The Swiss parliament rejected a bid by the centre-left Social Democrats (SP) to ban UBS and Credit Suisse from engaging in risky investment banking activities, put forward in response to the admission by UBS that unauthorised trades would cost it $2.3 billion, according to Reuters. SP parliamentarian Susanne Leutenegger Oberholzer on Monday asked parliament to discuss a ban on investment banking as part of a debate on tough new capital laws aimed at preventing a repeat of the government bailout of UBS in the financial crisis. \"One of the large risks for the financial centre is investment banking,\" she told parliament, adding that the threat which a single staff member can pose to a large bank was clearly demonstrated by the UBS alleged rogue trade incident. But parliament narrowly rejected her bid to reopen the debate with 55 votes against the motion, 42 in favour and six abstentions, meaning she will have to present her proposal to ban investment banking in a new legislative process. The lower house debated a plan to force UBS and Credit Suisse to hold equity Tier 1 capital of at least 10 percent of risk-weighted assets, compared with 7 percent under the Basel III industry rules. The law, which would also require the two banks to hold a further 9 percent in other forms of capital, such as contingent convertible (CoCo) bonds -- lifting the total capital ratio to a hefty 19 percent -- should take effect from early 2012. The measure passed the upper house in June but will return for another vote there on Wednesday, after the lower house made changes to the legislation over tax proposals to help banks issue CoCos. But Swiss politicians, keen to be seen as tough on the banks ahead of national elections on Oct. 23, have demanded more far-reaching measures after the news of the alleged fraud at UBS last week. The right-wing Swiss People\'s Party has called for UBS and Credit Suisse to be forced to split their investment banks from their core wealth management businesses. Before the scandal broke, UBS had lobbied against the new capital rules, warning they would make big Swiss banks less competitive than their foreign rivals and suggested the law could force it to move parts of its business overseas. The Swiss National Bank was a big proponent of the new standards and Vice Chairman Thomas Jordan termed criticisms \"exaggerated and largely unfounded\".