(Bloomberg) -- The new chief executive of the Swiss banking watchdog Finma said UBS Group AG should provide 100% capital backing to its foreign units, a move that aligns with the government’s plans to significantly increase the bank’s capital requirements.

“The Credit Suisse crisis starkly illustrated the vulnerability of the parent banks,” Stefan Walter said on Tuesday at a banking conference. “In the case of UBS, we support full capitalization of the parent bank’s subsidiaries.”

Walter’s comments address a key weakness that led to the downfall of Credit Suisse in March last year, in that low capital backing for foreign units left the parent bank less able to absorb losses. The government has said it aims for a “significant increase” of the current regulatory requirement of a 60% backing, but hasn’t yet given a precise number. 

The shift could contribute to an extra $20 billion in required buffers for UBS. A spokesperson for Finma clarified in an email that Walter was referring to the government’s proposals on the subsidiaries.

Read more: UBS Faces Higher Capital Requirement in Swiss Bank Reform

Walter, a former European Central Bank official, started as chief executive of Finma on April 1. Tuesday’s appearance at a conference for small banks was his first public speech.

Walter also said that Finma will review the business model and structure of UBS to ensure that a resolution of the merged bank is possible. In this context the authority needs powers for early intervention before a crisis, he added.

“We must have powers to prevent business activities, practices or interdependencies that could hinder an effective resolution of the institution,” he said.

Read More: Switzerland Is Reworking Its Rulebook to Stop Another Banking Meltdown

This is in line with the government’s intention to give Finma the power to demand clear accountability for senior managers at big banks, along with the ability to claw back bonuses. In its sweeping set of proposed reforms, Switzerland’s Federal Council has so far however stopped short of giving the watchdog the power to fine banks.

“What we need to strive for – and what I will work toward in the coming months and years with determination – is best-in-class supervision,” Walter said.

He added that Finma will strengthen its stress test tools and will scrutinize systemic lenders’ resolution plans to check if capital buffers are sufficient in difficult economic scenarios. 

“The more difficult it is to resolve a bank, the higher the precautionary capital buffers need to be,” Walter said. “We will keep a very close eye on this.”

(Updates with new lead, clarifying Walter was referring to capital backing of foreign units)

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