UPDATE 1-SNB vice chair urges Swiss banks to bolster capital

* Danthine says C.Suisse, UBS should keep boosting capital

* Says franc still "unusually strong" against euro (Recasts, adds detail on UBS, Credit Suisse)

ZURICH Oct 19 (Reuters) - The Swiss National Bank (SNB) isn't yet satisfied with steps taken by big banks Credit Suisse and UBS towards boosting capital, the central bank's vice chairman was quoted as saying on Friday.

The SNB urged Credit Suisse to address a capital shortfall to shield it from the risk of an escalation in the euro zone crisis in its financial stability report in June.

"Credit Suisse has caught up. We encourage both banks to continue to bolster capital," SNB vice chairman Jean-Pierre Danthine told Swiss business newspaper Finanz und Wirtschaft in an interview published on its website.

"Until we've reached this goal, I can't say I'm satisfied," he said.

Danthine stopped short of calling for the two to split off their riskier investment banking arms, saying the banks have to decide themselves how best to deal with stiffer requirements for these activities.

UBS's and Credit Suisse's investment banking arms soak up far more capital than their private banking arms.

The two banks are in the process of submitting plans to Swiss regulators on how they would wind down and save activities relevant to Switzerland's financial system, if the need arose.

Danthine said he hoped the banks would learn lessons from the financial crisis - during which the Swiss government had to bail out UBS in 2008 - and hold more of their own capital than demanded by regulators.

Asked if the SNB's foreign exchange reserves, which stood at 73 percent of annual output in September, could keep rising, Danthine said it was still possible.

"However there will come a point when the trust in the franc's strength will fade. Currently the franc is still unusually strong against the euro," he said.

Danthine said he was encouraged by recent measures taken by the European Central Bank to stabilise the euro zone and by ECB President Mario Draghi's determination to save the euro. (Reporting by Caroline Copley and Katherine Bart; Editing by Mark Potter)