UBS announced that it will pay US$115 million as part of a settlement agreement with Enron Creditors Recovery Corp. (formerly Enron Corp.).

The deal will settle litigation that Enron commenced against UBS in 2003 related to equity derivative contract payments that Enron sought to recover from UBS. UBS is settling this litigation without any admission of liability.

UBS believes it had valid defenses to all of Enron’s claims, but chose to settle this case to eliminate the uncertainty created by the proceeding, it said, adding that it is pleased to bring this matter to a close.

Under the terms of the settlement, UBS will pay Enron US$115 million and will waive a proof of claim for approximately US$5.5 million that UBS filed in Enron’s bankruptcy case. The settlement is subject to the approval of the U.S. Bankruptcy Court for the Southern District of New York.

Enron commenced this case in November 2003 to recover payments totaling approximately US$418.3 million that were made during 2001 pursuant to swap agreements indexed to Enron’s common stock and forward contracts in which UBS had agreed to sell and Enron had agreed to buy Enron stock.

During fiscal year 2006, UBS provisioned funds toward the resolution of this case. This settlement will not materially impact future financial results.