LUCERNE, Switzerland, June 18 (Reuters) - UBS's

CEO on Tuesday hit out at suggestions Switzerland should set

tougher regulations for the bank after its 2023 takeover of

Credit Suisse, saying "fear" and "populist" critics were doing

down the business and the country's own prospects.

Speaking as the government and regulators mull plans to make

the bank hold more capital, UBS CEO Sergio Ermotti told an event

at the Institute for Swiss Economic Policy in Lucerne that UBS

was not only a major source of tax revenue for public coffers,

but also a "beacon" for the Swiss finance industry.

"The demise of Credit Suisse should not be taken to mean

that the only remaining major bank has to pay the price and

should be penalized for its global significance," Ermotti said.

The CEO has in recent months lamented the perception that

the lender is too big for Switzerland and pushed back against

the need for tougher regulation.

UBS has been facing growing regulatory and political

scrutiny as Switzerland seeks ways to protect itself should a

bank with a balance sheet double the size of its economy ever

fail.

"At the end of the integration process, UBS's balance sheet

will be around 40% larger than before the acquisition of Credit

Suisse, not twice as large," Ermotti said on Tuesday.

(Reporting by Noele Illien; Editing by Dave Graham and Mark

Potter

)