UBS has buckled under the pressure of an investigation into allegations it helped rich Americans hide their wealth from the taxman, agreeing to stop offering Swiss banking services to 20,000 US clients.

The pledge was seen as a desperate attempt to pacify a furious Washington amid serious concerns about its future business in the world's biggest economy.

In a late hearing on Capitol Hill last night, Mark Branson, chief financial officer of UBS's global wealth management division, told the Senate: "We have decided entirely to exit the business. UBS will no longer provide offshore banking or securities services to US residents through our bank branches."

Clients whose accounts are handled by non-US regulated Swiss bankers will be told to use US-based accounts or transfer to UBS divisions in Hong Kong or Zurich that are subject to US transparency rules.

Senate investigators this week unveiled a 115-page report detailing how UBS bankers marketed offshore tax-haven accounts to wealthy American clients.