trading portfolio assets pledged as collateral | 61,352 | 44,221 | 40,216 | 114,190 | 230,168 | |||||||||||||||
Positive replacement values | 401,146 | 421,694 | 854,100 | 428,217 | 292,975 | |||||||||||||||
Cash collateral receivables on derivative instruments | 38,071 | 53,774 | 85,703 | 64,978 | 24,433 | |||||||||||||||
Loans | 262,877 | 266,477 | 291,456 | 271,492 | 258,350 | |||||||||||||||
Financial investments available-for-sale | 74,768 | 81,757 | 5,248 | 4,966 | 8,937 | |||||||||||||||
Other assets | 22,681 | 23,682 | 19,837 | 51,417 | 52,949 | |||||||||||||||
Liabilities | ||||||||||||||||||||
Due to banks | 41,490 | 31,922 | 76,822 | 121,983 | 182,316 | |||||||||||||||
Cash collateral on securities lent | 6,651 | 7,995 | 14,063 | 31,621 | 63,088 | |||||||||||||||
Repurchase agreements | 74,796 | 64,175 | 102,561 | 305,887 | 545,480 | |||||||||||||||
Trading portfolio liabilities | 54,975 | 47,469 | 62,431 | 164,788 | 204,773 | |||||||||||||||
Negative replacement values | 393,762 | 409,943 | 851,864 | 443,539 | 297,063 | |||||||||||||||
Cash collateral payables on derivative instruments | 58,924 | 66,097 | 92,937 | 77,781 | 52,251 | |||||||||||||||
Financial liabilities designated at fair value | 100,756 | 112,653 | 101,546 | 191,853 | 145,687 | |||||||||||||||
Due to customers | 332,301 | 339,263 | 362,639 | 496,279 | 451,020 | |||||||||||||||
Debt issued | 130,271 | 131,352 | 197,254 | 222,077 | 190,143 | |||||||||||||||
Other liabilities | 63,719 | 72,344 | 101,969 | 153,107 | 137,935 | |||||||||||||||
Equity attributable to UBS shareholders | 46,820 | 41,013 | 32,531 | 36,875 | 51,037 | |||||||||||||||
Ratio of earnings to fixed charges
The following table sets forth UBS’s ratio of earnings to fixed charges on an IFRS basis for the periods indicated. The ratios are calculated based on earnings from continuing operations. Ratios of earnings to combined fixed charges and preferred stock dividend requirements are not presented as there were no preferred share dividends in any of the periods indicated. | ||||||||||||||||||||
For the year ended | ||||||||||||||||||||
31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | 31.12.05 | ||||||||||||||||
0.82 | 0.53 | 0.96 | 1.17 | 1.23 | ||||||||||||||||
403
For the year ended | ||||||||||||||||
31.12.10 | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | ||||||||||||
1.53 | 0.82 | 0.53 | 0.96 | 1.17 | ||||||||||||
409
Financial information
Additional disclosure required under SEC regulations
C – Information on the company
Property, plant and equipment
At 31 December 2009,2010, UBS operated about 973907 business and banking locations worldwide, of which about 42%43% were in Switzerland, 41% in the Americas, 12%11% in the rest of Europe, Middle East and Africa and 5% in Asia-Pacific. Of the business and banking locations in Switzerland, 37%36% were owned directly by UBS,
with the remainder, along
with most of UBS’s offices outside Switzerland, being held under commercial leases.
404410
Financial information |
D – Information required by industry guide 3
Selected statistical information
monthly data. The distinction between domestic and foreign is generally based on the booking location. For loans, this method is not significantly different from an analysis based on the domicile of the borrower.
Average balances and interest rates
The following table sets forth average interest-earning assets and average interest-bearing liabilities, along with the average rates, for the years ended 31 December 2010, 2009 2008 and 2007.2008.
31.12.09 | 31.12.08 | 31.12.07 | 31.12.10 | 31.12.09 | 31.12.08 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average | Average | Average | Average | Average | Average | Average | Average | Average | Average | Average | Average | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CHF million, except where indicated | balance | Interest | rate (%) | balance | Interest | rate (%) | balance | Interest | rate (%) | balance | Interest | rate (%) | balance | Interest | rate (%) | balance | Interest | rate (%) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Due from banks | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | 3,420 | 200 | 5.8 | 7,243 | 421 | 5.8 | 11,784 | 664 | 5.6 | 3,037 | 13 | 0.4 | 3,420 | 56 | 1.6 | 7,243 | 342 | 4.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign | 52,668 | 321 | 0.6 | 58,287 | 1,559 | 2.7 | 46,049 | 2,344 | 5.1 | 14,280 | 60 | 0.4 | 16,194 | 260 | 1.6 | 15,946 | 789 | 4.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash collateral on securities borrowed and reverse repurchase agreements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | 10,029 | 244 | 2.4 | 31,642 | 1,208 | 3.8 | 31,473 | 1,693 | 5.4 | 11,277 | 196 | 1.7 | 10,029 | 244 | 2.4 | 31,642 | 1,208 | 3.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign | 381,049 | 2,385 | 0.6 | 669,010 | 21,313 | 3.2 | 977,302 | 46,581 | 4.8 | 296,252 | 1,240 | 0.4 | 381,049 | 2,385 | 0.6 | 669,010 | 21,313 | 3.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trading portfolio assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | 10,976 | 228 | 2.1 | 15,104 | 520 | 3.4 | 11,866 | 696 | 5.9 | 14,150 | 231 | 1.6 | 10,976 | 228 | 2.1 | 15,104 | 520 | 3.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign taxable | 270,674 | 6,915 | 2.6 | 522,804 | 21,494 | 4.1 | 861,923 | 38,206 | 4.4 | 212,430 | 5,769 | 2.7 | 270,674 | 6,915 | 2.6 | 522,804 | 21,494 | 4.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign non-taxable | 2,160 | 7 | 0.3 | 8,070 | 383 | 4.7 | 5,754 | 199 | 3.5 | 2,033 | 15 | 0.7 | 2,160 | 7 | 0.3 | 8,070 | 383 | 4.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign total | 272,834 | 6,922 | 2.5 | 530,874 | 21,877 | 4.1 | 867,677 | 38,405 | 4.4 | 214,463 | 5,784 | 2.7 | 272,834 | 6,922 | 2.5 | 530,874 | 21,877 | 4.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash collateral receivables on derivative instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign | 49,095 | 306 | 0.6 | 68,482 | 282 | 0.4 | 70,867 | 2,196 | 3.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial assets designated at fair value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | 548 | 0 | 945 | 0 | 588 | 0 | 568 | 0 | 548 | 0 | 945 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign | 11,674 | 316 | 2.7 | 11,024 | 404 | 3.7 | 9,114 | 298 | 3.3 | 9,128 | 262 | 2.9 | 11,674 | 316 | 2.7 | 11,024 | 404 | 3.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | 179,680 | 5,532 | 3.1 | 188,950 | 6,840 | 3.6 | 187,073 | 6,565 | 3.5 | 179,164 | 4,921 | 2.7 | 179,680 | 5,676 | 3.2 | 188,950 | 6,919 | 3.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign | 151,584 | 4,946 | 3.3 | 147,034 | 8,304 | 5.6 | 146,040 | 9,359 | 6.4 | 90,032 | 2,584 | 2.9 | 105,791 | 4,208 | 4.0 | 91,281 | 5,603 | 6.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial investments available-for-sale | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | 991 | 21 | 2.1 | 1,599 | 72 | 4.5 | 3,930 | 66 | 1.7 | 1,712 | 18 | 1.1 | 991 | 21 | 2.1 | 1,599 | 72 | 4.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign taxable | 28,295 | 143 | 0.5 | 3,370 | 73 | 2.2 | 2,934 | 110 | 3.7 | 74,821 | 539 | 0.7 | 28,295 | 143 | 0.5 | 3,370 | 73 | 2.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign non-taxable | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign total | 28,295 | 143 | 0.5 | 3,370 | 73 | 2.2 | 2,934 | 110 | 3.7 | 74,821 | 539 | 0.7 | 28,295 | 143 | 0.5 | 3,370 | 73 | 2.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other interest-earning assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign | 15,227 | 484 | 3.2 | 13,785 | 517 | 3.8 | 27,227 | 1,275 | 4.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total interest-earning assets | 1,103,748 | 21,258 | 1.9 | 1,665,082 | 62,591 | 3.8 | 2,295,830 | 106,781 | 4.7 | 973,206 | 16,638 | 1.7 | 1,103,748 | 21,258 | 1.9 | 1,665,082 | 62,591 | 3.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest on swaps | 2,203 | 3,088 | 2,331 | 2,234 | 2,203 | 3,088 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest income and average interest-earning assets | 1,103,748 | 23,461 | 2.1 | 1,665,082 | 65,679 | 3.9 | 2,295,830 | 109,112 | 4.8 | 973,206 | 18,872 | 1.9 | 1,103,748 | 23,461 | 2.1 | 1,665,082 | 65,679 | 3.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-interest-earning assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Positive replacement values | 654,651 | 600,073 | 373,229 | 471,046 | 654,651 | 600,073 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed assets | 6,609 | 7,091 | 7,090 | 5,884 | 6,609 | 7,091 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | 86,133 | 82,357 | 82,739 | 81,876 | 86,133 | 82,357 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total average assets | 1,851,141 | 2,354,603 | 2,758,888 | 1,532,012 | 1,851,141 | 2,354,603 |
405411
Financial information
Additional disclosure required under SEC regulations
Average balances and interest rates (continued) | Average balances and interest rates (continued) | Average balances and interest rates (continued) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
31.12.09 | 31.12.08 | 31.12.07 | 31.12.10 | 31.12.09 | 31.12.08 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average | Average | Average | Average | Average | Average | Average | Average | Average | Average | Average | Average | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CHF million, except where indicated | balance | Interest | rate (%) | balance | Interest | rate (%) | balance | Interest | rate (%) | balance | Interest | rate (%) | balance | Interest | rate (%) | balance | Interest | rate (%) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities and equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Due to banks | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | 36,278 | 219 | 0.6 | 51,027 | 1,503 | 2.9 | 60,858 | 2,477 | 4.1 | 29,400 | 253 | 0.9 | 36,248 | 219 | 0.6 | 51,027 | 1,503 | 2.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign | 76,305 | 457 | 0.6 | 88,798 | 3,423 | 3.9 | 146,286 | 8,008 | 5.5 | 10,318 | 99 | 1.0 | 34,205 | 245 | 0.7 | 55,731 | 1,930 | 3.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash collateral on securities lent and repurchase agreements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | 11,321 | 200 | 1.8 | 31,269 | 1,026 | 3.3 | 47,041 | 1,902 | 4.0 | 12,089 | 147 | 1.2 | 11,321 | 200 | 1.8 | 31,269 | 1,026 | 3.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign | 195,991 | 1,979 | 1.0 | 397,453 | 15,097 | 3.8 | 752,616 | 38,680 | 5.1 | 176,098 | 1,135 | 0.6 | 195,991 | 1,979 | 1.0 | 397,453 | 15,097 | 3.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trading portfolio liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | 1,411 | 55 | 3.9 | 5,525 | 256 | 4.6 | 5,561 | 328 | 5.9 | 1,068 | 37 | 3.5 | 1,411 | 55 | 3.9 | 5,525 | 256 | 4.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign | 58,091 | 3,823 | 6.6 | 132,901 | 8,906 | 6.7 | 214,326 | 15,484 | 7.2 | 59,672 | 3,757 | 6.3 | 58,091 | 3,823 | 6.6 | 132,901 | 8,906 | 6.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash collateral payables on derivative instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | 361 | 0 | 30 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign | 69,223 | 242 | 0.3 | 84,747 | 278 | 0.3 | 82,969 | 2,343 | 2.8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial liabilities designated at fair value | Financial liabilities designated at fair value | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | 934 | 17 | 1.8 | 1,444 | 69 | 4.8 | 1,503 | 79 | 5.3 | 878 | 3 | 0.3 | 934 | 17 | 1.8 | 1,444 | 69 | 4.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign | 106,690 | 2,838 | 2.7 | 151,324 | 7,229 | 4.8 | 173,162 | 7,580 | 4.4 | 108,405 | 2,389 | 2.2 | 106,690 | 2,838 | 2.7 | 151,324 | 7,229 | 4.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Due to customers | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Domestic demand deposits | 64,877 | 98 | 0.2 | 56,730 | 495 | 0.9 | 64,568 | 736 | 1.1 | 85,838 | 106 | 0.1 | 64,872 | 98 | 0.2 | 56,730 | 495 | 0.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Domestic savings deposits | 68,042 | 521 | 0.8 | 65,073 | 604 | 0.9 | 75,587 | 502 | 0.7 | 75,802 | 409 | 0.5 | 68,042 | 521 | 0.8 | 65,073 | 604 | 0.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Domestic time deposits | 13,075 | 451 | 3.4 | 35,575 | 1,081 | 3.0 | 41,056 | 1,206 | 2.9 | 7,977 | 49 | 0.6 | 13,075 | 451 | 3.4 | 35,575 | 1,081 | 3.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Domestic total | 145,994 | 1,070 | 0.7 | 157,378 | 2,180 | 1.4 | 181,211 | 2,444 | 1.3 | 169,617 | 564 | 0.3 | 145,989 | 1,070 | 0.7 | 157,378 | 2,180 | 1.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign | 304,641 | 2,127 | 0.7 | 394,151 | 11,044 | 2.8 | 418,558 | 16,388 | 3.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign1 | 168,099 | 756 | 0.4 | 220,860 | 1,971 | 0.9 | 271,487 | 8,998 | 3.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term debt | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | 689 | 27 | 3.9 | 1,735 | 63 | 3.6 | 2,228 | 98 | 4.4 | 1,140 | 9 | 0.8 | 971 | 27 | 2.8 | 1,735 | 63 | 3.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign | 86,186 | 2,234 | 2.6 | 134,920 | 6,216 | 4.6 | 144,546 | 8,643 | 6.0 | 53,454 | 394 | 0.7 | 85,904 | 1,280 | 1.5 | 134,920 | 6,216 | 4.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term debt | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | 13,462 | 142 | 1.1 | 11,152 | 153 | 1.4 | 5,766 | 148 | 2.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign | 68,267 | 2,661 | 3.9 | 76,961 | 2,771 | 3.6 | 74,531 | 2,527 | 3.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other interest-bearing liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | 11,152 | 153 | 1.4 | 5,766 | 148 | 2.6 | 4,235 | 115 | 2.7 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign | 76,961 | 1,817 | 2.4 | 74,531 | 2,527 | 3.4 | 70,079 | 1,549 | 2.2 | 37,996 | 69 | 0.2 | 41,139 | 90 | 0.2 | 72,762 | 1,196 | 1.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total interest-bearing liabilities | 1,112,644 | 17,016 | 1.5 | 1,628,222 | 59,687 | 3.7 | 2,222,210 | 103,775 | 4.7 | 979,547 | 12,657 | 1.3 | 1,112,644 | 17,016 | 1.5 | 1,628,222 | 59,687 | 3.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-interest-bearing liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Negative replacement values | 641,028 | 605,990 | 382,115 | 459,987 | 641,028 | 605,990 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | 54,720 | 77,476 | 98,951 | 40,418 | 54,720 | 77,476 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities | 1,808,392 | 2,311,688 | 2,703,276 | 1,479,952 | 1,808,392 | 2,311,688 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total equity | 42,749 | 42,915 | 55,612 | 52,060 | 42,749 | 42,915 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total average liabilities and equity | 1,851,141 | 2,354,603 | 2,758,888 | 1,532,012 | 1,851,141 | 2,354,603 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest income | 6,446 | 5,992 | 5,337 | 6,215 | 6,446 | 5,992 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net yield on interest-earning assets | Net yield on interest-earning assets | 0.6 | 0.4 | 0.2 | 0.6 | 0.6 | 0.4 |
The percentage of total average interest-earning assets attributable to foreign activities was 81%78% for 2010 (81% for 2009 (85%and 85% for 2008 and 89% for 2007)2008). The percentage of total average interest-bearing liabilities attributable to foreign activities was 81%77% for 2010 (81% for 2009 (84%and 84% for 2008 and 86% for 2007)2008). All assets and liabilities are translated into CHF at uniform month-end rates. Interest income and interest expense are translated at monthly average rates.
406412
Financial information |
Analysis of changes in interest income and expense
The following tables allocate, by categories of interest-earning assets and interest-bearing liabilities, the changes in interest income and expense due to changes in volume and interest rates for the year ended 31 December 2010 compared with the year ended 31 December 2009, and for the year ended 31 December 2009 compared with the year ended 31 December 2008,2008. Volume and for the year ended 31 December 2008 compared with the year end-
ed 31 December 2007. Volume and rate variances have been calculated on movements in average balances and changes in interest rates. Changes due to a combination of volume and rates have been allocated proportionally. Refer to the appropriate section of Industry Guide 3 for a discussion of the treatment of impaired and non-performing loans.
2009 compared with 2008 | 2008 compared with 2007 | 2010 compared with 2009 | 2009 compared with 2008 | |||||||||||||||||||||||||||||||||||||||||||||
Increase/(decrease) | Increase/(decrease) | Increase / (decrease) | Increase / (decrease) | |||||||||||||||||||||||||||||||||||||||||||||
due to changes in | due to changes in | due to changes in | due to changes in | |||||||||||||||||||||||||||||||||||||||||||||
Average | Average | Net | Average | Average | Net | Average | Average | Net | Average | Average | Net | |||||||||||||||||||||||||||||||||||||
CHF million | volume | rate | change | volume | rate | change | volume | rate | change | volume | rate | change | ||||||||||||||||||||||||||||||||||||
Interest income from interest-earning assets | ||||||||||||||||||||||||||||||||||||||||||||||||
Due from banks | ||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | (222 | ) | 1 | (221 | ) | (254 | ) | 11 | (243 | ) | (6 | ) | (37 | ) | (43 | ) | (180 | ) | (106 | ) | (286 | ) | ||||||||||||||||||||||||||
Foreign | (152 | ) | (1,086 | ) | (1,238 | ) | 624 | (1,409 | ) | (785 | ) | (31 | ) | (169 | ) | (200 | ) | 12 | (541 | ) | (529 | ) | ||||||||||||||||||||||||||
Cash collateral on securities borrowed and reverse repurchase agreements | Cash collateral on securities borrowed and reverse repurchase agreements | |||||||||||||||||||||||||||||||||||||||||||||||
Domestic | (821 | ) | (143 | ) | (964 | ) | 9 | (494 | ) | (485 | ) | 30 | (78 | ) | (48 | ) | (821 | ) | (143 | ) | (964 | ) | ||||||||||||||||||||||||||
Foreign | (9,215 | ) | (9,713 | ) | (18,928 | ) | (14,798 | ) | (10,470 | ) | (25,268 | ) | (509 | ) | (636 | ) | (1,145 | ) | (9,215 | ) | (9,713 | ) | (18,928 | ) | ||||||||||||||||||||||||
Trading portfolio assets | ||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | (140 | ) | (152 | ) | (292 | ) | 191 | (367 | ) | (176 | ) | 67 | (64 | ) | 3 | (140 | ) | (152 | ) | (292 | ) | |||||||||||||||||||||||||||
Foreign taxable | (10,337 | ) | (4,242 | ) | (14,579 | ) | (14,921 | ) | (1,791 | ) | (16,712 | ) | (1,514 | ) | 368 | (1,146 | ) | (10,337 | ) | (4,242 | ) | (14,579 | ) | |||||||||||||||||||||||||
Foreign non-taxable | (278 | ) | (98 | ) | (376 | ) | 81 | 103 | 184 | 8 | 8 | (278 | ) | (98 | ) | (376 | ) | |||||||||||||||||||||||||||||||
Foreign total | (10,615 | ) | (4,340 | ) | (14,955 | ) | (14,840 | ) | (1,688 | ) | (16,528 | ) | (1,514 | ) | 376 | (1,138 | ) | (10,615 | ) | (4,340 | ) | (14,955 | ) | |||||||||||||||||||||||||
Cash collateral receivables on derivative instruments | ||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | ||||||||||||||||||||||||||||||||||||||||||||||||
Foreign | (78 | ) | 102 | 24 | (74 | ) | (1,840 | ) | (1,914 | ) | ||||||||||||||||||||||||||||||||||||||
Financial assets designated at fair value | ||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||
Foreign | 24 | (112 | ) | (88 | ) | 63 | 43 | 106 | (69 | ) | 15 | (54 | ) | 24 | (112 | ) | (88 | ) | ||||||||||||||||||||||||||||||
Loans | ||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | (334 | ) | (974 | ) | (1,308 | ) | 66 | 209 | 275 | (17 | ) | (738 | ) | (755 | ) | (343 | ) | (900 | ) | (1,243 | ) | |||||||||||||||||||||||||||
Foreign | 255 | (3,613 | ) | (3,358 | ) | 64 | (1,119 | ) | (1,055 | ) | (630 | ) | (994 | ) | (1,624 | ) | 885 | (2,280 | ) | (1,395 | ) | |||||||||||||||||||||||||||
Financial investments available-for-sale | ||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | (27 | ) | (24 | ) | (51 | ) | (40 | ) | 46 | 6 | 15 | (18 | ) | (3 | ) | (27 | ) | (24 | ) | (51 | ) | |||||||||||||||||||||||||||
Foreign taxable | 548 | (478 | ) | 70 | 16 | (53 | ) | (37 | ) | 233 | 163 | 396 | 548 | (478 | ) | 70 | ||||||||||||||||||||||||||||||||
Foreign non-taxable | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||
Foreign total | 548 | (478 | ) | 70 | 16 | (53 | ) | (37 | ) | 233 | 163 | 396 | 548 | (478 | ) | 70 | ||||||||||||||||||||||||||||||||
Other interest-bearing assets | ||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | ||||||||||||||||||||||||||||||||||||||||||||||||
Foreign | 55 | (88 | ) | (33 | ) | (632 | ) | (126 | ) | (758 | ) | |||||||||||||||||||||||||||||||||||||
Interest income | ||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | (1,544 | ) | (1,292 | ) | (2,836 | ) | (28 | ) | (595 | ) | (623 | ) | 89 | (935 | ) | (846 | ) | (1,511 | ) | (1,325 | ) | (2,836 | ) | |||||||||||||||||||||||||
Foreign | (19,155 | ) | (19,342 | ) | (38,497 | ) | (28,871 | ) | (14,696 | ) | (43,567 | ) | (2,543 | ) | (1,231 | ) | (3,774 | ) | (19,067 | ) | (19,430 | ) | (38,497 | ) | ||||||||||||||||||||||||
Total interest income from interest-earning assets | (20,699 | ) | (20,634 | ) | (41,333 | ) | (28,899 | ) | (15,291 | ) | (44,190 | ) | (2,454 | ) | (2,166 | ) | (4,620 | ) | (20,578 | ) | (20,755 | ) | (41,333 | ) | ||||||||||||||||||||||||
Net interest on swaps | (885 | ) | 757 | 31 | (885 | ) | ||||||||||||||||||||||||||||||||||||||||||
Total interest income | (42,218 | ) | (43,433 | ) | (4,589 | ) | (42,218 | ) |
407413
Financial information
Additional disclosure required under SEC regulations
Analysis of changes in interest income and expense (continued) | Analysis of changes in interest income and expense (continued) | Analysis of changes in interest income and expense (continued) | ||||||||||||||||||||||||||||||||||||||||||||||
2009 compared with 2008 | 2008 compared with 2007 | 2010 compared with 2009 | 2009 compared with 2008 | |||||||||||||||||||||||||||||||||||||||||||||
Increase/(decrease) | Increase/(decrease) | Increase / (decrease) | Increase / (decrease) | |||||||||||||||||||||||||||||||||||||||||||||
due to changes in | due to changes in | due to changes in | due to changes in | |||||||||||||||||||||||||||||||||||||||||||||
Average | Average | Net | Average | Average | Net | Average | Average | Net | Average | Average | Net | |||||||||||||||||||||||||||||||||||||
CHF million | volume | rate | change | volume | rate | change | volume | rate | change | volume | rate | change | ||||||||||||||||||||||||||||||||||||
Interest expense on interest-bearing liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||
Due to banks | ||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | (428 | ) | (856 | ) | (1,284 | ) | (403 | ) | (571 | ) | (974 | ) | (41 | ) | 75 | 34 | (429 | ) | (855 | ) | (1,284 | ) | ||||||||||||||||||||||||||
Foreign | (487 | ) | (2,479 | ) | (2,966 | ) | (3,162 | ) | (1,423 | ) | (4,585 | ) | (167 | ) | 21 | (146 | ) | (753 | ) | (932 | ) | (1,685 | ) | |||||||||||||||||||||||||
Cash collateral on securities lent and repurchase agreements | ||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | (658 | ) | (168 | ) | (826 | ) | (631 | ) | (245 | ) | (876 | ) | 14 | (67 | ) | (53 | ) | (658 | ) | (168 | ) | (826 | ) | |||||||||||||||||||||||||
Foreign | (7,656 | ) | (5,462 | ) | (13,118 | ) | (18,113 | ) | (5,470 | ) | (23,583 | ) | (199 | ) | (645 | ) | (844 | ) | (7,656 | ) | (5,462 | ) | (13,118 | ) | ||||||||||||||||||||||||
Trading portfolio liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | (13 | ) | (5 | ) | (18 | ) | (189 | ) | (12 | ) | (201 | ) | ||||||||||||||||||||||||||||||||||||
Foreign | 104 | (170 | ) | (66 | ) | (5,012 | ) | (71 | ) | (5,083 | ) | |||||||||||||||||||||||||||||||||||||
Cash collateral payables on derivative instruments | ||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | (189 | ) | (12 | ) | (201 | ) | (2 | ) | (70 | ) | (72 | ) | ||||||||||||||||||||||||||||||||||||
Foreign | (5,012 | ) | (71 | ) | (5,083 | ) | (5,863 | ) | (715 | ) | (6,578 | ) | (47 | ) | 11 | (36 | ) | 50 | (2,115 | ) | (2,065 | ) | ||||||||||||||||||||||||||
Financial liabilities designated at fair value | ||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | (24 | ) | (28 | ) | (52 | ) | (3 | ) | (7 | ) | (10 | ) | (1 | ) | (13 | ) | (14 | ) | (24 | ) | (28 | ) | (52 | ) | ||||||||||||||||||||||||
Foreign | (2,142 | ) | (2,249 | ) | (4,391 | ) | (961 | ) | 610 | (351 | ) | 46 | (495 | ) | (449 | ) | (2,142 | ) | (2,249 | ) | (4,391 | ) | ||||||||||||||||||||||||||
Due to customers | ||||||||||||||||||||||||||||||||||||||||||||||||
Domestic demand deposits | 73 | (470 | ) | (397 | ) | (86 | ) | (155 | ) | (241 | ) | 42 | (34 | ) | 8 | 73 | (470 | ) | (397 | ) | ||||||||||||||||||||||||||||
Domestic savings deposits | 27 | (110 | ) | (83 | ) | (74 | ) | 176 | 102 | 62 | (174 | ) | (112 | ) | 27 | (110 | ) | (83 | ) | |||||||||||||||||||||||||||||
Domestic time deposits | (675 | ) | 45 | (630 | ) | (159 | ) | 34 | (125 | ) | (173 | ) | (229 | ) | (402 | ) | (675 | ) | 45 | (630 | ) | |||||||||||||||||||||||||||
Domestic total | (575 | ) | (535 | ) | (1,110 | ) | (319 | ) | 55 | (264 | ) | (69 | ) | (437 | ) | (506 | ) | (575 | ) | (535 | ) | (1,110 | ) | |||||||||||||||||||||||||
Foreign | (2,506 | ) | (6,411 | ) | (8,917 | ) | (952 | ) | (4,392 | ) | (5,344 | ) | (475 | ) | (740 | ) | (1,215 | ) | (1,671 | ) | (5,356 | ) | (7,027 | ) | ||||||||||||||||||||||||
Short-term debt | ||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | (38 | ) | 2 | (36 | ) | (22 | ) | (13 | ) | (35 | ) | 5 | (23 | ) | (18 | ) | (28 | ) | (8 | ) | (36 | ) | ||||||||||||||||||||||||||
Foreign | (2,242 | ) | (1,740 | ) | (3,982 | ) | (578 | ) | (1,849 | ) | (2,427 | ) | (487 | ) | (399 | ) | (886 | ) | (2,255 | ) | (2,681 | ) | (4,936 | ) | ||||||||||||||||||||||||
Long-term debt | ||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | 140 | (135 | ) | 5 | 41 | (8 | ) | 33 | 32 | (43 | ) | (11 | ) | 140 | (135 | ) | 5 | |||||||||||||||||||||||||||||||
Foreign | 83 | (793 | ) | (710 | ) | 98 | 880 | 978 | (313 | ) | 203 | (110 | ) | 83 | 161 | 244 | ||||||||||||||||||||||||||||||||
Other interest-bearing liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | ||||||||||||||||||||||||||||||||||||||||||||||||
Foreign | (6 | ) | (15 | ) | (21 | ) | (506 | ) | (600 | ) | (1,106 | ) | ||||||||||||||||||||||||||||||||||||
Interest expense | ||||||||||||||||||||||||||||||||||||||||||||||||
Domestic | (1,772 | ) | (1,732 | ) | (3,504 | ) | (1,339 | ) | (859 | ) | (2,198 | ) | (73 | ) | (513 | ) | (586 | ) | (1,763 | ) | (1,741 | ) | (3,504 | ) | ||||||||||||||||||||||||
Foreign | (19,962 | ) | (19,205 | ) | (39,167 | ) | (29,531 | ) | (12,359 | ) | (41,890 | ) | (1,544 | ) | (2,229 | ) | (3,773 | ) | (19,862 | ) | (19,305 | ) | (39,167 | ) | ||||||||||||||||||||||||
Total interest expense | (21,734 | ) | (20,937 | ) | (42,671 | ) | (30,870 | ) | (13,218 | ) | (44,088 | ) | (1,617 | ) | (2,742 | ) | (4,359 | ) | (21,625 | ) | (21,046 | ) | (42,671 | ) |
408414
Financial information |
Deposits
The following table analyzes average deposits and the average rates on each deposit category listed below for the years ended 31 December 2010, 2009 2008 and 2007.2008. The geographic allocation is based on the location of the office or branch
where the deposit is
made. Deposits by foreign depositors in domestic offices were CHF 55,17163,953 million, CHF 54,957 million and CHF 45,082 million and CHF 72,849 million atas of 31 December 2010, 31 December 2009 and 31 December 2008, and 31 December 2007, respectively.
31.12.09 | 31.12.08 | 31.12.07 | 31.12.10 | 31.12.09 | 31.12.08 | |||||||||||||||||||||||||||||||||||||||||||
Average | Average | Average | Average | Average | Average | Average | Average | Average | Average | Average | Average | |||||||||||||||||||||||||||||||||||||
CHF million, except where indicated | deposit | rate (%) | deposit | rate (%) | deposit | rate (%) | deposit | rate (%) | deposit | rate (%) | deposit | rate (%) | ||||||||||||||||||||||||||||||||||||
Banks | ||||||||||||||||||||||||||||||||||||||||||||||||
Domestic offices | ||||||||||||||||||||||||||||||||||||||||||||||||
Demand deposits | 1,154 | 0.1 | 2,341 | 0.5 | 2,474 | 0.6 | 1,315 | 0.0 | 1,154 | 0.1 | 2,341 | 0.5 | ||||||||||||||||||||||||||||||||||||
Time deposits | 2,266 | 0.9 | 4,902 | 3.8 | 9,310 | 5.1 | 1,722 | 2.1 | 2,266 | 0.9 | 4,902 | 3.8 | ||||||||||||||||||||||||||||||||||||
Total domestic offices | 3,420 | 0.6 | 7,243 | 2.7 | 11,784 | 4.2 | 3,037 | 1.2 | 3,420 | 0.6 | 7,243 | 2.7 | ||||||||||||||||||||||||||||||||||||
Foreign offices | ||||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing deposits1 | 52,668 | 0.6 | 58,287 | 3.9 | 46,049 | 5.5 | 14,280 | 1.0 | 16,194 | 0.7 | 15,946 | 3.5 | ||||||||||||||||||||||||||||||||||||
Total due to banks | 56,088 | 0.6 | 65,530 | 3.7 | 57,833 | 5.2 | 17,317 | 1.0 | 19,614 | 0.7 | 23,189 | 3.2 | ||||||||||||||||||||||||||||||||||||
Customer accounts | ||||||||||||||||||||||||||||||||||||||||||||||||
Domestic offices | ||||||||||||||||||||||||||||||||||||||||||||||||
Demand deposits | 64,877 | 0.2 | 56,730 | 0.9 | 64,568 | 1.1 | 85,838 | 0.1 | 64,872 | 0.2 | 56,730 | 0.9 | ||||||||||||||||||||||||||||||||||||
Savings deposits | 68,042 | 0.8 | 65,073 | 0.9 | 75,587 | 0.7 | 75,802 | 0.5 | 68,042 | 0.8 | 65,073 | 0.9 | ||||||||||||||||||||||||||||||||||||
Time deposits | 13,075 | 3.4 | 35,575 | 3.0 | 41,056 | 2.9 | 7,977 | 0.6 | 13,075 | 3.4 | 35,575 | 3.0 | ||||||||||||||||||||||||||||||||||||
Total domestic offices | 145,994 | 0.7 | 157,378 | 1.4 | 181,211 | 1.3 | 169,617 | 0.3 | 145,989 | 0.7 | 157,378 | 1.4 | ||||||||||||||||||||||||||||||||||||
Foreign offices | ||||||||||||||||||||||||||||||||||||||||||||||||
Demand deposits | 93,520 | 0.4 | 111,168 | 2.4 | 110,839 | 1.1 | 35,588 | 0.2 | 29,725 | 0.8 | 38,761 | 1.7 | ||||||||||||||||||||||||||||||||||||
Time and savings deposits1 | 211,121 | 0.8 | 282,983 | 2.9 | 307,719 | 4.9 | 132,511 | 0.5 | 191,135 | 0.9 | 232,726 | 3.6 | ||||||||||||||||||||||||||||||||||||
Total foreign offices | 304,641 | 0.7 | 394,151 | 2.8 | 418,558 | 3.9 | 168,099 | 0.4 | 220,860 | 0.9 | 271,487 | 3.3 | ||||||||||||||||||||||||||||||||||||
Total due to customers | 450,635 | 0.7 | 551,529 | 2.4 | 599,769 | 3.1 | 337,716 | 0.4 | 366,849 | 0.8 | 428,865 | 2.6 |
AtAs of 31 December 2009,2010, the maturity of time deposits exceeding CHF 150,000, or an equivalent amount in other currencies, was as follows:
CHF million | Domestic | Foreign | Domestic | Foreign | ||||||||||||
Within 3 months | 27,398 | 82,800 | 35,520 | 63,087 | ||||||||||||
Over 3 up to 6 months | 773 | 9,315 | ||||||||||||||
3 to 6 months | 2,077 | 4,182 | ||||||||||||||
Over 6 up to 12 months | 655 | 3,242 | ||||||||||||||
6 to 12 months | 1,718 | 2,386 | ||||||||||||||
Over 1 up to 5 years | 358 | 827 | ||||||||||||||
1 to 5 years | 336 | 411 | ||||||||||||||
Over 5 years | 160 | 80 | 102 | 108 | ||||||||||||
Total time deposits | 29,344 | 96,264 | 39,753 | 70,174 |
409415
Financial information
Additional disclosure required under SEC regulations
Short-term borrowings
The following table presents the period-end, average and maximum month-end outstanding amounts for short-term borrowings, along with the average rates and period-end rates at and for the years ended 31 December 2010, 2009 2008 and 2007.2008.
Money market papers issued | Due to banks | Repurchase agreements1 | Money market papers issued | Due to banks | Repurchase agreements1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CHF million, except where indicated | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.10 | 31.12.09 | 31.12.08 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Period-end balance | 51,579 | 111,619 | 152,256 | 18,560 | 61,155 | 84,826 | 136,811 | 140,039 | 487,455 | 56,039 | 51,579 | 111,619 | 24,332 | 15,086 | 59,106 | 150,024 | 136,811 | 140,039 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average balance | 86,875 | 136,655 | 146,774 | 56,495 | 74,295 | 149,311 | 195,613 | 404,512 | 739,138 | 54,594 | 86,875 | 136,655 | 22,401 | 50,838 | 83,569 | 178,458 | 195,613 | 404,512 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maximum month-end balance | 125,812 | 170,503 | 167,637 | 74,044 | 87,233 | 175,233 | 272,443 | 591,005 | 848,401 | 64,941 | 125,812 | 170,503 | 37,886 | 70,985 | 95,979 | 207,828 | 272,443 | 591,005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average interest rate during the period (%) | 2.6 | 4.6 | 6.0 | 0.6 | 3.5 | 5.1 | 0.7 | 3.5 | 5.0 | 0.7 | 1.5 | 4.6 | 0.9 | 0.7 | 3.2 | 0.4 | 0.7 | 3.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average interest rate at period-end (%) | 0.9 | 2.9 | 6.1 | 0.6 | 2.3 | 4.5 | 0.3 | 1.4 | 4.9 | 0.7 | 0.9 | 2.9 | 1.0 | 0.6 | 2.3 | 0.4 | 0.3 | 1.4 |
Contractual maturities of debt investments available-for-sale1,2 | ||||||||||||||||||||||||||||||||
Within 1 year | Over 1 up to 5 years | Over 5 up to 10 years | Over 10 years | |||||||||||||||||||||||||||||
CHF million, except percentages | Amount | Yield (%) | Amount | Yield (%) | Amount | Yield (%) | Amount | Yield (%) | ||||||||||||||||||||||||
31 December 2009 | ||||||||||||||||||||||||||||||||
Swiss national government and agencies | 209 | 0.47 | 16 | 2.27 | 6 | 1.11 | 1 | 4.00 | ||||||||||||||||||||||||
Swiss local governments | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 | ||||||||||||||||||||||||
US Treasury and agencies | 3,475 | 0.05 | 1,831 | 0.02 | 0 | 0.00 | 0 | 0.00 | ||||||||||||||||||||||||
Foreign governments and official institutions | 2,861 | 0.98 | 96 | 2.75 | 25 | 1.88 | 18 | 3.66 | ||||||||||||||||||||||||
Corporate debt securities3 | 5,227 | 0.11 | 5,021 | 0.10 | 0 | 21.80 | 3 | 21.80 | ||||||||||||||||||||||||
Mortgage-backed securities | 27 | 0.00 | 3 | 4.87 | 25 | 3.75 | 752 | 0.43 | ||||||||||||||||||||||||
Other debt instruments | 98 | 2.80 | 3 | 1.21 | 0 | 0.00 | 0 | 0.00 | ||||||||||||||||||||||||
Total fair value | 11,898 | 6,970 | 56 | 774 | ||||||||||||||||||||||||||||
Within 1 year | Over 1 up to 5 years | Over 5 up to 10 years | Over 10 years | |||||||||||||||||||||||||||||
CHF million, except percentages | Amount | Yield (%) | Amount | Yield (%) | Amount | Yield (%) | Amount | Yield (%) | ||||||||||||||||||||||||
31 December 2008 | ||||||||||||||||||||||||||||||||
Swiss national government and agencies | 0 | 0.00 | 2 | 3.46 | 0 | 0.00 | 1 | 4.00 | ||||||||||||||||||||||||
Swiss local governments | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 | ||||||||||||||||||||||||
US Treasury and agencies | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 | ||||||||||||||||||||||||
Foreign governments and official institutions | 33 | 1.31 | 0 | 0.00 | 33 | 2.81 | 34 | 5.22 | ||||||||||||||||||||||||
Corporate debt securities | 3 | 23.35 | 88 | 3.38 | 38 | 3.12 | 12 | 1.74 | ||||||||||||||||||||||||
Mortgage-backed securities | 0 | 0.00 | 0 | 0.00 | 42 | 4.00 | 455 | 5.28 | ||||||||||||||||||||||||
Other debt instruments | 188 | 9.06 | 3 | 13.47 | 0 | 0.00 | 37 | 7.42 | ||||||||||||||||||||||||
Total fair value | 224 | 93 | 113 | 539 | ||||||||||||||||||||||||||||
Contractual maturities of investments in debt instruments available-for-sale1,2 | Contractual maturities of investments in debt instruments available-for-sale1,2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Within 1 year | Over 1 up to 5 years | Over 5 up to 10 years | Over 10 years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CHF million, except percentages | Amount | Yield (%) | Amount | Yield (%) | Amount | Yield (%) | Amount | Yield (%) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
31 December 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Swiss national government and agencies | 3,048 | 0.54 | 95 | 1.34 | 1 | 4.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
US Treasury and agencies | 18,500 | 0.41 | 6,687 | 1.11 | 8,792 | 1.62 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign governments and official institutions | 20,916 | 0.55 | 843 | 0.78 | 4,552 | 3.28 | 28 | 5.20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate debt securities3 | 5,119 | 1.02 | 652 | 0.81 | 1 | 5.38 | 4 | 15.84 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage-backed securities | 3 | 4.83 | 1 | 13.09 | 4,089 | 3.04 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other debt instruments | 51 | 14.52 | 3 | 14.52 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total fair value | 47,633 | 8,284 | 13,345 | 4,123 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Within 1 year | Over 1 up to 5 years | Over 5 up to 10 years | Over 10 years | Within 1 year | Over 1 up to 5 years | Over 5 up to 10 years | Over 10 years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CHF million, except percentages | Amount | Yield (%) | Amount | Yield (%) | Amount | Yield (%) | Amount | Yield (%) | Amount | Yield (%) | Amount | Yield (%) | Amount | Yield (%) | Amount | Yield (%) | ||||||||||||||||||||||||||||||||||||||||||||||||
31 December 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
31 December 2009 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Swiss national government and agencies | 0 | 0.00 | 2 | 2.02 | 0 | 0.00 | 1 | 4.00 | 623 | 0.47 | 16 | 2.27 | 6 | 1.11 | 1 | 4.00 | ||||||||||||||||||||||||||||||||||||||||||||||||
Swiss local governments | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
US Treasury and agencies | 41,451 | 0.16 | 5,044 | 0.02 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
US Treasury and agencies | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign governments and official institutions | 28,861 | 0.30 | 96 | 2.75 | 25 | 1.88 | 18 | 3.66 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate debt securities3 | 1,139 | 0.11 | 1,808 | 0.10 | 0 | 21.80 | 3 | 21.80 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage-backed securities | 27 | 0.00 | 3 | 4.87 | 25 | 3.75 | 752 | 0.43 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other debt instruments | 98 | 2.80 | 3 | 1.21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total fair value | 72,199 | 6,970 | 56 | 774 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Within 1 year | Over 1 up to 5 years | Over 5 up to 10 years | Over 10 years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CHF million, except percentages | Amount | Yield (%) | Amount | Yield (%) | Amount | Yield (%) | Amount | Yield (%) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
31 December 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Swiss national government and agencies | 2 | 3.46 | 1 | 4.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign governments and official institutions | 50 | 1.87 | 2 | 2.54 | 75 | 4.48 | 0 | 0.00 | 39 | 1.14 | 0 | 0.00 | 33 | 2.81 | 34 | 5.22 | ||||||||||||||||||||||||||||||||||||||||||||||||
Corporate debt securities | 50 | 5.66 | 44 | 4.11 | 0 | 0.00 | 0 | 0.00 | 2,122 | 1.05 | 88 | 3.38 | 38 | 3.12 | 12 | 1.74 | ||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage-backed securities | 0 | 0.00 | 0 | 0.00 | 3 | 4.48 | 561 | 5.28 | 42 | 4.00 | 455 | 5.28 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other debt instruments | 14 | 4.20 | 216 | 12.41 | 0 | 0.00 | 0 | 0.00 | 188 | 9.06 | 3 | 13.47 | 37 | 7.42 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total fair value | 114 | 264 | 78 | 562 | 2,349 | 93 | 113 | 539 |
410416
Financial information |
Due from banks and loans (gross)
The Group’s lending portfolio is widely diversified across industry sectors with no significant concentrations of credit risk. CHF 152.8151.2 billion (42.4%(53.1% of the total) consists of loans to thousands of private households, predominantly in Switzerland, and mostly secured by mortgages, financial collateral or other assets. Exposure to Banksbanks and Financialfinancial institutions amounted to CHF 132.663.8 billion (36.8%(22.4% of the total). This includes cash posted as collateral by UBS against negative replacement values on derivatives or other positions,
which, from a risk perspective, is not considered lending but is a key component of the measurement of counterparty risk taken in connection with the underlying products. Exposure to Banksbanks includes money market deposits with highly rated institutions. Excluding Banksbanks and Financialfinancial institutions, the largest industry sector exposure as
of December 20092010 is CHF 16.315.3 billion (4.5%(5.4% of the total) to Public authorities.services. For further discussion of the loan portfolio, refer to credit risk in the “Risk“Credit risk” section of this report.
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | 31.12.05 | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | ||||||||||||||||||||||||||||||
Domestic | ||||||||||||||||||||||||||||||||||||||||
Banks1 | 819 | 1,734 | 1,237 | 561 | 1,407 | 1,130 | 609 | 1,056 | 735 | 458 | ||||||||||||||||||||||||||||||
Construction | 1,381 | 1,377 | 1,393 | 1,535 | 1,816 | 1,356 | 1,381 | 1,554 | 1,594 | 1,742 | ||||||||||||||||||||||||||||||
Financial institutions | 7,458 | 8,113 | 5,525 | 5,542 | 4,213 | 3,737 | 4,370 | 5,984 | 5,322 | 5,382 | ||||||||||||||||||||||||||||||
Hotels and restaurants | 1,882 | 1,811 | 1,824 | 1,957 | 2,044 | 1,803 | 1,882 | 1,811 | 1,824 | 1,957 | ||||||||||||||||||||||||||||||
Manufacturing | 3,374 | 4,020 | 3,887 | 3,643 | 4,134 | 3,192 | 3,373 | 3,795 | 3,766 | 3,578 | ||||||||||||||||||||||||||||||
Private households | 119,432 | 119,285 | 121,536 | 117,852 | 111,549 | 119,796 | 119,432 | 119,285 | 121,536 | 117,852 | ||||||||||||||||||||||||||||||
Public authorities | 3,785 | 4,042 | 4,734 | 4,972 | 5,494 | 4,908 | 3,785 | 4,042 | 4,734 | 4,972 | ||||||||||||||||||||||||||||||
Real estate and rentals | 11,745 | 12,097 | 11,691 | 11,356 | 11,792 | 12,252 | 11,745 | 11,921 | 11,489 | 11,148 | ||||||||||||||||||||||||||||||
Retail and wholesale | 4,299 | 4,818 | 5,138 | 4,569 | 4,808 | 4,101 | 4,288 | 4,781 | 4,647 | 4,507 | ||||||||||||||||||||||||||||||
Services2 | 5,702 | 6,172 | 6,170 | 6,758 | 8,088 | |||||||||||||||||||||||||||||||||||
Services | 5,728 | 5,712 | 5,935 | 5,875 | 6,450 | |||||||||||||||||||||||||||||||||||
Other3 | 3,520 | 3,329 | 3,300 | 4,345 | 3,119 | |||||||||||||||||||||||||||||||||||
Other2 | 3,107 | 3,413 | 3,539 | 3,712 | 4,710 | |||||||||||||||||||||||||||||||||||
Total domestic | 163,397 | 166,798 | 166,435 | 163,090 | 158,464 | 161,109 | 159,990 | 163,705 | 165,233 | 162,757 | ||||||||||||||||||||||||||||||
Foreign | ||||||||||||||||||||||||||||||||||||||||
Banks1 | 46,452 | 63,708 | 60,333 | 50,124 | 32,287 | 16,474 | 16,891 | 17,629 | 25,905 | 32,374 | ||||||||||||||||||||||||||||||
Chemicals | 2,403 | 2,816 | 635 | 1,321 | 2,716 | 394 | 2,403 | 2,816 | 646 | 1,333 | ||||||||||||||||||||||||||||||
Construction | 741 | 448 | 624 | 522 | 295 | 1,008 | 741 | 619 | 867 | 862 | ||||||||||||||||||||||||||||||
Electricity, gas and water supply | 1,024 | 2,995 | 1,888 | 951 | 1,637 | 686 | 759 | 1,655 | 880 | 717 | ||||||||||||||||||||||||||||||
Financial institutions | 77,838 | 100,779 | 96,370 | 67,676 | 62,344 | 42,470 | 44,143 | 60,775 | 37,074 | 39,361 | ||||||||||||||||||||||||||||||
Manufacturing | 3,606 | 5,026 | 4,678 | 3,006 | 3,784 | 2,456 | 3,313 | 4,709 | 4,370 | 2,324 | ||||||||||||||||||||||||||||||
Mining | 3,177 | 4,394 | 4,509 | 3,177 | 3,431 | 2,776 | 2,799 | 3,787 | 4,272 | 3,171 | ||||||||||||||||||||||||||||||
Private households | 33,392 | 33,242 | 42,828 | 35,031 | 38,283 | 31,361 | 33,166 | 33,216 | 42,219 | 34,861 | ||||||||||||||||||||||||||||||
Public authorities | 12,472 | 11,094 | 4,172 | 2,175 | 1,686 | 9,880 | 10,808 | 8,104 | 2,825 | 1,318 | ||||||||||||||||||||||||||||||
Real estate and rentals | 1,305 | 4,240 | 5,056 | 4,360 | 2,707 | 1,578 | 1,240 | 4,069 | 4,813 | 4,021 | ||||||||||||||||||||||||||||||
Retail and wholesale | 1,772 | 2,515 | 2,239 | 1,815 | 1,257 | 1,765 | 1,558 | 2,045 | 1,954 | 1,648 | ||||||||||||||||||||||||||||||
Services | 8,629 | 9,816 | 9,294 | 16,436 | 5,593 | 9,621 | 8,363 | 9,913 | 8,720 | 7,074 | ||||||||||||||||||||||||||||||
Transport, storage and communication | 3,085 | 3,894 | 1,752 | 1,528 | 1,419 | 1,959 | 3,059 | 3,603 | 1,860 | 1,648 | ||||||||||||||||||||||||||||||
Other4 | 797 | 1,073 | 1,105 | 564 | 272 | |||||||||||||||||||||||||||||||||||
Other3 | 843 | 735 | 584 | 977 | 546 | |||||||||||||||||||||||||||||||||||
Total foreign | 196,693 | 246,040 | 235,483 | 188,686 | 157,711 | 123,271 | 129,978 | 153,524 | 137,381 | 131,257 | ||||||||||||||||||||||||||||||
Total gross | 360,090 | 412,838 | 401,918 | 351,776 | 316,175 | 284,381 | 289,969 | 317,228 | 302,614 | 294,014 |
The table above also includes loans designated at fair value.
411417
Financial information
Additional disclosure required under SEC regulations
Due from banks and loans (gross) (continued)
The following table analyzes the Group’s mortgage portfolio by geographic origin of the client and type of mortgage at 31 December 2010, 2009, 2008, 2007 2006 and 2005. Mortgag-
es2006. Mortgages are included in the industry categories mentioned on the previous page.
CHF million | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | |||||||||||||||
Mortgages | ||||||||||||||||||||
Domestic | 136,687 | 136,029 | 134,700 | 135,341 | 134,468 | |||||||||||||||
Foreign | 6,174 | 4,972 | 8,381 | 8,152 | 10,069 | |||||||||||||||
Total gross mortgages | 142,861 | 141,001 | 143,081 | 143,493 | 144,537 | |||||||||||||||
Mortgages | ||||||||||||||||||||
Residential | 122,499 | 121,031 | 121,811 | 122,435 | 124,548 | |||||||||||||||
Commercial | 20,362 | 19,970 | 21,270 | 21,058 | 19,989 | |||||||||||||||
Total gross mortgages | 142,861 | 141,001 | 143,081 | 143,493 | 144,537 | |||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | 31.12.05 | |||||||||||||||
Mortgages | ||||||||||||||||||||
Domestic | 136,029 | 134,700 | 135,341 | 134,468 | 130,880 | |||||||||||||||
Foreign | 4,972 | 8,381 | 8,152 | 10,069 | 15,619 | |||||||||||||||
Total gross mortgages | 141,001 | 143,081 | 143,493 | 144,537 | 146,499 | |||||||||||||||
Mortgages | ||||||||||||||||||||
Residential | 121,031 | 121,811 | 122,435 | 124,548 | 127,990 | |||||||||||||||
Commercial | 19,970 | 21,270 | 21,058 | 19,989 | 18,509 | |||||||||||||||
Total gross mortgages | 141,001 | 143,081 | 143,493 | 144,537 | 146,499 | |||||||||||||||
Due from banks and loan maturities (gross)1 | ||||||||||||||||||||
CHF million | Within 1 year | Over 1 up to 5 years | Over 5 years | Total | ||||||||||||||||
Domestic | ||||||||||||||||||||
Banks | 728 | 90 | 0 | 818 | ||||||||||||||||
Mortgages | 53,436 | 58,961 | 23,632 | 136,029 | ||||||||||||||||
Other loans | 20,405 | 4,832 | 1,314 | 26,551 | ||||||||||||||||
Total domestic | 74,569 | 63,883 | 24,946 | 163,398 | ||||||||||||||||
Foreign | ||||||||||||||||||||
Banks | 45,444 | 212 | 132 | 45,788 | ||||||||||||||||
Mortgages | 2,845 | 1,611 | 516 | 4,972 | ||||||||||||||||
Other loans | 93,955 | 12,491 | 35,467 | 141,923 | 2 | |||||||||||||||
Total foreign | 142,254 | 14,314 | 36,115 | 192,683 | ||||||||||||||||
Total gross | 216,823 | 78,197 | 61,061 | 356,081 | ||||||||||||||||
Due from banks and loan maturities (gross)1 | ||||||||||||||||
Over 1 up | ||||||||||||||||
CHF million | Within 1 year | to 5 years | Over 5 years | Total | ||||||||||||
Domestic | ||||||||||||||||
Banks | 1,082 | 48 | 1,130 | |||||||||||||
Mortgages | 52,673 | 58,778 | 25,236 | 136,687 | ||||||||||||
Other loans | 17,577 | 4,384 | 1,331 | 23,292 | ||||||||||||
Total domestic | 71,332 | 63,210 | 26,567 | 161,109 | ||||||||||||
Foreign | ||||||||||||||||
Banks | 15,767 | 183 | 77 | 16,027 | ||||||||||||
Mortgages | 4,038 | 1,583 | 553 | 6,174 | ||||||||||||
Other loans | 61,041 | 8,300 | 28,470 | 97,811 | 2 | |||||||||||
Total foreign | 80,846 | 10,066 | 29,100 | 120,012 | ||||||||||||
Total gross | 152,178 | 73,276 | 55,667 | 281,121 | ||||||||||||
At 31 December 2009,2010, the total amount ofDue from banks and Loansloans due after one year granted affixedat fixed and floating rates isare as follows:
CHF million | 1 to 5 years | Over 5 years | Total | 1 to 5 years | Over 5 years | Total | ||||||||||||||||||
Fixed-rate loans | 75,064 | 27,623 | 102,687 | 72,595 | 27,857 | 100,452 | ||||||||||||||||||
Adjustable or floating-rate loans | 3,132 | 33,439 | 36,571 | 681 | 27,810 | 28,491 | ||||||||||||||||||
Total | 78,196 | 61,062 | 139,258 | 73,276 | 55,667 | 128,943 |
412418
Financial information |
Impaired and non-performing loans
A loan (included inDue from banksor Loans)Loans) is classified as non-performing: 1) when the payment of interest, principal or fees is overdue by more than 90 days and there is no firm evidence that
it will be made good by later payments or the
liquidation of collateral; 2) when insolvency proceedings have commenced; or 3) when obligations have been restructured on concessionary terms.
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.05 | 31.12.05 | |||||||||||||||
Gross interest income that would have been recorded on non-performing loans: | ||||||||||||||||||||
Domestic | 13 | 16 | 39 | 50 | 81 | |||||||||||||||
Foreign | 9 | 3 | 4 | 10 | 8 | |||||||||||||||
Interest income included in net profit for non-performing loans: | ||||||||||||||||||||
Domestic | 41 | 32 | 40 | 56 | 72 | |||||||||||||||
Foreign | 9 | 4 | 2 | 8 | 9 | |||||||||||||||
The table below provides an analysis of the Group’s non-performing loans. For further information see credit risk in the “Risk and treasury management” section.
CHF million | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | |||||||||||||||||||||||||||||||||||
Gross interest income that would have been recorded under non-performing loans: | ||||||||||||||||||||||||||||||||||||||||
Domestic | 11 | 13 | 16 | 39 | 50 | |||||||||||||||||||||||||||||||||||
Foreign | 35 | 89 | 7 | 6 | 10 | |||||||||||||||||||||||||||||||||||
Interest income included in net profit of non-performing loans: | ||||||||||||||||||||||||||||||||||||||||
Domestic | 35 | 41 | 32 | 40 | 56 | |||||||||||||||||||||||||||||||||||
Foreign | 19 | 30 | 6 | 2 | 8 | |||||||||||||||||||||||||||||||||||
The table below provides an analysis of the Group’s non-performing loans. For further information see credit risk in the “Risk and treasury management” section. | The table below provides an analysis of the Group’s non-performing loans. For further information see credit risk in the “Risk and treasury management” section. | |||||||||||||||||||||||||||||||||||||||
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.05 | 31.12.05 | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | ||||||||||||||||||||||||||||||
Non-performing loans: | ||||||||||||||||||||||||||||||||||||||||
Domestic | 1,462 | 1,431 | 1,349 | 1,744 | 2,106 | 1,164 | 1,462 | 1,431 | 1,349 | 1,744 | ||||||||||||||||||||||||||||||
Foreign | 3,940 | 3,272 | 132 | 174 | 257 | 563 | 3,940 | 3,272 | 132 | 174 | ||||||||||||||||||||||||||||||
Total non-performing loans | 5,402 | 4,703 | 1,481 | 1,918 | 2,363 | 1,727 | 5,402 | 4,703 | 1,481 | 1,918 |
UBS does not, as a matter of policy, typically restructure loans to accrue interest at rates different from the original contractual terms or reduce the principal amount of loans. For more information seerefer to the “Credit risk” section of this report. Instead, specific loan allowances are established as necessary. Unrecognized interest related to restructured loans was not material to the results of operations in 2010, 2009, 2008, 2007 2006 or 2005.2006.
413419
Financial information
Additional disclosure required under SEC regulations
Cross-border outstandings
Cross-border outstandings consist of exposures in relation to (i) general banking products with third parties, such as loans and deposits with third parties, credit equivalents ofadvances, (ii) over-the-counter (OTC) derivatives, exchange-traded (ETD) derivatives and securities financing transactions, which are represented as a credit equivalent based on UBS’s internal risk measures, and (iii) the market value of the inventory of debt securities. Outstandings are monitored and reported on an ongoing basis by the credit risk control organization with a dedicated country risk information system. With the exception of the 32largest most developed economies, to which UBS assigns a high rating, and a small number of financial centers, where the credit quality of UBS’s exposures is not correlated with the state of their internal economy, these exposures are rigorously limited. The following analysis excludesDue from banks and Loansfrom Industrial Holdings.
secured by collateral are recorded against
the country where the asset could be liquidated. This follows the “Guidelines for the Management of Country Risk”, which are applicable to all banks that are supervised by the Swiss Financial Market Supervisory Authority (FINMA).
31.12.09 | ||||||||||||||||||||
CHF million | Banks | Private sector | Public sector | Total | % of total assets | |||||||||||||||
United States | 14,915 | 52,305 | 62,224 | 129,444 | 9.7 | |||||||||||||||
Germany | 14,612 | 9,114 | 12,648 | 36,374 | 2.7 | |||||||||||||||
Japan | 625 | 4,280 | 22,888 | 27,793 | 2.1 | |||||||||||||||
France | 9,672 | 5,672 | 10,848 | 26,192 | 2.0 | |||||||||||||||
United Kingdom | 4,700 | 9,293 | 7,310 | 21,303 | 1.6 | |||||||||||||||
Netherlands | 4,425 | 7,023 | 2,940 | 14,388 | 1.1 | |||||||||||||||
Italy | 1,694 | 2,296 | 8,729 | 12,719 | 0.9 | |||||||||||||||
Luxembourg | 3,950 | 8,509 | 20 | 12,479 | 0.9 | |||||||||||||||
31.12.08 | ||||||||||||||||||||
CHF million | Banks | Private sector | Public sector | Total | % of total assets | |||||||||||||||
United States | 13,869 | 71,584 | 14,234 | 99,687 | 4.9 | |||||||||||||||
Japan | 2,093 | 13,159 | 38,922 | 54,174 | 2.7 | |||||||||||||||
Germany | 19,098 | 10,418 | 6,010 | 35,526 | 1.8 | |||||||||||||||
France | 11,469 | 7,048 | 6,807 | 25,324 | 1.3 | |||||||||||||||
United Kingdom | 9,599 | 8,608 | 2,625 | 20,832 | 1.0 | |||||||||||||||
Luxembourg | 2,883 | 17,586 | 0 | 20,469 | 1.0 | |||||||||||||||
31.12.07 | 31.12.10 | |||||||||||||||||||||||||||||||||||||||
CHF million | Banks | Private sector | Public sector | Total | % of total assets | Banks | Private sector | Public sector | Total | % of total assets | ||||||||||||||||||||||||||||||
United States | 13,110 | 192,049 | 16,545 | 221,704 | 9.8 | 8,039 | 48,145 | 46,332 | 102,516 | 7.8 | ||||||||||||||||||||||||||||||
Japan | 1,761 | 12,883 | 36,717 | 51,361 | 2.3 | 725 | 3,155 | 39,551 | 43,431 | 3.3 | ||||||||||||||||||||||||||||||
Germany | 21,384 | 12,354 | 2,249 | 35,988 | 1.6 | 12,842 | 6,455 | 6,044 | 25,341 | 1.9 | ||||||||||||||||||||||||||||||
United Kingdom | 6,624 | 14,647 | 8,552 | 29,823 | 1.3 | 4,157 | 8,715 | 7,864 | 20,736 | 1.6 | ||||||||||||||||||||||||||||||
Cayman Islands | 173 | 27,715 | 74 | 27,963 | 1.2 | |||||||||||||||||||||||||||||||||||
France | 7,521 | 5,665 | 4,715 | 17,901 | 1.4 | |||||||||||||||||||||||||||||||||||
Netherlands | 3,814 | 5,276 | 3,315 | 12,405 | 0.9 | |||||||||||||||||||||||||||||||||||
31.12.09 | ||||||||||||||||||||||||||||||||||||||||
CHF million | Banks | Private sector | Public sector | Total | % of total assets | |||||||||||||||||||||||||||||||||||
United States | 14,915 | 52,305 | 62,224 | 129,444 | 9.7 | |||||||||||||||||||||||||||||||||||
Germany | 14,612 | 9,114 | 12,648 | 36,374 | 2.7 | |||||||||||||||||||||||||||||||||||
Japan | 625 | 4,280 | 22,888 | 27,793 | 2.1 | |||||||||||||||||||||||||||||||||||
France | 10,620 | 7,075 | 4,605 | 22,300 | 1.0 | 9,672 | 5,672 | 10,848 | 26,192 | 2.0 | ||||||||||||||||||||||||||||||
United Kingdom | 4,700 | 9,293 | 7,310 | 21,303 | 1.6 | |||||||||||||||||||||||||||||||||||
Netherlands | 4,425 | 7,023 | 2,940 | 14,388 | 1.1 | |||||||||||||||||||||||||||||||||||
Italy | 1,694 | 2,296 | 8,729 | 12,719 | 0.9 | |||||||||||||||||||||||||||||||||||
Luxembourg | 3,950 | 8,509 | 20 | 12,479 | 0.9 | |||||||||||||||||||||||||||||||||||
31.12.08 | ||||||||||||||||||||||||||||||||||||||||
CHF million | Banks | Private sector | Public sector | Total | % of total assets | |||||||||||||||||||||||||||||||||||
United States | 13,869 | 71,584 | 14,234 | 99,687 | 4.9 | |||||||||||||||||||||||||||||||||||
Japan | 2,093 | 13,159 | 38,922 | 54,174 | 2.7 | |||||||||||||||||||||||||||||||||||
Germany | 19,098 | 10,418 | 6,010 | 35,526 | 1.8 | |||||||||||||||||||||||||||||||||||
France | 11,469 | 7,048 | 6,807 | 25,324 | 1.3 | |||||||||||||||||||||||||||||||||||
United Kingdom | 9,599 | 8,608 | 2,625 | 20,832 | 1.0 | |||||||||||||||||||||||||||||||||||
Luxembourg | 2,883 | 17,586 | 0 | 20,469 | 1.0 | |||||||||||||||||||||||||||||||||||
414420
Financial information |
Summary of movements in allowances and provisions for credit losses
The following table provides an analysis of movements in allowances and provisions for credit losses.
ing assets and/and / or in case of debt forgiveness. Under Swiss law, a creditor can continue to collect from a debtor who has emerged from bankruptcy, unless the debt has been forgiven through a formal agreement.
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | 31.12.05 | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | ||||||||||||||||||||||||||||||
Balance at beginning of year | 3,070 | 1,164 | 1,332 | 1,776 | 2,802 | 2,820 | 3,070 | 1,164 | 1,332 | 1,776 | ||||||||||||||||||||||||||||||
Domestic | ||||||||||||||||||||||||||||||||||||||||
Write-offs | ||||||||||||||||||||||||||||||||||||||||
Banks | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||
Construction | (16 | ) | (6 | ) | (9 | ) | (14 | ) | (16 | ) | (8 | ) | (15 | ) | (6 | ) | (9 | ) | (14 | ) | ||||||||||||||||||||
Financial institutions | (2 | ) | (37 | ) | (8 | ) | (11 | ) | (14 | ) | (47 | ) | (2 | ) | (37 | ) | (9 | ) | (11 | ) | ||||||||||||||||||||
Hotels and restaurants | (2 | ) | (3 | ) | (7 | ) | (16 | ) | (26 | ) | (1 | ) | (2 | ) | (3 | ) | (8 | ) | (16 | ) | ||||||||||||||||||||
Manufacturing1 | (21 | ) | (31 | ) | (45 | ) | (40 | ) | (39 | ) | ||||||||||||||||||||||||||||||
Manufacturing | (28 | ) | (21 | ) | (24 | ) | (14 | ) | (37 | ) | ||||||||||||||||||||||||||||||
Private households | (61 | ) | (112 | ) | (68 | ) | (89 | ) | (131 | ) | (66 | ) | (61 | ) | (112 | ) | (69 | ) | (89 | ) | ||||||||||||||||||||
Public authorities | 0 | 0 | (1 | ) | 0 | 0 | 0 | 0 | 0 | (1 | ) | 0 | ||||||||||||||||||||||||||||
Real estate and rentals | (19 | ) | (10 | ) | (27 | ) | (44 | ) | (56 | ) | (2 | ) | (19 | ) | (10 | ) | (26 | ) | (44 | ) | ||||||||||||||||||||
Retail and wholesale | (41 | ) | (4 | ) | (62 | ) | (20 | ) | (25 | ) | (117 | ) | (41 | ) | (4 | ) | (62 | ) | (20 | ) | ||||||||||||||||||||
Services2 | (3 | ) | (7 | ) | (20 | ) | (47 | ) | (35 | ) | ||||||||||||||||||||||||||||||
Services | (49 | ) | (3 | ) | (7 | ) | (17 | ) | (43 | ) | ||||||||||||||||||||||||||||||
Other3 | (12 | ) | 0 | (21 | ) | (2 | ) | (4 | ) | |||||||||||||||||||||||||||||||
Other1 | (16 | ) | (12 | ) | (8 | ) | (54 | ) | (7 | ) | ||||||||||||||||||||||||||||||
Total domestic write-offs | (177 | ) | (210 | ) | (268 | ) | (283 | ) | (346 | ) | (332 | ) | (177 | ) | (210 | ) | (268 | ) | (281 | ) | ||||||||||||||||||||
Foreign | ||||||||||||||||||||||||||||||||||||||||
Write-offs | ||||||||||||||||||||||||||||||||||||||||
Banks | (8 | ) | (13 | ) | (1 | ) | (3 | ) | (164 | ) | (2 | ) | (8 | ) | (134 | ) | (1 | ) | (3 | ) | ||||||||||||||||||||
Chemicals | (111 | ) | (1 | ) | 0 | 0 | 0 | (846 | ) | (111 | ) | (1 | ) | 0 | 0 | |||||||||||||||||||||||||
Construction | (10 | ) | 0 | 0 | 0 | 0 | 0 | (10 | ) | 0 | 0 | 0 | ||||||||||||||||||||||||||||
Electricity, gas and water supply | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||
Financial institutions | (685 | ) | (623 | ) | (15 | ) | 0 | (50 | ) | (267 | ) | (685 | ) | (501 | ) | (15 | ) | 0 | ||||||||||||||||||||||
Manufacturing4 | (138 | ) | (6 | ) | (21 | ) | (11 | ) | (8 | ) | ||||||||||||||||||||||||||||||
Manufacturing | (22 | ) | (138 | ) | (6 | ) | (21 | ) | (6 | ) | ||||||||||||||||||||||||||||||
Mining | (5 | ) | 0 | 0 | (1 | ) | (23 | ) | 0 | (5 | ) | 0 | 0 | (1 | ) | |||||||||||||||||||||||||
Private households | (40 | ) | (5 | ) | (14 | ) | (7 | ) | (21 | ) | (21 | ) | (40 | ) | (4 | ) | (14 | ) | (7 | ) | ||||||||||||||||||||
Public authorities | (25 | ) | (2 | ) | (2 | ) | (58 | ) | (22 | ) | (1 | ) | (20 | ) | (2 | ) | (2 | ) | (58 | ) | ||||||||||||||||||||
Real estate and rentals | (196 | ) | 0 | 0 | 0 | (3 | ) | (1 | ) | (196 | ) | (1 | ) | 0 | 0 | |||||||||||||||||||||||||
Retail and wholesale | (121 | ) | 0 | 0 | 0 | (9 | ) | (1 | ) | (122 | ) | 0 | 0 | 0 | ||||||||||||||||||||||||||
Services | (413 | ) | 0 | 0 | 0 | 0 | (9 | ) | (413 | ) | 0 | 0 | 0 | |||||||||||||||||||||||||||
Transport, storage and communication | (37 | ) | (7 | ) | 0 | 0 | 0 | (3 | ) | (37 | ) | (6 | ) | 0 | 0 | |||||||||||||||||||||||||
Other5 | (80 | ) | (1 | ) | 0 | 0 | (5 | ) | ||||||||||||||||||||||||||||||||
Other2 | 0 | (80 | ) | (1 | ) | 0 | (5 | ) | ||||||||||||||||||||||||||||||||
Total foreign write-offs | (1,869 | ) | (658 | ) | (53 | ) | (80 | ) | (305 | ) | (1,173 | ) | (1,865 | ) | (658 | ) | (53 | ) | (80 | ) | ||||||||||||||||||||
Total specific provisions for off-balance sheet | 0 | (5 | ) | 0 | 0 | (1 | ) | |||||||||||||||||||||||||||||||||
Total write-offs | (2,046 | ) | (868 | ) | (321 | ) | (363 | ) | (651 | ) | (1,505 | ) | (2,046 | ) | (868 | ) | (321 | ) | (363 | ) | ||||||||||||||||||||
Recoveries | ||||||||||||||||||||||||||||||||||||||||
Domestic | 44 | 43 | 52 | 51 | 53 | 38 | 44 | 43 | 52 | 51 | ||||||||||||||||||||||||||||||
Foreign | 8 | 1 | 3 | 11 | 10 | 41 | 8 | 1 | 3 | 11 | ||||||||||||||||||||||||||||||
Total recoveries | 52 | 44 | 55 | 62 | 63 | 79 | 52 | 44 | 55 | 62 | ||||||||||||||||||||||||||||||
Net write-offs | (1,994 | ) | (824 | ) | (266 | ) | (301 | ) | (588 | ) | (1,427 | ) | (1,994 | ) | (824 | ) | (266 | ) | (301 | ) | ||||||||||||||||||||
Increase/(decrease) in credit loss allowance and provision | 1,806 | 3,007 | 242 | (108 | ) | (298 | ) | |||||||||||||||||||||||||||||||||
Increase / (decrease) in credit loss allowance and provision | 67 | 1,806 | 3,007 | 242 | (108 | ) | ||||||||||||||||||||||||||||||||||
Collective loan loss provisions | 26 | (11 | ) | (4 | ) | (48 | ) | (76 | ) | (2 | ) | 26 | (11 | ) | (4 | ) | (48 | ) | ||||||||||||||||||||||
Other adjustments | (88 | ) | (266 | ) | (140 | ) | 13 | (64 | ) | (173 | ) | (88 | ) | (266 | ) | (140 | ) | 13 | ||||||||||||||||||||||
Balance at end of year | 2,820 | 3,070 | 1,164 | 1,332 | 1,776 | 1,287 | 2,820 | 3,070 | 1,164 | 1,332 | ||||||||||||||||||||||||||||||
Net foreign exchange | (37 | ) | (43 | ) | (9 | ) | 10 | 50 | (173 | ) | (37 | ) | (43 | ) | (9 | ) | 10 | |||||||||||||||||||||||
Other adjustments | (51 | )6 | (223 | )6 | (131 | ) | 3 | (114 | ) | 0 | (51 | )3 | (223 | )3 | (131 | ) | 3 | |||||||||||||||||||||||
Total adjustments | (88 | ) | (266 | ) | (140 | ) | 13 | (64 | ) | (173 | ) | (88 | ) | (266 | ) | (140 | ) | 13 |
415421
Financial information
Additional disclosure required under SEC regulations
Allocation of the allowances and provisions for credit losses
The following table provides an analysis of the allocation of the allowances and provisions for credit loss by industry sector and geographic location at 31 December 2010, 2009, 2008, 2007
2007, 2006 and 2005.2006. For a description of procedures with respect to allowances and provisions for credit losses, see credit risk inrefer to the “Risk and treasury management” section.
“Credit risk” section of this report.
CHF million | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | 31.12.05 | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | ||||||||||||||||||||||||||||||
Domestic | ||||||||||||||||||||||||||||||||||||||||
Banks | 1 | 16 | 10 | 10 | 10 | 1 | 1 | 16 | 10 | 10 | ||||||||||||||||||||||||||||||
Construction | 27 | 39 | 43 | 72 | 91 | 23 | 27 | 39 | 43 | 73 | ||||||||||||||||||||||||||||||
Financial institutions | 126 | 18 | 52 | 61 | 75 | 28 | 126 | 18 | 52 | 61 | ||||||||||||||||||||||||||||||
Hotels and restaurants | 6 | 8 | 10 | 27 | 49 | 5 | 6 | 8 | 10 | 27 | ||||||||||||||||||||||||||||||
Manufacturing1 | 104 | 71 | 113 | 155 | 174 | |||||||||||||||||||||||||||||||||||
Manufacturing | 93 | 104 | 84 | 98 | 104 | |||||||||||||||||||||||||||||||||||
Private households | 119 | 121 | 190 | 187 | 262 | 91 | 119 | 125 | 190 | 188 | ||||||||||||||||||||||||||||||
Public authorities | 20 | 1 | 1 | 3 | 8 | 0 | 1 | 1 | 1 | 4 | ||||||||||||||||||||||||||||||
Real estate and rentals | 21 | 50 | 57 | 99 | 168 | 19 | 21 | 50 | 57 | 98 | ||||||||||||||||||||||||||||||
Retail and wholesale | 221 | 262 | 247 | 311 | 330 | 165 | 221 | 262 | 247 | 312 | ||||||||||||||||||||||||||||||
Services2 | 99 | 78 | 112 | 113 | 196 | |||||||||||||||||||||||||||||||||||
Services | 45 | 99 | 79 | 87 | 94 | |||||||||||||||||||||||||||||||||||
Other3 | 43 | 92 | 76 | 107 | 61 | |||||||||||||||||||||||||||||||||||
Other1 | 27 | 43 | 47 | 53 | 106 | |||||||||||||||||||||||||||||||||||
Total domestic | 787 | 756 | 911 | 1,145 | 1,424 | 497 | 768 | 729 | 848 | 1,076 | ||||||||||||||||||||||||||||||
Foreign | ||||||||||||||||||||||||||||||||||||||||
Banks4 | 31 | 6 | 18 | 20 | 35 | |||||||||||||||||||||||||||||||||||
Banks2 | 23 | 31 | 6 | 35 | 20 | |||||||||||||||||||||||||||||||||||
Chemicals | 1,037 | 960 | 1 | 4 | 5 | 8 | 1,037 | 960 | 1 | 4 | ||||||||||||||||||||||||||||||
Construction | 1 | 8 | 1 | 2 | 2 | 2 | 1 | 8 | 1 | 1 | ||||||||||||||||||||||||||||||
Electricity, gas and water supply | 0 | 2 | 3 | 8 | 16 | 0 | 0 | 2 | 3 | 8 | ||||||||||||||||||||||||||||||
Financial institutions | 414 | 542 | 112 | 9 | 8 | 190 | 414 | 530 | 96 | 9 | ||||||||||||||||||||||||||||||
Manufacturing5 | 83 | 25 | 20 | 37 | 57 | |||||||||||||||||||||||||||||||||||
Manufacturing | 15 | 83 | 25 | 13 | 35 | |||||||||||||||||||||||||||||||||||
Mining | 0 | 4 | 0 | 0 | 1 | 0 | 0 | 4 | 0 | 0 | ||||||||||||||||||||||||||||||
Private households | 171 | 233 | 15 | 26 | 30 | 139 | 171 | 226 | 13 | 26 | ||||||||||||||||||||||||||||||
Public authorities | 87 | 19 | 20 | 21 | 72 | 171 | 18 | 19 | 20 | 21 | ||||||||||||||||||||||||||||||
Real estate and rentals | 36 | 208 | 8 | 4 | 3 | 15 | 36 | 208 | 8 | 3 | ||||||||||||||||||||||||||||||
Retail and wholesale | 17 | 80 | 4 | 4 | 1 | 8 | 17 | 81 | 4 | 4 | ||||||||||||||||||||||||||||||
Services | 100 | 19 | 4 | 7 | 27 | 12 | 100 | 205 | 7 | 7 | ||||||||||||||||||||||||||||||
Transport, storage and communication | 7 | 185 | 1 | 1 | 0 | 29 | 7 | 1 | 1 | 1 | ||||||||||||||||||||||||||||||
Other6 | 0 | 0 | 12 | 6 | 8 | |||||||||||||||||||||||||||||||||||
Other3 | 0 | 0 | 12 | 17 | 1 | |||||||||||||||||||||||||||||||||||
Total foreign | 1,984 | 2,291 | 219 | 149 | 265 | 613 | 1,913 | 2,287 | 219 | 143 | ||||||||||||||||||||||||||||||
Collective loan loss provisions7 | 49 | 23 | 34 | 38 | 86 | |||||||||||||||||||||||||||||||||||
Collective loan loss provisions | 47 | 49 | 23 | 34 | 38 | |||||||||||||||||||||||||||||||||||
Total allowances and provisions for credit losses8 | 2,820 | 3,070 | 1,164 | 1,332 | 1,775 | |||||||||||||||||||||||||||||||||||
Included in other liabilities related to provisions for contingent claims | 130 | 90 | 31 | 63 | 76 | |||||||||||||||||||||||||||||||||||
Total allowances and provisions for credit losses | 1,287 | 2,820 | 3,070 | 1,164 | 1,332 | |||||||||||||||||||||||||||||||||||
416422
Financial information |
Due from banks and loans by industry sector (gross)
The following table presents the percentage of loans in each industry sector and geographic location to total loans. This table can be read in conjunction with the preceding table showing the
showing the breakdown of the allowances and provisions for credit losses by industry sectors to evaluate the credit risks in each of the categories.
ln % | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | 31.12.05 | |||||||||||||||||||||||||||||||||||
In % | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | |||||||||||||||||||||||||||||||||||
Domestic | ||||||||||||||||||||||||||||||||||||||||
Banks1 | 0.2 | 0.4 | 0.3 | 0.2 | 0.4 | 0.4 | 0.2 | 0.3 | 0.2 | 0.2 | ||||||||||||||||||||||||||||||
Construction | 0.4 | 0.3 | 0.3 | 0.4 | 0.6 | 0.5 | 0.5 | 0.5 | 0.5 | 0.6 | ||||||||||||||||||||||||||||||
Financial institutions | 2.1 | 2.0 | 1.4 | 1.6 | 1.3 | 1.3 | 1.5 | 1.9 | 1.8 | 1.8 | ||||||||||||||||||||||||||||||
Hotels and restaurants | 0.5 | 0.4 | 0.5 | 0.6 | 0.6 | 0.6 | 0.6 | 0.6 | 0.6 | 0.7 | ||||||||||||||||||||||||||||||
Manufacturing | 0.9 | 1.0 | 1.0 | 1.0 | 1.3 | 1.1 | 1.2 | 1.2 | 1.2 | 1.2 | ||||||||||||||||||||||||||||||
Private households | 33.2 | 28.9 | 30.2 | 33.5 | 35.3 | 42.1 | 41.2 | 37.6 | 40.2 | 40.1 | ||||||||||||||||||||||||||||||
Public authorities | 1.0 | 1.0 | 1.2 | 1.4 | 1.7 | 1.7 | 1.3 | 1.3 | 1.6 | 1.7 | ||||||||||||||||||||||||||||||
Real estate and rentals | 3.3 | 2.9 | 2.9 | 3.2 | 3.7 | 4.3 | 4.1 | 3.8 | 3.8 | 3.8 | ||||||||||||||||||||||||||||||
Retail and wholesale | 1.2 | 1.2 | 1.3 | 1.3 | 1.5 | 1.4 | 1.5 | 1.5 | 1.5 | 1.5 | ||||||||||||||||||||||||||||||
Services2 | 1.6 | 1.5 | 1.5 | 1.9 | 2.6 | |||||||||||||||||||||||||||||||||||
Services | 2.0 | 2.0 | 1.9 | 1.9 | 2.2 | |||||||||||||||||||||||||||||||||||
Other3 | 1.0 | 0.8 | 0.8 | 1.3 | 1.1 | |||||||||||||||||||||||||||||||||||
Other2 | 1.1 | 1.2 | 1.1 | 1.2 | 1.6 | |||||||||||||||||||||||||||||||||||
Total domestic | 45.4 | 40.4 | 41.4 | 46.4 | 50.1 | 56.7 | 55.2 | 51.6 | 54.6 | 55.4 | ||||||||||||||||||||||||||||||
Foreign | ||||||||||||||||||||||||||||||||||||||||
Banks1 | 12.9 | 15.4 | 15.0 | 14.2 | 10.2 | 5.8 | 5.8 | 5.6 | 8.6 | 11.0 | ||||||||||||||||||||||||||||||
Chemicals | 0.7 | 0.7 | 0.2 | 0.4 | 0.9 | 0.1 | 0.8 | 0.9 | 0.2 | 0.5 | ||||||||||||||||||||||||||||||
Construction | 0.2 | 0.1 | 0.2 | 0.1 | 0.1 | 0.4 | 0.3 | 0.2 | 0.3 | 0.3 | ||||||||||||||||||||||||||||||
Electricity, gas and water supply | 0.3 | 0.7 | 0.5 | 0.3 | 0.5 | 0.2 | 0.3 | 0.5 | 0.3 | 0.2 | ||||||||||||||||||||||||||||||
Financial institutions | 21.6 | 24.4 | 24.0 | 19.2 | 19.7 | 14.9 | 15.2 | 19.2 | 12.3 | 13.4 | ||||||||||||||||||||||||||||||
Manufacturing | 1.0 | 1.2 | 1.2 | 0.9 | 1.2 | 0.9 | 1.1 | 1.5 | 1.4 | 0.8 | ||||||||||||||||||||||||||||||
Mining | 0.9 | 1.1 | 1.1 | 0.9 | 1.1 | 1.0 | 1.0 | 1.2 | 1.4 | 1.1 | ||||||||||||||||||||||||||||||
Private households | 9.3 | 8.1 | 10.7 | 10.0 | 12.1 | 11.0 | 11.4 | 10.5 | 14.0 | 11.9 | ||||||||||||||||||||||||||||||
Public authorities | 3.4 | 2.7 | 1.0 | 0.6 | 0.5 | 3.5 | 3.7 | 2.6 | 0.9 | 0.4 | ||||||||||||||||||||||||||||||
Real estate and rentals | 0.4 | 1.0 | 1.3 | 1.2 | 0.9 | 0.6 | 0.4 | 1.3 | 1.6 | 1.4 | ||||||||||||||||||||||||||||||
Retail and wholesale | 0.5 | 0.6 | 0.6 | 0.5 | 0.4 | 0.6 | 0.5 | 0.6 | 0.6 | 0.6 | ||||||||||||||||||||||||||||||
Services | 2.4 | 2.4 | 2.3 | 4.7 | 1.8 | 3.4 | 2.9 | 3.1 | 2.9 | 2.4 | ||||||||||||||||||||||||||||||
Transport, storage and communication | 0.8 | 0.9 | 0.4 | 0.4 | 0.4 | 0.7 | 1.1 | 1.1 | 0.6 | 0.6 | ||||||||||||||||||||||||||||||
Other4 | 0.2 | 0.3 | 0.1 | 0.2 | 0.1 | |||||||||||||||||||||||||||||||||||
Other3 | 0.3 | 0.3 | 0.2 | 0.3 | 0.2 | |||||||||||||||||||||||||||||||||||
Total foreign | 54.6 | 59.6 | 58.6 | 53.6 | 49.9 | 43.3 | 44.8 | 48.4 | 45.4 | 44.6 | ||||||||||||||||||||||||||||||
Total gross | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 |
417423
Financial information
Additional disclosure required under SEC regulations
Loss history statistics
The following is a summary of the Group’s loan loss history (relating to Due from banks and Loans). The table below does not include loans designated at fair value.
CHF million, except where indicated | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | 31.12.05 | 31.12.10 | 31.12.09 | 31.12.08 | 31.12.07 | 31.12.06 | ||||||||||||||||||||||||||||||
Gross loans1 | 356,081 | 407,685 | 397,802 | 349,524 | 315,210 | 281,121 | 285,960 | 312,076 | 298,498 | 308,332 | ||||||||||||||||||||||||||||||
Impaired loans | 6,865 | 9,145 | 2,392 | 2,628 | 3,434 | 4,193 | 6,865 | 9,145 | 2,392 | 2,628 | ||||||||||||||||||||||||||||||
Non-performing loans | 5,402 | 4,703 | 1,481 | 1,918 | 2,363 | 1,727 | 5,402 | 4,703 | 1,481 | 1,918 | ||||||||||||||||||||||||||||||
Allowances and provisions for credit losses2 | 2,820 | 3,070 | 1,164 | 1,332 | 1,776 | 1,287 | 2,820 | 3,070 | 1,164 | 1,332 | ||||||||||||||||||||||||||||||
Net write-offs | 1,994 | 824 | 266 | 301 | 588 | 1,427 | 1,994 | 824 | 266 | 301 | ||||||||||||||||||||||||||||||
Credit loss (expense)/recovery | (1,832 | ) | (2,996 | ) | (238 | ) | 156 | 375 | ||||||||||||||||||||||||||||||||
Credit loss (expense) / recovery | (66 | ) | (1,832 | ) | (2,996 | ) | (238 | ) | 156 | |||||||||||||||||||||||||||||||
Ratios | ||||||||||||||||||||||||||||||||||||||||
Impaired loans as a percentage of gross loans | 1.9 | 2.2 | 0.6 | 0.8 | 1.1 | 1.5 | 2.4 | 2.9 | 0.8 | 0.9 | ||||||||||||||||||||||||||||||
Non-performing loans as a percentage of gross loans | 1.5 | 1.2 | 0.4 | 0.5 | 0.7 | 0.6 | 1.9 | 1.5 | 0.5 | 0.6 | ||||||||||||||||||||||||||||||
Allowances and provisions for credit losses as a percentage of: | ||||||||||||||||||||||||||||||||||||||||
Gross loans | 0.8 | 0.8 | 0.3 | 0.4 | 0.6 | 0.5 | 1.0 | 1.0 | 0.4 | 0.4 | ||||||||||||||||||||||||||||||
Impaired loans | 41.1 | 33.6 | 48.7 | 50.7 | 51.7 | 30.7 | 41.1 | 33.6 | 48.7 | 50.7 | ||||||||||||||||||||||||||||||
Non-performing loans | 52.2 | 65.3 | 78.6 | 69.4 | 75.2 | 74.5 | 52.2 | 65.3 | 78.6 | 69.4 | ||||||||||||||||||||||||||||||
Allocated allowances as a percentage of impaired loans3 | 38.3 | 31.8 | 41.7 | 46.3 | 46.4 | 25.4 | 38.3 | 31.8 | 41.7 | 46.3 | ||||||||||||||||||||||||||||||
Allocated allowances as a percentage of non-performing loans4 | 41.6 | 41.8 | 58.9 | 58.0 | 59.0 | 30.6 | 41.6 | 41.8 | 58.9 | 58.0 | ||||||||||||||||||||||||||||||
Net write-offs as a percentage of: | ||||||||||||||||||||||||||||||||||||||||
Gross loans | 0.6 | 0.2 | 0.1 | 0.1 | 0.2 | 0.5 | 0.7 | 0.3 | 0.1 | 0.1 | ||||||||||||||||||||||||||||||
Average loans outstanding during the period | 0.5 | 0.2 | 0.0 | 0.1 | 0.1 | 0.5 | 0.7 | 0.3 | 0.1 | 0.1 | ||||||||||||||||||||||||||||||
Allowances and provisions for credit losses | 70.7 | 26.8 | 22.9 | 22.6 | 33.1 | 110.9 | 70.7 | 26.8 | 22.9 | 22.6 | ||||||||||||||||||||||||||||||
Allowance and provisions for credit losses as a multiple of net write-offs | 1.41 | 3.73 | 4.38 | 4.43 | 3.02 | 0.90 | 1.41 | 3.73 | 4.38 | 4.43 |
418424
Financial information |
425
Annual Report 2010
Cautionary statement regarding forward-looking statementsStatement Regarding Forward-Looking Statements || This report contains statements that constitute “forward-looking statements”, including but not limited to management’s outlook for UBS’s financial performance and statements relating to the anticipated effect of transactions and strategic initiatives on UBS’s business and future development. While these forward-looking statements represent UBS’s 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 UBS’s 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,prices or liquidity, credit spreads, currency exchange rates and interest rates; (2)rates and the effect of the current economic environment or otherconditions and market developments on the financial position or creditworthiness of UBS’s customersclients and counterparties; (3)(2) changes in the availability of capital and funding, including any changes in UBS’s credit spreads and ratings; (3) the ability of UBS to retain earnings and reduce its risk-weighted assets in order to comply with recommended Swiss capital requirements without adversely affecting its business; (4) the consequences of the recent Swiss court decision relating to the provision of certain UBS client data tochanges in financial regulation in Switzerland, the US, Internal Revenue Service,the UK and other major financial centers which may impose constraints on or necessitate changes in the scope and location of UBS’s business activities and in its legal and booking structures, including possible effectsthe imposition of more stringent capital and liquidity requirements, incremental tax requirements and constraints on UBS’s 2009 settlements with US authoritiesremuneration, some of which may affect UBS in a different manner or degree than they affect competing institutions; (5) the liability to which UBS may be exposed due to legal claims and on its businesses; (5)regulatory investigations, including those stemming from market dislocation and losses incurred by clients and counterparties during the financial crisis; (6) the outcome and possible consequences of pending or future actionsinquiries or inquiriesactions concerning UBS’s cross-border banking business by tax or regulatory authorities in various other jurisdictions; (6)(7) 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; (7)(8) UBS’s ability to retain and attract the employees that are necessary to generate revenues and to manage, support and control its businesses; (8) possible political, legal and regulatory developments, including the effect of more stringent capital and liquidity requirements, constraints on remuneration and the imposition of additional legal or regulatory constraints on UBS’s activities; (9) changes in accounting standards or policies, and accounting determinations affecting the recognition of gain or loss, the valuation of goodwill and other matters; (10) limitations on the effectiveness of UBS’s internal processes for risk management, risk control, measurement and modeling, and of financial models generally; (11) changes in the size, capabilities and effectiveness of UBS’s competitors;competitors, including whether UBS will be successful in keeping pace with competitors in updating its technology, particularly in trading businesses; and (12) the occurrence of operational failures, such as fraud, unauthorized trading and systems failures, either within UBS or within a counterparty; and (13) technological developments. In addition, actual results could depend on other factors that we have previously indicated could adversely affect ourcounterparty. Our business and financial performance which are containedcould be affected by other factors identified 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 UBS’s Annual Report on Form 20-F for the year ended 31 December 2009.2010. 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.
Rounding || Numbers presented throughout this report may not add up precisely to the totals provided in the tables and text. Percentages and percent changes are calculated based on rounded figures displayed in the tables and text and may not precisely reflect the percentages and percent changes that would be derived based on figures that are not rounded.
Imprint| Publisher: UBS AG, P.O. Box, CH-8098 Zurich, Switzerland; P.O. Box, CH-4002 Basel, Switzerland; www.ubs.com | Language: English/German | SAP-No. 80531E-1001426
© UBS 2010. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved.
Printed in Switzerland on chlorine-free paper with mineral oil-reduced inks. Paper production from socially responsible and ecologically sound forestry practices.
www.ubs.com