The 52-year-old German left Commerzbank in April after surprisingly announcing in November that he would step down despite an offer to extend his eight years as CEO, viewing it as the last opportunity for a fresh career move.

At UBS he will oversee the Swiss retail and corporate business. The division has around 5,000 employees and posted a 2015 operating profit before tax of 1.65 billion Swiss francs (1.17 billion pounds). This was equivalent to just under a third of UBS's overall pre-tax profit.

"With Martin Blessing we gain a professional with a proven track record and significant experience in all areas of the business for UBS," UBS Chief Executive Sergio Ermotti said in a statement. "I am certain he will further advance our business in Switzerland and beyond."

Blessing has little Swiss banking experience, although he did study at a local university and Switzerland was one of the first markets outside of Germany where Commerzbank expanded its corporate banking business.

He steered Commerzbank through the turbulence that followed its takeover of Dresdner Bank during the financial crisis. He subsequently returned Commerzbank to profit and to paying a dividend while slashing risky assets and strengthening its capital base.

Asked why UBS chose a German to lead its Swiss business, a UBS spokesman said nationality had nothing to do with the choice and that the business opted for the best candidate.

For UBS, which is also the world's biggest wealth manager, Blessing's appointment adds to an already deep bench of possible replacements for Ermotti when he eventually leaves the bank.

Blessing could vie for the job against the likes of Juerg Zeltner, the Swiss head of UBS's private banking business outside the Americas, investment banking head Andrea Orcel from Italy and wealth management Americas boss Tom Naratil, an American.

Blessing replaces Lukas Gaehwiler, who wanted a fresh strategic focus within the bank and will take on the new role of chairman of the Switzerland region. The changes take effect from Sept. 1.

(Additional reporting by Oliver Hirt; Editing by Michael Shields and Mark Heinrich)

By Joshua Franklin and Alexander Hübner

Stocks treated in this article : Commerzbank AG, UBS Group AG