In a strategy paper published this week, the regulator proposed that its preferred option is a single point of entry bail-in, with the aim of preserving the banking group as a whole in recapitalised form,

"Such resolution must ensure the continuity or orderly wind-down of systemically important functions, prevent a negative impact on the global and national financial systems and the relevant economies and avoid recourse to state aid as far as possible," FINMA said.

"The single point entry approach aims to avoid the preventive ring-fencing of individual parts of the business in the various markets and enable the orderly wind-down of foreign subsidiaries," FINMA added.

Under the proposal, FINMA recommended spreading bank losses across a range of creditors, including shareholders, bond holders, holders of contingent convertible instruments and owners of debt including senior debt.

"A process of this kind has major advantages. Business operations can continue without significant interruption and the continuity of economically critical functions is assured. This increases the likelihood that the recovery or resolution of a global systemically important bank will not affect system stability in the home country of the bank or abroad," FINMA said.

This process would also create time to reorganise the viable parts of the bank and transfer them to a sustainable business model, the regulator said.

FINMA said that if it was clear that the bank could not be saved, it would protect the key functions of the bank.

The bank group could be sold off, wound down, restructured or liquidated to protect the critical functions, however, FINMA said it would be "impossible" to rescue the entire bank.