SecProbe.io

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

       DIVISION OF
CORPORATION FINANCE

September 9, 2010
By U.S. Mail and Facsimile to: (203) 719-0680

John Cryan Group Chief Financial Officer UBS AG Bahnhofstrasse 45 CH-8001 Zurich, Switzerland
Re: UBS AG
Form 20-F for the Fiscal Year Ended December 31, 2009 Form 6-K furnished May 4, 2010 Form 6-K furnished July 27, 2010 File No. 001-15060

Dear Mr. Cryan:

We have reviewed your filings and have the following comments.  In some of our
comments, we may ask you to provide us w ith information so we may better understand
your disclosure.
 Please respond to this letter within te n business days by providing the requested
information or by advising us when you will provide the requested response.  If you do not believe our comments apply to your facts and circumstan ces, please tell us why in
your response.
 After reviewing the information you provide  in response to these comments, we
may have additional comments.

Form 20-F for the Fiscal Year Ended December 31, 2009

 Exhibits, page 21

 Exhibit 4.1

 1. We note that Exhibit 4.1 to your Form 20- F refers to an Exhibit E, a letter
agreement between UBS and the U.S. Government, which does not appear to have been provided.  Please be aware that  when you file an agreement pursuant to
Instruction 4 to Exhibits on Form 20- F, you are required to file the entire
agreement, including all exhibits, schedul es and appendices.  Please amend your

John Cryan
UBS AG September 9, 2010 Page 2

Form 20-F to file the full and complete Deferred Prosecution Agreement,
including any exhibits, sc hedules and appendices whic h are included in such
agreement.
 Risk and treasury management

 Composition of credit risk – UBS Group, page 119

 2. We refer to your “Credit exposure by bus iness division” table on page 119 which
provides a breakdown of your banking and trading product exposures before and after impairments, credit valuation adjust ments and specific hedges.  Please revise
your future filings to more clearly de fine how your gross credit exposure was
determined for each product.  For example, the gross credit exposure for loans in Wealth Management & Swiss Bank, Wea lth Management Americas and Other
business divisions appears to equal the car rying value of loans in each of these
divisions.  However, for your Investment Bank division you show that the gross credit exposure for loan products is CH F 25.4 million while the carrying value of
loans in this division is CHF 90.7 million as of 31 December 2009.
 Composition of credit risk – business divisions, page 120

 Investment Bank, page 122

 3. Based on your “Allowances and provisions for credit losses” table on page 126, it appears that the majority of your loans ar e held within the Wealth Management &
Swiss Bank business division.  However,  the Investment Bank also holds a
significant portion of your loans (approximately 30% as of 31 December 2009).  In an effort to provide greater transpar ency and granularity to your disclosures,
please revise your future filings to disclose the composition of the Investment Bank lending portfolio in a level of detail  similar to that disclosed for Wealth
Management & Swiss Bank on page 121.
 Impaired loans, allowances and provisions, page 125

 4. We note your disclosure in Note 1(a) (11) that for purposes of measuring
impairment on specifically identified im paired loans, you include amounts that
may result from restructuring or liquidati on of the collateral in your estimate of
expected future cash flows.  We also note, however, that as of 31 December 2009
your allocated allowances represent only 56.3% of your impaired lending
portfolio after consideri ng the estimated liquidation proceeds of the underlying
collateral.  Please provide us with more clarity around how estimated liquidation proceeds from collateralized financial asse ts are factored into your impairment
measurements and explain how you consid ered the guidance in paragraph AG84
of IAS 39 when developing your calculation of the present value of estimated

John Cryan
UBS AG September 9, 2010 Page 3

future cash flows.

Notes to the consolidated financial statements

 Note 1(a)(11) – Allowance and pr ovision for credit losses, page 267

 5. Please revise your future filings to more  comprehensively disclose your process
for collectively measuring impairment on those loans that have not been
specifically identified as impaired.  Consider the following in your revised
disclosures:

• Disclose how loans with similar risk characteristics are grouped to be
evaluated for loan collectability (such as loan type, past-due status, and risk);
• Disclose how historical loss rates ar e determined and what factors are
considered when establishing appr opriate time frames over which you
evaluate loss experience; and
• Describe any qualitative factors (e .g., industry, geographical, economic, and
political factors) that have affected loss rates or other loss measurements.

Note 1(a)(14) – Repurchase and reverse repurchase transactions, page 269

 6. We note that securities purchased and sold are generally  treated as collateralized
financing transactions.  You also di sclose that securities delivered under
repurchase agreements are not derecognized  from the balance sheet unless the
risks and rewards of ownership are relinqu ished.  Please address the following:

• Tell us and revise your future filings to clearly disclose whether you have
derecognized any securities delivered  in your repurchase agreements.
• If you have, provide us the specific fact s and circumstances related to these
transactions and provide us your acco unting analysis that supports your
treatment.  Also, provide us with and re vise your future filings to quantify the
amount derecognized at each balanc e sheet date, the average amount
derecognized for the periods presen ted and discuss how  you calculated the
average amount.
 Note 11 – Trading portfolio, page 294

 7. We note that you present the debt instru ments in both your trading and available-
for-sale investment portfolios in three categories based on the issuers of such
securities (e.g., government and government agencies, banks, corporates and others).  In an effort to provide grea ter transparency and granularity to your
disclosure, please consider disaggregating these categories into additional classes
of financial instruments (for example, by product type).  Provide us with your

John Cryan
UBS AG September 9, 2010 Page 4

proposed revised disclosure for fu ture filings, if applicable.

Note 13 – Financial Investments available-for-sale, page 296

 8. We note that you present the total net unreal ized gains/(losses) for your available-
for-sale investment portfolio as an ag gregate (net) amount.  Such aggregate
presentation does not necessarily provid e a clear indication of your exposure to
impairment risk on those securities that  are currently in an unrealized loss
position.  In the interest of  transparency and consistent with the guidance in
paragraph 31 of IFRS 7, please revise your future filings to provide disclosures that will enable a reader to more clearly assess the extent of your impairment risk exposure on your available-for-sale investment portfolio.  For example, consider revising your disclosure to separately present gross unrealized losses and gross
unrealized gains on investment securities.  Please also consid er classifying the
gross unrealized losses by duration (e.g., le ss than 12 months and greater than 12
months) or by security type.
 Note 26 – Capital increases and mand atory convertible notes, page 318

 9. We note your disclosures regarding your mandatorily convertible notes (MCNs)
issued in March and December 2008.   Please respond to the following:

• Tell us how you concluded that upon i ssuance of the MCNs in March and
December the conversion option should be separated into more than one component whereby a portion of the c onversion option (presumably related to
the obligation to deliver a fixed number of shares) is accounted for as an
embedded equity instrument, and a portion of the conversion option (presumably related to the obligation to deliver a variable number of shares
worth a fixed amount between the minimum and maximum number of shares that could have potentially been issued upon conversion) is accounted for as a derivative liability.
• As it relates to the March 2008 issuance, tell us the nature of the adjustments
to the conversion prices that resulted in  the MCNs being treated as an equity
instrument upon the adjustment.
 Note 27 – Fair value of financial instruments, page 318

 10. We note that you provide high level disc losure of your valuation principles
beginning on page 318 and more specific information about certain significant
product categories and related valuation t echniques and models beginning on page
325.  Given the multitude of financial instruments carried at fair value and the varying degrees of complexity associated  with valuing such instruments, please
revise your future filings to  disclose the valuation methods and assumptions used
in determining the fair value for each class  of financial instrument pursuant to the

John Cryan
UBS AG September 9, 2010 Page 5

guidance in paragraph 27 of IFRS 7. Consideration should also be given to
providing this disclosure on a more gr anular level (e.g., by product type).

Note 29(b) – Measurement categories of fina ncial assets and financial liabilities –

Reclassification of financial assets, page 332
 11. We note that during 2008 and the first quarter of 2009 you reclassified certain
debt financial assets from your held-for-t rading portfolio to loans and receivables
mainly due to illiquid markets for these instruments.  Please tell us whether such instruments were reclassified pursuant to  paragraph 50B or 50D of IAS 39 and
explain how you determined you met the requirements of such guidance.  For example, explain how you determined that  securities reclassified as loans and
receivables would have met the definition of  a loan or receivable if they had not
been required to be classified as he ld for trading at in itial recognition.
 12. As a related matter, please tell us and re vise your future filings to reconcile your
reclassified assets disclose d in the table on page 332 to footnote (2) to the table on
page 292.  Please also ensure that your disclosure concerning your auction rate
securities holdings (both those reclassified  and initially classified as loans) is
consistent throughout your filing.  It is unclear how the auction rate securities
figures on pages 141, 292, and 332 re late to one another.

Loans granted to members of the BoD on 31 December 2008 / 2009, page 392

Loans granted to members of the GEB on 31 December 2008 / 2009, page 392

13. It does not appear that you have provided all of the information regarding outstanding loans granted to members of  the BoD and GEB as required by Item
7.B.2 of Form 20-F, including, for example, the nature of the loan and the transaction in which it was incurred and the interest rate on the loan.  Please provide us with this information and conf irm that you will revi se future filings
accordingly.
 Form 6-K furnished May 4, 2010

 Notes to the financial statements

 Note 27 – Fair value of financial instruments, page 64

 14. We note your disclosure on page 65 re garding the changes made in the
discounting methods used to account for the impact of your own credit on the valuation of your financial li abilities designated at fair value.  We also note that
you revised your methodology for estimati ng debit valuation adjustments to
incorporate your own risk in the valua tion of derivative lia bilities during 2009
based on your disclosure on page 319 of your Form 20-F.  Given the multiple

John Cryan
UBS AG September 9, 2010 Page 6

changes to the methods used to incorpor ate your own credit risk in your valuation
of derivatives and financial liabilities designated at fair  value, please provide the
following:

• Provide us with a comprehensive de scription of your current valuation
methodology for these liabilities;
• Clearly describe the valuation methods a nd assumptions used to estimate fair
value and provide more clarity around the changes made to such methods and
assumptions during recent periods;
• Tell us how you considered whether your pr ior valuations of such derivatives
and financial liabilities designated at fair value reflected  the appropriate
amount of own credit risk; and
• Provide us with a sample computation which illustrates the calculation of a
debit valuation adjustment.
 Form 6-K furnished July 27, 2010

 15. We note your disclosure on page 28 that your emerging markets revenues
declined, due at least in pa rt to ongoing market concerns , particularly in Europe,
about the impact of sovereign debt a nd the European Union response.  Given
these market concerns, and your significant exposure to  sovereign counterparties,
please tell us, and in future filings e nhance your disclosure, to provide further
quantitative exposure, by country, to a ny country whose credit rating is AA or
below.  As part of your response, plea se address which financial statement line
item these exposures are included.
 16. We note your disclosure on page 69 th at you are involved in a number of
litigations in which parties allege bre aches of representations and warranties on
various whole loans and certain other assets transferred in securitization
transactions.  Please tell us whether y ou have recognized any provision related to
these alleged breaches, and if not, please te ll us which criteria in paragraph 14 of
IAS 37 is (are) not met.  To the exte nt you do not believe you are able to
determine a range of possible outcomes, pl ease tell us why and discuss the steps
you have taken to try to determine a range.  As part of your response, please provide additional information regarding the types of counterparties alleging the
breaches, additional background on the dollar amount of claims made to date, and
the nature of any discussions held with the counterparties with  respect to these
allegations.
 Closing Comments

We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filing to be certain that the filing includes the information the Securities
Exchange Act of 1934 and all applicable Exch ange Act rules require.  Since the company

John Cryan
UBS AG September 9, 2010 Page 7

and its management are in possession of all f acts relating to a company’s disclosure, they
are responsible for the accuracy and adequacy  of the disclosures they have made.

In responding to our comments, please provide a written statement from the
company acknowledging that:

• the company is responsible for the adequacy  and accuracy of the disclosure in the
filing;
• staff comments or changes to disclosure  in response to staff comments do not
foreclose the Commission from taking any action with respect to the filing; and
• the company may not assert staff comme nts as a defense in any proceeding
initiated by the Commission or any person under the federal secu rities laws of the
United States.  You may contact Angela Connell at (202) 551-3426 or Hugh West, Accounting
Branch Chief, at (202) 551-3872 if you ha ve questions regarding comments on the
financial statements and related matters.  Please contact Justin Dobbie at (202) 551-3469
or me at (202) 551-3464 with any other questions.

Sincerely,

Kathryn McHale Attorney Advisor