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Swiss regulator against government bail-outs

Switzerland's financial regulator has said the country should not bail out any of its largest banks again without taking money creditors and shareholders first.

The Swiss Financial Market Supervisory Authority (FINMA) has joined the Swiss National Bank to enforce tougher regulations on UBS and Credit Suisse. The two institutions are the staple of the financial industry in Switzerland and generate six per cent of the nation's entire gross domestic product, Reuters reports.

The regulator has now backed so called bail-ins by creditors should Credit Suisse and UBS risk collapse, the latter of which was rescued by the government almost five years ago.

It recommended spreading bank losses across a range of creditors, including shareholders, holders of contingent convertible instruments and owners of debt, and also said a bank could be broken up and have its assets run down or liquidated after a failed bail-in, which would stop the government having to perform a rescue.

By Tony Aynsley