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* Frankfurt bank consolidates EU wealth management operations
* UBS will keep branches across Europe
* Britain and France to remain separate from Frankfurt bank (Adds detail, background)
By Joshua Franklin
ZURICH, Dec 1 (Reuters) - Swiss bank UBS has set up a bank in Frankfurt to consolidate most of its European wealth management operations, after Britain's vote to leave the European Union dashed London's chances of being the host city.
In an effort to conserve capital and simplify its structure, UBS began the project of funnelling its European private banking business into one bank around three years ago.
With neutral Switzerland outside of the EU, the key question was where to have the headquarters. Luxembourg was a contender, along with London until Britain's vote to leave the EU, but Frankfurt had long been viewed as the favourite.
UBS, the world's biggest wealth manager, will keep branches across Europe.
But UBS Europe SE will bring UBS's private banking business in Germany, Italy, Luxembourg, Austria, Denmark, Sweden, the Netherlands and Spain under one roof, meaning UBS no longer needs to allocate capital to multiple banks.
UBS has not disclosed the potential capital savings.
"UBS has taken an important step to simplify its governance structure and increase operational efficiency across its European operations," the bank said in a statement on Thursday.
UBS's German investment banking operations will sit within UBS Europe SE but it relates primarily to wealth management, with UBS's investment banking headquarters remaining in London.
However, the new bank is an option to house more investment banking jobs if Britain fails to preserve single market access for financial firms in Brexit negotiations.
Frankfurt is a top-tier candidate among European cities for banking jobs requiring EU access. Reuters reported last month that Goldman Sachs is considering shifting some of its assets and operations from London to Frankfurt.
The new set-up is also part of efforts by UBS to streamline its structure as it looks to cut costs by a net 2.1 billion Swiss francs ($2.07 billion) by the end of 2017.
UBS's private banking business in Britain will remain separate due to the uncertainty over the country's single market access once it leaves the EU.
France, where UBS is facing legal issues, will also be separate from Europe SE for the time being.
$1 = 1.0136 Swiss francs Editing by Susan Fenton and Michael Shields