* World's biggest wealth group to cut management layers
* About 400-500 jobs likely to go from division - source
* Comes months after Iqbal Khan joins from Credit Suisse
* Europe, Middle East and Africa business to be split up (Adds executive comments, background and detail)
By Brenna Hughes Neghaiwi and Oliver Hirt
ZURICH, Jan 7 (Reuters) - UBS is overhauling its flagship wealth management business, including shrinking its senior staff, in the first big strategic move under the division's new co-head Iqbal Khan as the bank looks to revive flagging profits.
UBS is cutting up to three layers of management in the division, splitting up its Europe, Middle East and Africa (EMEA) business and giving local teams more autonomy, according to a staff memo seen by Reuters and confirmed by the Swiss bank.
About 400-500 jobs are likely to go, or roughly 2% of the unit's workforce, a source briefed on the matter said.
The revamp mirrors changes Khan, who joined the world's largest wealth manager three months ago, made as an executive at rival Credit Suisse.
"We're moving our advisers closer to senior management than they ever have been before," Khan told Reuters in a phone interview.
UBS benefited from a shift to the traditionally steady wealth management business almost a decade ago, years ahead of Credit Suisse. However it has been hit by sliding profits and sluggish activity among its wealthy clients over the past year, prompting questions from some investors and analysts over whether it needs to refresh its strategy.
The changes announced on Tuesday mark the first big shakeup since the bank appointed Khan to lead its wealth management business alongside Tom Naratil in October, replacing former Commerzbank boss Martin Blessing as co-head.
Khan and Naratil are also looking to boost collaboration with asset management and the investment bank to extend more complex financing to wealthy clients and increase access to private and capital markets.
Similar strategies helped Khan turn around Credit Suisse's international wealth management business, more than doubling profits in the unit serving rich clients outside Switzerland and Asia-Pacific during his tenure from 2015 to June last year.
UBS wants to provide more financing to rich clients by taking on loans that are secured against riskier collateral - including single stocks, private equity and anticipated future cash flows - and managing the risks in the investment bank.
"We're giving them a broader variety of solutions which are available to our corporate and institutional clients through the investment bank," Naratil told Reuters. "And we're making them available for Global Wealth Management clients across the globe."
In 2018, UBS set a goal to boost new loans for rich clients by a net $20-$30 billion a year. Loan volumes, however, have yet to pick up, and managers pointed to lingering risk aversion and complicated bureaucracy.
The bank's EMEA wealth management business will be split into three regions, with Caroline Kuhnert appointed head of Central and Eastern Europe and Ali Janoudi head of the Middle East and Africa. Christl Novakovic, formerly responsible for the full EMEA region, will lead its main European business.
UBS also said it was expanding its global family office group, aligning coverage of ultra high net worth clients to regional business units and enhancing its offering. (Reporting by Brenna Hughes Neghaiwi and Oliver Hirt; Additional reporting by Michael Shields; Editing by Louise Heavens and Pravin Char)