UBS, the Swiss banking giant, announced a sweeping overhaul of historic practice yesterday with executive bonuses worth SwFr70 million (£38 million) to be forfeited and the partial end of client secrecy.

Faced with a storm of protests from shareholders over the group’s response to the sub-prime crisis and to a tax inquiry in the US, Peter Kurer, the chairman, was contrite as he addressed an extraordinary general meeting in Lucerne. In an attempt to restore the battered reputation of an institution seen as a pillar of the national economy, Mr Kurer said that he and other members of the executive board would forgo their multimillion-dollar bonuses this year.

But his contrition failed to dispel the anger of shareholders, who called for executives to be prosecuted after the $60 billion (£40 billion) bailout of UBS by the Swiss Government last month. Anger over sub-prime write-downs has been compounded by an investigation in the US into claims that UBS enabled wealthy customers to avoid tax.

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. He denies the accusation.

With US authorities seeking the identity of about 17,000 clients, Mr Kurer told shareholders that an internal inquiry had revealed a “limited number of cases of tax fraud under both US and Swiss law”.

“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,” he said.

Lawyers for UBS’s American customers suggested that the “unconventional solution” could involve lifting banking secrecy in connection with several hundred accounts.

Mr Kurer also announced further steps to recoup executive bonuses in an attempt to head off what he admitted was widespread outrage at devastating losses of about SwFr45 billion over the past year. He said that SwFr70 million had already been paid back, with Peter Wuffli, the former head of the executive board, returning SwFr12 million, and Marcel Ospel, Stephan Haeringer and Marco Suter, three other former directors, waiving a total of SwFr33 million.

“No other bank has seen so many former top managers agree to forgo so much,” Mr Kurrer told the 2,395 shareholders present at the meeting.

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