The comments come a few days after the IMF warned that the Swiss financial services industry, while it has made advances, continues to have vulnerabilities.

Swiss authorities want the country’s leading banks to have fatter capital buffers to withstand potential wobbles in areas such as residential property. A report said this means that prominent banks such as UBS and Credit Suisse might need to set aside an additional SFr24 billion ($24 billion) in reserves.

The Finance Ministry is considering whether to change capital adequacy rules so that parent companies of systemically important banks can ride out a crisis.

“In Switzerland, around 30 per cent of mortgages are used to finance residential investment property. Price corrections for these properties, as well as rising interest rates, can lead to considerable losses for banks. In order to increase their resilience, banks should thus use additional capital to underpin mortgages on domestic residential investment property with a high loan-to-value ratio,” the Swiss federal government said in a statement last Friday.

“Gone concern requirements are intended to ensure that a systemically important bank in difficulty can be restructured and wound up in an orderly manner without financial assistance from the state. The Federal Council introduced gone concern requirements at group level for UBS and Credit Suisse back in 2016. Gone concern requirements have also been in force to a reduced extent for domestically focused systemically important banks (PostFinance AG, Raiffeisen and Zürcher Kantonalbank) since 1 January 2019,” the statement said.

A report that accompanied the statement said: “The additional funds the two big banks [UBS, Credit Suisse] need to absorb the losses amount to a total of approximately 24 billion francs. “These must issue new lease-in bonds to the level of their holding for a similar amount.” (Source: Bloomberg, 5 April.)

Bloomberg quoted UBS as saying: “We will review the draft and provide a comprehensive comment.” Credit Suisse said the proposal is “an important clarification” with regards to capital requirements. 

Last week the International Monetary Fund said the Swiss regulator, FINMA, should intensify inspections of the country’s banks, saying the real estate market was a potential point of vulnerability.

A decade ago, Switzerland's largest bank, UBS, was bailed out by the government - an event that dented the image of the country's rock-solid banking system. International pressure on the country to end its decades-old bank secrecy laws, which had allowed firms to operate high-margin businesses, have forced major changes. With more than 300 banks a decade ago, the number of Swiss-based banks has contracted to 253. Negative interest rates, part of a central bank policy to curb a high Swiss franc exchange rate, have squeezed banks' margins, encouraging mergers and acquisitions.