Below is the full text of a memo that UBS CEO Oswald Grübel sent Tuesday to his firm's staff.

'Dear colleagues,

Since I last wrote you, we have accomplished a great deal and have had several positive things to report.

In the second quarter, we reported an operating profit for the first time in eight quarters. In addition, we have strengthened our capital position and further reduced our risks. The market too has shown more confidence in us.

We have also consolidated the initiatives determining our firm's new positioning in a turnaround program, and we are on track with the program to increase overall efficiency. The unpleasant side of it, the job cuts, is almost complete, and most of the employees have been informed.

The creation of a comprehensive Corporate Center is well advanced. The teams in the areas of Finance, Risk and Communications & Branding have been brought together, and the remaining functions will take this step in the next quarter.

In connection with the summons of the US tax authorities, a settlement agreement acceptable to all parties was reached. What's crucial about it is that the agreed solution lies within the framework of the existing Swiss legal system. Implementing the settlement will continue to occupy the bank for some time yet, but the fog of uncertainty that the summons created has lifted.

Finally, the Swiss government sold its stake in UBS through a placement with institutional investors and realized a healthy profit from it. This closed another important chapter in our recent history.

How should we assess these events ? Our transformation is proceeding according to plan. But we must recognize that none of these steps free us overnight from all the challenges we face. We must change and keep changing in an ongoing, sustainable way.

To do so, we need to get the basics right. We must abide by all laws everywhere and have clear responsibilities. You are the key here. You are the specialist in your field, the one who knows best what has to be changed. But most of all you are the point of contact with our clients. Right now, at the point when we've put some of our biggest problems behind us, is the time for us to serve our clients even more attentively.

One thing must be clear: our results have indeed improved and certain progress has been recognized, but our reputation is still damaged. Primarily the situation with the US has left our clients with a bitter taste in their mouths, and it is now up to us to show them that we are a trustworthy bank with trustworthy employees. There is nothing more important, and I count on your active engagement in winning their trust back step by step.

It is important that we do not point fingers at each other, but that we grow closer together across divisional and national boundaries. Only then will UBS be a truly integrated organization that can achieve its fullest potential. This integration cannot only be centrally designed; it must be truly lived everywhere we are operating. Our regional CEOs are responsible for making the total expertise of UBS available to our clients, and we must do everything possible to support them.

Returning the group to profitability will only be the beginning. The recovery of our reputation will require hard work and relentless effort. But I am confident that we have the fundamentals and the right people in place. Essentially, it's about one thing: we must do everything better than our competitors.

To do that, we will support you with the 'UBS Business University' currently being developed. I am confident that the success of a bank in the future will be, more than ever, dependent on having the most competent people at all levels. At UBS, we want to be diligent in pursuing this goal. I am excited about our new university, which will help us put our strategy into practice.

To conclude, I want to again touch on the topic of communications and the media. Along the path to success, we will have to deal with a skeptical public. Achievements will be apparent to us in the bank long before they will be recognized by the outside world. We will not be able to accelerate this process through advertising campaigns, public promises and aggressive media work. Our clients have read enough headlines about us. If we want to convince the public, we must, first and foremost, provide evidence of our accomplishments again and again, and this takes time.

I would like to thank you again for your replies and encourage you to use the recently launched TurnAround Platform to comment on UBS's most recent developments.

Yours,

Oswald J. Grübel'

Source: The Wall Street Journal

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