Switzerland's once proud banks may have to lift their celebrated secrecy, the chairman of UBS admitted today, as he sought to deflect claims of involvement in tax fraud in the US where the group is under official investigation.

In an unprecedented show of public remorse, Peter Kurer, chairman of UBS, also told an extraordinary general meeting in Lucerne today that the bank had wrenched a total of SwFr 70 million (£37.8 million) in bonuses back from former executives.

He said he and other members of the executive board would forego their multi-million dollar bonuses this year following a $60 billion (£38.8 billion) government bailout.

The controversy sparked by the bank's response to the sub-prime mortgage crisis has been fuelled by a US investigation into its off shore services for wealthy customers.

Mr Kurer said an internal inquiry had revealed a "limited number of cases of tax fraud under both US and Swiss law."

His admission came after Raoul Weil, the head of UBS's private banking unit, was indicted in federal court in Florida for allegedly helping to hide assets of about $20 billion from tax inspectors

Bowing to pressure from US authorities, Mr Kurer said secrecy could be lifted.

"Contrary to the idea conjured up in public discussions, bank secrecy is not absolutely valid. It is not there to protect cases of tax fraud. Such an absolute pretence would only damage bank secrecy."

He added: "I do not believe that the purpose of bank-client confidentiality is to protect such cases. In these situations, we must find a rapid, efficient and possibly unconventional solution."

Mr Kurer was seeking to head off what he admitted was widespread outrage at UBS's devastating losses of about SwFr45 billion over the past year.

The main plank of his fight back involves a limit to executive bonuses.

"No other bank has seen so many former top managers agree to forego so much," he told the 2,395 shareholders present at the meeting

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