Switzerland's approach to fixing its banking system has turned out to be at once less interventionist and more far-reaching than other government-sponsored bank rescues unveiled this month.

The country was among the first to apply political pressure on its banks to raise capital after UBS (NYSE: UBS - News) , its national banking champion, became an early and severe casualty of the credit crisis over the fourth quarter of last year. But others, notably the US and UK, acted sooner to inject capital into their banks and act as a buyer for their "toxic" debt.

The Swiss plan involves a familiar combination of new equity, a vehicle for buying bad assets, and potential guarantees of bank debt. However, the Swiss government also seems to be much less keen than those of other countries on getting too involved in the sector.

UBS is the first to accept the support and the terms of engagement demonstrate the government's relatively arm's-length approach. The Swiss bank's SFr6bn ($5.3bn) of new equity comes in the form of a mandatory convertible bond. That contrasts with the commitments by the UK government to buy £37bn ($64bn) of straight equity in three of its banks, the US authorities' agreement to buy $250bn in preferred stock, and France's commitment of €40bn ($54bn) in equity for its banks.

This mandatory convertible bond becomes UBS stock only after 30 months, giving the government plenty of time to exit the investment without ever becoming a direct shareholder in UBS.

There are none of the controversial restrictions around paying dividends that have been attached to the US and UK capital injections, nor is there any suggestion of direct government influence over business strategy. And while the coupon on the mandatory looks high at 12.5 per cent - against the 9 per cent on the mandatory convertible sold to the Government of Singapore Investment Corporation earlier this year - that mainly reflects the higher cost of capital suffered by all banks in this climate.

There is a suggestion of more enlightened remuneration policies but there seems to have been a deliberate attempt by the government not to play to the political gallery in calling for UBS to ditch executive bonuses.

The government-owned vehicle for adopting UBS's toxic credit assets is also generously constructed. On the one hand, UBS is providing it with $6bn in equity to act as a buffer against the first 10 per cent of losses. But UBS also gets to share in any upside if the value of the funds' assets appreciates.

Full details of the US's troubled assets relief programme have yet to emerge. Even so, the US Treasury has been quick to advertise associated restrictions on executive pay.

All in all, the Swiss could probably have extracted a more painful pound of flesh from UBS as a condition of its support if it had wanted to. But at the same time, Switzerland seems to have been more radical in the long-term reforms that seem to underpin yesterday's announcements.

This manifests itself in higher standard capital requirements and a new so-called leverage ratio.

Credit Suisse, which raised capital without government assistance, said it now satisfied the central bank's capital requirements. Its tier one capital ratio at September 30 would have been 13.7 per cent rather than 10.4 per cent had the capital injection taken place then. The ratio is a key indicator of financial strength.

It remains unclear precisely how high Switzerland thinks tier one ratios should be from now on, but the ballpark figure looks like 12 to 13 per cent, judging by Credit Suisse's behaviour.

No government has yet dared to say what is the right level for tier one. The French finance minister this week rowed back from suggesting 9 per cent. But the UK noted that the banks it agreed to recapitalise last weekend would have tier one ratios exceeding 9 per cent.

Credit Suisse also said it had come to an agreement with the Swiss Federal Banking Commission on its overall amount of leverage - equity against total, rather than risk-weighted, assets.

It remains unclear how Switzerland is defining this leverage ratio. But the fact it has already agreed it with one key institution shows how advanced it is in establishing long-term as well as short-term responses to the crisis.