The move will merge together the Swiss banking giant's subsidiaries across Germany, Italy, Luxembourg (which included the branches in Austria, Denmark and Sweden already), the Netherlands and Spain.
UBS hopes the move will help to simplify its governance structure and make the bank's wealth division more efficient.
Although it will be headquartered in Germany, where the firm already has a sizeable wealth management offering, UBS Europe will operate throughout Europe through a series of branches.
UBS Europe's supervisory board will be chaired by Roland Koch, who has been chairman of UBS Deutschland since 2011. Meanwhile, Thomas Rodermann, who has headed UBS's German business over the last two years, will be spokesman of the UBS Europe management board.
Shares in UBS closed up 0.19 per cent at CHF 16.20 in Zurich.
The UK's wealth management business is not among the countries being consolidated into the new Frankfurt legal hub.