ZURICH (Reuters) – Big Swiss banks UBS and Credit Suisse have strengthened their plans for how they would stabilise themselves in a financial crisis, Swiss financial markets watchdog FINMA said on Friday, adding there is still work to be done.

Systemically important Swiss banks must demonstrate how they would right themselves in the event of an emergency, or how they can be restructured or liquidated without obstacles while maintaining their systemically important functions in Switzerland.

This is part of the country’s so-called Too Big to Fail rules, aimed at reducing risks to the country’s financial system and avoiding the need for taxpayer-funded bailouts.

FINMA judged the recovery plans and Swiss emergency plans of UBS and Credit Suisse to be adequate, but wrote for both institutions that their “preparatory measures are not quite adequate”.

“FINMA continues to regard the Swiss emergency plans of the global systemically important banks UBS and Credit Suisse as effective, although UBS’s approval remains subject to the proviso that it continues to reduce certain financial interdependencies within the group according to the agreed schedule,” the watchdog said in a statement.

FINMA said that to achieve global resolvability, “regulatory and supervisory requirements are still to be developed or finalised on the part of authorities, particularly in the area of liquidity”.

For the first time, the financial industry supervisor added, all of Switzerland’s domestic systemically important banks – Post Finance, Raiffeisen and Zuercher Kantonalbank – also have credible resolution strategies.

(Reporting by John Miller; Editing by Riham Alkousaa and Stephen Coates)