The former head of UBS's flagship wealth management arm was squeezed out this week over poor performance at the prized business unit and because of his strained relationship with the bank's chief executive, according to people familiar with the matter.

Jürg Zeltner was with UBS for more than three decades. But his position became increasingly untenable after CEO Sergio Ermotti grew dissatisfied with results from the wealth management operation, which has become the most important part of the Swiss lender's business.