UBS: Approve Special Audit Requested by Ethos and the Capital Increase Proposed by Profond

On 20 December 2007, Ethos tabled a request for information and a request for a special control to shed light to the risk management and risk control mechanisms' malfunction. This double request aims to contribute to improve procedures in the future and ascertain compliance with the law.

The request for information is addressed to both the Board of Directors of UBS and to the External auditor. UBS will communicate its answers to all shareholders simultaneously, at the latest on 18 February 2008.

To ensure UBS' shareholders' and clients' trust, it is necessary to present detailed answers allowing to better understand the circumstances that drove the Bank to that situation and to undertake corrective operational measures. This is why Ethos proposes to the General Meeting that a special control be entrusted to an external and independent party. Such control should confirm and complete the answers of UBS in order to clarify the facts to which the request for information relates.

 

Following the very important write-offs that were made recently, UBS has to re-inforce its capital base. Therefore, the Board of Directors proposes to create a conditional capital to service «Mandatory Convertible Notes (MCN)» solely issued to the Government of Singapore Investment Corporation (GIC) and to an anonymous investor from the Middle East. This operation requires the suppression of pre-emptive rights for existing shareholders. However, it is legitimate that current shareholders benefit from their right to subscribe in priority to the capital issue, in order to avoid dilution of their rights. Ethos therefore recommends to oppose this proposal.

Alternatively, the Swiss pension fund Profond proposes to this Extraordinary General Meeting to increase the Bank's ordinary share capital respecting the shareholders' pre-emptive rights. Ethos therefore recommends to accept this proposal.