UBS sets sights on London for its investment banking

London could become the official headquarters for UBS's investment banking operations as the bank overhauls its structure to protect Swiss taxpayers from any future bailout.

But moving its investment bank to London, New York or Singapore could mean UBS losing out on future dealmaking because it would not be able to make full use of the parent company's balance sheet.

Switzerland is planning to introduce one of the toughest regulatory regimes in the world demanding that its banks hold far more capital than either European or American regulators have planned.

UBS described the report in the Wall Street Journal as "pure speculation" but did not deny it.

Chief executive Oswald Gruebel has previously said that draconian Swiss regulation could force the bank to move some of its units abroad. UBS holds almost all its capital in Switzerland but has 80% of its assets in other countries.

The bank does very little investment banking in Switzerland where its main operations are in retail, commercial banking and wealth management. By decoupling the investment bank and moving it to a more lenient home it could reduce the amount of capital it is required to hold.

UBS had the biggest state bailout of any European bank when the Swiss government injected $60 billion in October 2008.