UBS has been given the green light to build a £850 million (about $1.2 billion) European headquarters in the City of London, after the UK government rejected calls to protect the existing Broadgate office complex.

The culture secretary, Jeremy Hunt, ruled out plans by English Heritage, the country’s official advisor on the historic environment, to list - and so protect - the 1980s development. It will now be partly demolished to make way for the new 70,000 square metre building, which will allow UBS to bring together all its London operations into one building.

The announcement comes at a time when it is feared that some global banks – including wealth managers – might relocate from London due to rising regulatory and tax burdens, heading for friendlier climes such as Singapore and Switzerland.

Chris Grigg, chief executive of property developer British Land, co-owner of Broadgate, has said that with the move the government has sent out a “loud and clear” message to the world that the UK is open for business.

Broadgate is known as a symbol of the mid 1980s City culture which English Heritage found of enough architectural importance to be saved from the bulldozers. However, the listing recommendation was dubbed “ludicrous” by the Mayor of London, Boris Johnson.

The City of London Corporation's policy chairman, Stuart Fraser, said that the City had been supportive of the UBS building from the start. He said: “The City is – and always has been – first and foremost a place of business and it must be allowed to adapt to meet the long-term business needs of current and potential future occupiers.”

This week’s decision came earlier than expected. Construction work will begin this summer and the Swiss banking giant is set to move in to its new building by 2014. The initial rent will reportedly be £54.50 per square feet and rise in line with inflation.

USB made a pre-tax profit of SFr2.2 billion (about $2.6 billion) in the first quarter of this year.