As part of the settlement, UBS has agreed to reveal the names of some of its clients, a move that represents a potentially significant loosening of Switzerland’s legendarily tight bank secrecy traditions.

UBS will also complete its exit from the business of providing offshore banking to US citizens, the Zurich-listed bank said in a statement.

The settlement represents a halt to what has been a long-running case that has added to UBS’s woes, already severe as a result of booking massive losses from the credit crunch.

Under the terms of the agreement, UBS and US authorities have agreed that any prosecution case should be deferred for a period of 18 months. If UBS completes its withdrawal of offshore banking services in the US, then the Justice Department will “refrain from pursuing charges against UBS relating to the investigation of its US cross-border business”, the UBS statement said.

“We accept full responsibility for these improper activities,” Peter Kurer, UBS chairman, said in the statement. “We are firmly committed to the terms of the settlement agreements which we have reached with the DOJ and the SEC that there was no evidence that Mr Weil was aware of or participated in any conspiracy to violate US law,” it said.

“We continue to expect that Mr Weil will be fully vindicated,” the statement added.