Wegelin, which was founded in 1741 and based in St. Gallen, eastern Switzerland, unveiled late on Thursday an agreement with US federal prosecutors in New York that includes penalties worth a total of $57.8 million for helping wealthy individuals avoid at least $20 million in taxes.
"Wegelin was aware that this conduct was wrong," said Otto Bruderer, one of the bank's managing partners, as he entered a guilty plea on behalf of the bank to one count of conspiracy.
The bank is the first Swiss financial institution to admit it aided US tax evaders, and has also agreed to preserve data on Americans that had accounts at the bank pending further instructions from competent Swiss authorities.
"Wegelin believed that, as a practical matter, it would not be prosecuted in the United States for this conduct because it had no branches or offices in the United States and because of its understanding that it acted in accordance with, and not in violation of, Swiss law and that such conduct was common in the Swiss banking industry," Bruderer told the court.
The bank carried out operations in the United States via an account with UBS, and the case marked the first time that US justice officials have charged a bank, rather than individuals, as part of a crackdown on overseas tax evasion, Dow Jones Newswires said.
In 2009, UBS, the biggest Swiss bank, reached its own agreement with US authorities that halted legal proceedings against it.
Under terms of that deal, UBS did not acknowledge guilt, but agreed to give US officials the names of around 4,450 US clients who held accounts at the bank.
US Attorney for the Southern District of New York Preet Bharara termed the agreement with Wegelin a "watershed moment in our efforts to hold to account both the individuals and the banks — wherever they may be in the world — who are engaging in unlawful conduct that deprives the US treasury of billions of dollars of tax revenue".
According to the Wall Street Journal, the court could sentence the Swiss bank on March 4th formally endorsing the agreement and putting an end to further prosecution of Wegelin in the United States.
Three Wegelin bankers charged in the United States last year are not covered by the agreement, however.
Wegelin had essentially stopped operating as a bank in late January 2012 to focus on the US case, selling its non-US operations to the Notenstein bank, which has since been bought by the Swiss banking group Raiffeisen.
Several Swiss banks are still under investigation by US justice officials, but while the names of Credit Suisse and Julius Baer have circulated for months, none have been formally identified.
In December, the Zurich Cantonal Bank (ZKB) revealed that three of its employees faced charges.
"These are two different cases. In the case of ZKB, three employees (two active and one former employee) have been accused, and there are no indications that the bank will be accused," a bank spokesman told AFP on Friday.
ZKB declined to comment on Wegelin's guilty plea.