Swiss bailout for major banks

(CNN) -- The Swiss government announced a package of measures Thursday to stabilize its financial system and boost global confidence in the Swiss market.

The bailout plan will see the government invest 6 billion Swiss francs ($5.3 billion) into banking giant UBS to strengthen its capital base.

Thursday's news came the same day another major bank, Credit Suisse, announced it had raised approximately 10 billion Swiss francs ($8.8 billion) from a group of major global investors led by the Qatar Investment Authority.

Switzerland's Federal Department of Finance hailed the moves, saying "significant steps are being made towards the strengthening of capital in the big banks."

UBS said it had also reached agreement with the Swiss National Bank to transfer up to $60 billion of illiquid U.S. securities and other assets to a separate fund entity fully owned and controlled by the SNB.

Illiquid assets -- which include real estate, cars and property -- are those that cannot be sold easily or quickly without a substantial loss in value. UBS said that by transferring those assets to a separate fund, it caps any future losses they may generate and reduces risks for the company, shareholders, and clients.

The Swiss National Bank will finance the fund with a $54 billion loan, USB said.

"In these turbulent times we want to ensure that we do everything possible to safeguard the solidity of our bank," said UBS Chairman Peter Kurer. "We are taking practical steps to eliminate legacy risks."

UBS Chief Executive Marcel Rohner said the moves protect the company's future.

Credit Suisse said the raising of 10 billion francs was part of an agreement with the Swiss Federal Banking Commission on future capital targets and leverage requirements.

"We are very pleased to have reached a solution that further strengthens our capital base and ensures our competitive position," said Brady Dougan, the bank's chief executive. "Credit Suisse is very strongly capitalized and these measures mean that we immediately exceed the revised regulatory requirement for 2013."

Credit Suisse said it decided not to participate in the government's bailout plan because it had a low level of affected assets in its portfolio and good access to capital markets. Still, the bank said it expects to announce a net loss of about 1.3 billion Swiss francs ($1.2 billion) for the third quarter of 2008.

All About Financial Markets • UBS AG • Switzerland