Credit Suisse offered cash compensation today to about 1,700 of its wealthy customers who invested in financial products sold by Lehman Brothers, the former Wall Street banking titan that collapsed last year.

In what is likely to be seen as a landmark deal, Switzerland's second-largest bank offered to pay about SwFr50 million (£29.5 million) in cash to customers who bought "capital-protected" products sold by Lehman Brothers.

The bank collapsed into Chapter 11 bankruptcy protection in the US and filed for administration in the UK and continental Europe in September, triggering a worldwide crisis in banking.

Thousands of customers who were sold Lehman products by international fund managers and investment banks saw the value of their holdings wiped out.

The proposal today means that Credit Suisse has offered a total of approximately SwFr150 million to about 3,700 of its customers who bought Lehman Brothers products, after a separate deal was agreed days after the collapse.

Credit Suisse is thought to be the first investment bank to table a comprehensive offer to compensate customers who bought Lehman products in this way.

Today's proposal, which has the backing of the Swiss consumer group the Fédération Romande des Consommateurs, puts the pressure on UBS, Switzerland's biggest banking group, to follow suit.

Individual cash offers will be made to Credit Suisse customers over the next few days.

They will have several weeks to decide whether to agree to the terms.

If accepted, the offer means that customers will recover between 50 per cent and 70 per cent of the nominal value of their investment.

To qualify, they would need to have had assets of up to SwFr500,000 invested with Credit Suisse as at the end of August.

More than a fifth of this would need to have been invested in 100 per cent capital-protected Lehman products.

Credit Suisse declined to say how many customers in total had used the Swiss bank to buy Lehman products, but said it believed that today's offer would draw a line under the issue.

Walter Berchtold, the chief executive of private banking at Credit Suisse, said: "We fully understand the difficult situation faced by clients as a result of Lehman Brothers' declaration of bankruptcy, and began early on to seek ways of accommodating them."

Credit Suisse shares rose SwFr0.44, or 1.2 per cent, to SwFr37.9.

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