UBS has recently established UBS Group Funding (Switzerland) AG, a wholly-owned direct subsidiary of UBS Group AG, to issue total loss-absorbing capacity- (TLAC-) eligible senior unsecured debt. These securities will be unconditionally and irrevocably guaranteed by UBS Group AG.

Scope points out that investors in TLAC-eligible senior unsecured debt issued under the programme “acknowledge, agree to be bound by and consent to the exercise, without any notice, of any Swiss Resolution Power with respect to UBS Group AG”. In line with Scope’s bank rating methodology, the TLAC-eligible senior unsecured debt to be issued under the programme will be rated A, one notch below the A+ rating on UBS’s issuer rating and the ratings of outstanding non-TLAC eligible senior unsecured debt. The rating outlook for all long-term ratings remains Positive.

Scope added that UBS has successfully reshaped its business model for a changed banking landscape. The group has a mix of businesses which are considered “capital efficient” and offer attractive growth and profit opportunities. The balance of businesses combined with geographic diversification enables the group to generate solid returns even in challenging conditions. Furthermore, management remains focused on improving the group’s resilience and efficiency.

Regulatory disclosures

Information pursuant to Regulation (EC) No 1060/2009 on credit rating agencies, as amended by Regulations (EU) No. 513/2011 and (EU) No. 462/2013

Responsibility
The party responsible for the dissemination of the financial analysis is Scope Ratings AG, Berlin, District Court for Berlin (Charlottenburg) HRB 161306 B, Executive Board: Torsten Hinrichs (CEO), Dr. Stefan Bund and Dr. Sven Janssen.
The rating analysis has been prepared by Pauline Lambert, Executive Director
Responsible for approving the ratings: Sam Theodore, Managing Director.
The rating outlook indicates the most likely direction of the rating if the rating were to change within the next 12 to 18 months. A rating change is, however, not automatically ensured.

Rating history
The full rating history can be accessed via the individual rating cards on www.scoperatings.com

Information on interests and conflicts of interest
The ratings were prepared independently by Scope Ratings but for a fee based on a mandate of the rated entity. The issuer has participated in the rating process.
As at the time of the analysis, neither Scope Ratings AG nor companies affiliated with it hold any interests in the rated entity or in companies directly or indirectly affiliated to it. Likewise, neither the rated entity nor companies directly or indirectly affiliated with it hold any interests in Scope Ratings AG or any companies affiliated to it. Neither the rating agency, the rating analysts who participated in this rating, nor any other persons who participated in the provision of the rating and/or its approval hold, either directly or indirectly, any shares in the rated entity or in third parties affiliated to it. Notwithstanding this, it is permitted for the above-mentioned persons to hold interests through shares in diversified undertakings for collective investment, including managed funds such as pension funds or life insurance companies, pursuant to EU Rating Regulation (EC) No 1060/2009. Neither Scope Ratings nor companies affiliated with it are involved in the brokering or distribution of capital investment products. In principle, there is a possibility that family relationships may exist between the personnel of Scope Ratings and that of the rated entity. However, no persons for whom a conflict of interests could exist due to family relationships or other close relationships will participate in the preparation or approval of a rating.

Key sources of information for the rating
Website of the rated entity/issuer, annual reports/quarterly reports of the rated entity/issuer, current performance record, detailed information provided on request, data provided by external data providers, interview with the rated entity, external market reports, press reports/other public information
Scope Ratings considers the quality of the available information on the evaluated company to be satisfactory. Scope ensured as far as possible that the sources are reliable before drawing upon them, but did not verify each item of information specified in the sources independently.

Examination of the rating by the rated entity prior to publication
Prior to publication, the rated entity was given the opportunity to examine the rating and the rating drivers, including the principal grounds on which the credit rating or rating outlook is based. The rated entity was subsequently provided with at least one full working day, to point out any factual errors, or to appeal the rating decision and deliver additional material information. Following that examination, the rating was not modified.

Methodology
The methodologies applicable for this rating “Bank Rating Methodology” (May 2016) & “Bank Capital Instruments Rating Methodology” (May 2016) are available on www.scoperatings.com. The historical default rates of Scope Ratings can be viewed on the central platform (CEREP) of the European Securities and Markets Authority (ESMA): http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. A comprehensive clarification of Scope’s credit rating, definitions of rating symbols and further information on the analysis components of a rating can be found in the documents on methodologies on the rating agency’s website.

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