UBS, the Swiss bank, is expected to disclose the identities of thousands of its American clients with offshore accounts after agreeing a settlement with the US Department of Justice (DoJ) over allegations of tax evasion.

Stuart Gibson, an attorney for the DoJ, said this morning that the American and Swiss Governments had initialled an agreement that will end the DoJ's pursuit of UBS.

In a telephone conference with Judge Alan Gold, who had been due to hear the case in a Miami court, Mr Gibson said only that the Governments would soon reach a final accord. He gave no further details of the settlement.

Lawyers speculated that the DoJ was unlikely to have backed away from a legal battle without being assured that it would receive a large chunk of the information that it had sought.

The DoJ sued UBS in February for the names of 52,000 Americans with Swiss bank accounts, which the Internal Revenue Service (IRS), the American tax authority, suspected were being used to evade taxes.

Under US law, citizens must provide the IRS with information on amounts over $10,000 (£6,000) held in offshore bank accounts.

UBS had refused to hand over the names, arguing that to do so would force it to violate strict Swiss banking secrecy laws. The bank insisted that the issue of disclosure needed to be resolved between Switzerland and the US.

Switzerland, meanwhile, threatened to seize the names itself rather than allow them to be give up to the IRS. Switzerland will co-operate with information requests if there is evidence of wrongdoing, but believed that the IRS was on a fishing expedition — seeking the identities of all Americans with offshore accounts in the hope of catching some committing tax evasion.

The Swiss and US governments and UBS have been in talks for five weeks in an attempt to settle the case without going to court. They had previously announced an agreement on the major principles and planned to present the final settlement to Judge Gold last week, but postponed the hearing after a disagreement, believed to have been about the actual process of transmitting the names between Switzerland and the US.

American customers of UBS have until September 23 to confess to the IRS that they have undeclared cash overseas.

In February, UBS gave the IRS the names of 250 clients and paid a $780 million settlement after admitting that its bankers helped some US customers to evade tax. Three of these customers have since pleaded guilty to tax evasion.

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