When UBS, the Swiss bank, agreed in August to hand over some 4,450 names of U.S. account holders as part of a tax settlement between the Swiss and U.S. authorities, it appeared to sound the death knell for banking secrecy in Switzerland – one of the main selling points for the country's financial institutions.

However, Swiss politicians and local bankers said that the agreement did not mean the U.S. authorities would be given information on all the offshore accounts held by Americans in Switzerland. Instead, information would only be supplied when tax authorities from another country had provable evidence of a tax fraud by an offshore account holder. Swiss foreign minister, Micheline Calmy-Rey, was instrumental in negotiating a settlement between the US and UBS.

But many within the financial industry think that banking secrecy in Switzerland is undergoing its most significant transformation since it was codified by the Swiss Banking Act in 1934.

"Banking secrecy will continue to exist, but not for tax reasons. Private banks will have to offer services on a fully compliant basis," says Boris Collardi, chief executive of Swiss private bank Julius Baer.

Philip Marcovici, a partner at lawyers Baker & McKenzie in Zurich, says taxcompliant banking secrecy continues to be a useful attribute of offshore centres such as Switzerland.

"Transparency for tax purposes does not mean that bank secrecy does not remain an important need of today's wealthowning family. A wealth owner needs and wants to play by the tax rules of their home country and this doesn't compromise his or her ability to retain privacy in relation to their financial affairs."

The stakes are high for Switzerland. The country is the largest offshore financial centre in the world, accounting for $1.8 trillion, or 28%, of offshore wealth in 2008, according to the Boston Consultancy Group.

Jacques de Saussure, a managing partner at Pictet & Cie, says some Swiss private banks that have small amounts of assets under management will suffer from the changing landscape on banking secrecy.

However, he says there has been "a surge of money coming in from Germany, France and the U.K. in the last year," says Mr. de Saussure.