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UBS Bank USA

FEDERAL DEPOSIT INSURANCE CORPORATION

UBS Bank USA
Salt Lake City, Utah
Application for Federal Deposit Insurance
(Bank Insurance Fund)

ORDER

The undersigned, acting under delegated authority, has fully considered all relevant facts and information relating to the factors of Section 6 of the Federal Deposit Insurance Act regarding the application for Federal deposit insurance for UBS Bank USA, a proposed new bank to be located at 299 South Main Street, Suite 2275, Salt Lake City, Salt Lake County, Utah, and has concluded that the application should be approved.

Accordingly, it is hereby ORDERED, for the reasons set forth in the attached Statement, that the application submitted by UBS Bank USA ("Bank"), for Federal deposit insurance be, and the same is hereby approved subject to the following conditions:

1. That the Bank's beginning paid-in capital funds shall not be less than $1,700,000,000 and that a Tier 1 Leverage Capital ratio of not less than eight (8) percent be maintained throughout the first three years of operation and that an adequate Allowance for Loan and Leases Losses be provided;

2. That the Bank will adopt an accrual accounting system for maintaining its books;

3. That the Bank shall operate within the parameters of the business plan submitted to the FDIC. Furthermore, during the first three years of operations, the Bank shall notify the Regional Director of the FDIC's San Francisco Regional Office ("Regional Director") of any proposed, major deviation or material change from the submitted plan 60 days before consummation of the change;

4. That any changes in proposed Bank management or proposed ownership (10% or more of stock), including new acquisitions of or subscriptions to 10% or more of the stock, will render this commitment null and void unless such proposal is approved by the Regional Director prior to opening the Bank;

5. That prior to the effective date of Federal deposit insurance, primary surety bond coverage on the Bank's active officers and employees in the amount of no less than $60,000,000 will be obtained;

6. That the Bank obtain an audit of its financial statements by an independent public accountant annually for at least the first three years after deposit insurance is effective, furnish a copy of any reports by the independent auditor (including any management letters) to the Regional Director within 15 days after their receipt by the Bank and notify the Regional Director within 15 days when a change in its independent auditor occurs;

7. That Federal deposit insurance shall not become effective unless and until the Bank has been established as a State Bank (not a member of the Federal Reserve System), that it has authority to conduct a banking business, and that its establishment and operation as a bank have been fully approved by the State of Utah Department of Financial Institutions;

8. That UBS AG, Zurich, Switzerland, the Bank's ultimate corporate parent, will consent and submit to the personal jurisdiction of any United States Federal court of competent jurisdiction and of any Federal Banking Authority for purposes of any investigation or possible investigation, subpoena, examination, action, or proceeding by any Federal Banking Authority, the United States Department of the Treasury, or the United States Department of Justice, relating to the administration and enforcement of any Banking Law or pursuant to any Banking Law;

9. That UBS AG will at all times maintain in the United States a designated agent, acceptable to the FDIC, to accept service on its behalf, including service of any legal process, notice, order, or subpoena, solely in connection with the consent to jurisdiction. UBS AG will update the designation from time to time, as circumstances warrant, but will not change the designation without the prior written consent of the FDIC;

10. That Federal deposit insurance of the Bank shall not become effective unless UBS AG provides the FDIC with a binding written commitment, satisfactory to the FDIC, permitting examination of any affiliate (as defined in Section 3(w) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1813(w)) of the Bank to the extent the FDIC determines necessary to disclose fully: (1) the relationship between the Bank and any such affiliate; and (2) the effect of such relationship on the Bank;

11. That where key banking functions are outsourced to service providers, including affiliates, the books, records, and performance of those service providers, as they pertain to the Bank, shall be subject to regulation and examination by the FDIC and the State of Utah Department of Financial Institutions to the same extent as if such services were being performed by the Bank itself, and that applicable service agreements shall contain provisions expressly stating this understanding;

12. That the Bank shall maintain a risk control unit managed by an individual employed solely by the Bank, or by a wholly-owned subsidiary of the Bank, and that such employee shall report directly to the Bank's executive management and Board of Directors. The risk control unit shall be staffed by employees of the Bank or a wholly-owned subsidiary of the Bank. In addition, the Bank shall retain a chief investment officer who shall be responsible for setting and overseeing the Bank's trading strategies and shall be an employee of the Bank or of a wholly-owned subsidiary of the Bank;

13. That until the conditional commitment of the FDIC becomes effective, the FDIC retains the right to alter, suspend, or withdraw its commitment should any interim development be deemed to warrant such action; and

14. If deposit insurance has not become effective within twelve months from the date of this ORDER, the consent granted herein shall expire, unless the Corporation approves a request for an extension of the deadline prior to the expiration.

Dated at Washington, D.C. this 9th day of September, 2003.

FEDERAL DEPOSIT INSURANCE CORPORATION

By: Lisa K. Roy
Associate Director
Division of Supervision and Consumer Protection


FEDERAL DEPOSIT INSURANCE CORPORATION

IN RE: UBS Bank USA
Salt Lake City, Utah
Application for Federal Deposit Insurance
(Bank Insurance Fund)

STATEMENT

Pursuant to the provisions of Section 5 of the Federal Deposit Insurance Act (12 U.S.C. 1815), an application for Federal deposit insurance with membership in the Bank Insurance Fund has been filed on behalf of UBS Bank USA, a proposed new bank that will be located at 299 South Main Street, Suite 2275, Salt Lake City, Salt Lake County, Utah.

The proposed new bank involves foreign ownership, with UBS AG, Zurich, Switzerland, owning 100 percent of the proposed bank's common stock. The bank will primarily offer loan and deposit products to brokerage customers of two UBS AG subsidiaries. The proposed bank's primary trade area includes the Salt Lake City, Utah, metropolitan area; however, products will be offered at numerous brokerage locations throughout the United States. The applicants are cognizant of and intend to fully comply with the Community Reinvestment Act ("CRA").

For the purposes of this proposal, the investment in fixed assets is reasonable and capital is adequate. Future earnings prospects are favorable, and management is considered satisfactory. One formal protest covering potential CRA issues was filed with the FDIC concerning this application. In conjunction with this proposal, the FDIC has reviewed the bank's proposed CRA plan and has found that it is sufficient to fulfill the CRA requirements of the application. Corporate powers to be exercised are consistent with the purpose of the Federal Deposit Insurance Act, and no undue risk to the Bank Insurance Fund is apparent.

Accordingly, based upon a careful evaluation of all available facts and information, the Associate Director, pursuant to delegated authority, has concluded that approval of the application is warranted.

ASSOCIATE DIRECTOR
DIVISION OF SUPERVISION AND CONSUMER PROTECTION
FEDERAL DEPOSIT INSURANCE CORPORATION



Last Updated 03/24/2011 Legal@fdic.gov