SWITZERLAND'S top two banks took emergency measures to shore up their finances yesterday, with the state taking a near 10-percent stake in UBS while Credit Suisse raised new funds from private investors.

UBS AG is getting 6 billion Swiss francs (US$5.3 billion) from the state in return for a 9.3-percent stake, while Credit Suisse Group AG (CS) said it would raise 10 billion francs from investors including Qatar. UBS, the biggest Swiss bank, will also unload US$60 billion of toxic assets into a new fund controlled by the central bank.

Shares in both banks recovered from sharp early falls, outperforming European banks as a whole as investors welcomed the latest example of the dramatic measures being taken around the world to prop up banks.

"All European governments intervened and this left the Swiss banks at a competitive disadvantage," said analyst Dirk Becker at brokerage Kepler. "The Swiss have recapitalized their banks and made them the best capitalized banks in the world."

UBS, which has been worse hit than Credit Suisse in the current crisis, said its foremost need was to cut exposure to illiquid assets. It said the creation of the new fund had laid the foundation for a return to its normal operating business. It said it made a net profit of 296 million francs in the third quarter - helped by gains on its own credit and tax gains - but admitted client withdrawals had accelerated, particularly as the market turmoil escalated in September.

While Credit Suisse saw strong inflows in the quarter, it made a net loss of about 1.3 billion Swiss francs after fresh write-downs.

The Swiss government said it did not want to hold the UBS stake for years and would sell to private investors as soon as it was possible.