Juerg Zeltner, head of UBS wealth management, reiterated an estimate he gave in May that Switzerland's biggest bank could see outflows of 12-30 billion Swiss francs ($12.8-31.9 billion) from total European assets under management of over 300 billion.

"As a consequence of the realignment of the financial centre and the planned withholding tax, we assume that a total of hundreds of billions of francs will flow out of Switzerland," he told the Schweizer Bank magazine in an interview on Monday.

"In the offshore business with European customers, I assume that we will have to live with significant outflows of wealth for quite a long time yet."

German financial services consultancy Zeb/Rolfes Schierenbeck Associates estimates Swiss banks could see European clients pull up to 200 billion francs by 2016 of the 789 billion it believes they currently hold in untaxed assets.

Zeltner's comments come just days after Credit Suisse (CSGN.VX), Switzerland's second biggest bank, said it expected clients in western Europe to withdraw up to $37 billion in the next few years due to pressure on the tax issue.

Putting the potential outflows in context, Zeltner said UBS had seen about 200 billion francs of withdrawals during the financial crisis, when the bank had to be rescued by a government bailout after huge subprime losses. Client assets fell almost double that amount due to market and currency moves.

Swiss bank secrecy - which has helped the country build a $2 trillion offshore financial centre dominated by UBS and Credit Suisse - has come under heavy fire in recent years as cash-strapped governments elsewhere have sought to fight tax evasion.

Switzerland has struck deals with Germany, Britain and Austria to tax their citizens' accounts and is hoping for accords with Italy and Greece. But the deal with Germany - the biggest market in Europe - is under threat from the opposition Social Democrats who see it as too lenient on tax evaders.

Zeltner said he hoped the dispute with Germany would be settled and said he still saw a good future for the bank's business in the country - and elsewhere in Europe - even after Swiss banks lost their tax evasion appeal.

"There are legitimate reasons to have money outside your home, for example due to the high level of training in Switzerland or currency and political stability," he said.

"In particular in the area of very wealthy customers, there is strong demand for diversification of booking centres for assets. That will also be the case in the future," he said.

In an interview with the Finanz und Wirtschaft newspaper on Saturday, UBS CEO Sergio Ermotti compared the 12-30 billion francs the bank sees at risk with 60 billion francs in total net inflows it has seen in the last year and a half.

Zeltner said UBS wealth management was investing in Germany, Britain and Italy in Europe, while it is also making up for lost assets in mature markets by investing in emerging centres like Hong Kong, Singapore, Brazil, Mexico, Turkey and Russia.

($1 = 0.9394 Swiss francs)

(Reporting by Emma Thomasson; Editing by Mark Potter)

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