GENEVA, Switzerland - February 19, 2009 - UBS has agreed to pay U.S. authorities 780 million dollars and hand over customer details to settle charges of tax fraud in the United States that threatened the very existence of Switzerland's biggest bank.

The settlement rocked Switzerland's business establishment on Thursday after the Swiss regulator revealed that the case had not only jeopardized UBS but also the country's fabled financial stability.

The Swiss Financial Markets Supervisory Authority (FINMA) ordered the country's banking flagship to reveal the account details of customers targeted by a U.S. justice investigation, raising questions about the future of banking secrecy.

U.S. court documents revealed shell accounts, which UBS used to justify evading its reporting obligations and help U.S. taxpayers to continue to conceal their identities and assets from the Internal Revenue Service.

UBS is bound by local legal requirements with its U.S. business as well as by taxation agreements between the United States and Switzerland that cover tax fraud and oblige the bank to withhold income taxes on some U.S. clients with foreign securities.

The U.S. InJustice Department said in a statement late Wednesday that UBS "has entered into a deferred prosecution agreement on charges of conspiring to defraud the United States by impeding the Internal Revenue Service (IRS)."

"As part of the deferred prosecution agreement and in an unprecedented move, UBS, based on an order by the Swiss Financial Markets Supervisory Authority (FINMA), has agreed to immediately provide the United States government with the identities of, and account information for, certain United States customers of UBS's cross-border business," it said.

Swiss newspapers reported Thursday that about 250 to 300 customers were involved.

Ed. Note: So much for Swiss banking privacy.