International regulators will present plans in July on how major banks can be wound down in an orderly way as an alternative to a state bailout or going bust, the Swiss central bank head was quoted as saying on Sunday.

Philipp Hildebrand, chairman of the Swiss National Bank since the start of the month, told Swiss weekly Sonntags-Zeitung the outlines of a reform to banking regulation were clear and details, still being decided, would be out by October.

Hildebrand, a member of international regulator the Financial Stability Board's (FSB) steering committee as well as taking part in its plenary meetings, said that over-the-counter derivatives were being targeted as a specific problem.

The FSB has been tasked by G20 powers to make sure that a wide range of new financial regulation is applied consistently across the world so that countries do not try to take advantage.

Switzerland is working on a reform of its own banking regulation in parallel to international efforts, said Hildebrand, who has repeatedly said that Switzerland may need tougher rules than other jurisdictions to deal with the problem of mega banks that are too big to fail.

Hildebrand said mechanisms were needed to wind down an institution in trouble in an orderly fashion if necessary.

Banks must be reorganized to make that possible. This is a highly complex issue and the solution will not be simple. And this also applies to the regulation of the size of individual banks and of their business divisions, he said.

Hildebrand noted that it had been possible to wind down in an orderly manner the derivatives business of Lehman Brothers that had been conducted through central counter-parties.

This shows that there are certainly things that can be wound down in an orderly manner in even the worst circumstances, he said.

In the over-the-counter business, on the other hand, chaos reigned -- and to a certain extent still does -- over a year after the collapse.

(Reporting by Jonathan Lynn; Editing by Louise Ireland)