UBS is planning to separate its investment bank from the rest of the firm and incorporate it outside Switzerland to allay regulators' concerns, a report said.

UBS plans to split its investment bank from the rest of the Swiss banking and wealth management empire and incorporate it outside of Switzerland to allay regulator concerns, the Wall Street Journal reported, citing unnamed sources.

The Zurich-listed bank’s investment banking arm suffered massive credit losses in the 2008 financial panic, alarming clients of the wealth management side of UBS and prompting them to pull out money in large sums. More recently, the fortunes of UBS have improved, including in the embattled Americas division.

However, there remains speculation that UBS, Switzerland’s biggest bank, may restructure its operations to reassure regulators. The Swiss authorities are, meanwhile, implementing tough new capital rules that go further than the recently agreed Basel III capital regulations on the world’s leading banks.

Under UBS's planned overhaul, the investment bank would be transformed into its own legal entity, the WSJ report said. Swiss regulators hope that the change would mean that if the investment bank encountered problems, the parent company, which also includes a large wealth management arm, would no longer be liable for the losses. At present, the bank's units abroad have less capital than they otherwise would need because UBS has agreed to serve as a financial backstop, promising to bail them out if they ran into trouble, the report said.

Under pressure from Switzerland's Financial Market Supervisory Authority, known as Finma, UBS executives are studying their options, the report said.

"This is speculation. UBS does not comment on speculation," a spokesperson for the firm told WealthBriefing when asked to comment on the news report.

One issue is where the investment bank would enjoy the greatest latitude to operate, although Swiss regulators want the unit headquartered in a country where the investment bank has major operations.

UBS's main activities are in the US, the UK and Asia, where it operates through various branches, subsidiaries and other legal structures.

The investment banking side of UBS remains a vital driver of its overall business. In the first quarter of this year, the WSJ noted that this business accounted for about 44 per cent of total revenues.