The financial position of UBS has stabilised but the bank and wealth management firm still has a long way to go before returning to profitability, the director of Switzerland’s financial regulator FINMA was quoted as saying, media reports said.

It is also too early for UBS to buy back toxic assets it transferred to the Swiss National Bank as part of a government bailout last year, SonntagsZeitung quoted Patrick Raaflaub as saying, according to a translation by Reuters.

"We consider the position of both big banks (UBS and Credit Suisse) as stable, otherwise we would not have welcomed the government's exit from UBS," Mr Raaflaub said.

UBS has received government financial aid as it works to rebuild its brand after massive investments into risky US assets forced it to make more writedowns than any other European bank. UBS has also seen its reputation hit by a costly legal battle in the US surrounding its former activities in the country as a provider of offshore banking. It no longer does so in the US, and has paid $780 million to settle criminal charges that it helped wealthy US citizens dodge taxes.

Mr Raaflaub was also quoted as saying that international proposals to reform bank regulations on criteria such as capital bases and leverage ratios may go further than Switzerland's, in which case FINMA would also adopt them.