UBS (NYSE: UBS - News) on Thursday turned to the Swiss authorities for its third capital raising this year as one of Europe's biggest casualties of the US subprime crisis tried to draw a line under its exposure to troubled credits.

The Swiss government is investing SFr6bn ($5.3bn) for a 9.3 per cent stake in the bank, which is the world's biggest wealth manager.

UBS in turn will use the money to finance its share of a SFr60bn vehicle being created by the Swiss National Bank to hold most of UBS's toxic credits, mainly securities linked to US mortgages.

The unexpected move came as Credit Suisse, UBS's arch rival, said it had declined government assistance in favour of raising SFr10bn from three investors, including Qatar's sovereign wealth fund.

The UBS decision was criticised by parliamentarians from both the left and the right who disapproved of using of state funds to aid a private company.

Ministers said it was essential to restore UBS to an even keel while the bank denied it was a "rescue" because it was not facing collapse.

"UBS is strong in capital but has a credibility problem," said Jean-Pierre Roth, governor of the Swiss National Bank, the country's central bank.

Eveline Widmer-Schlumpf, Switzerland's justice minister, who is also serving as finance minister. "These measures will sustainably raise confidence in the Swiss financial system and boost interbank business",

The finance will lift Credit's Suisse's tier one ratio to the equivalent of 13.7 per cent at the end of September, making it the best-capitalised of Europe's leading financial institutions. Credit Suisse said its capitalisation would meet the - as yet unpublished - higher ratio being sought by the regulator for 2013 as well as the new, and also as yet undisclosed, leverage ratio on lending proposed by the central bank.

"This puts us in the vanguard of capital raising measures round the world", said Brady Dougan, Credit Suisse's chief executive.

Investors reacted well to both banks' moves although the shares gyrated amid broader market developments. UBS closed down almost 5 per cent at SFr19.09 while Credit Suisse closed down 0.87 per cent at SFr45.50 after both banks had risen earlier in the day.

Additional reporting by Simeon Kerr in Dubai