Even as Switzerland said its reputation of bank secrecy would remain – despite turning over the names of hundreds of American investors to US tax officials who said Swiss bank UBS had helped them evade taxes - the European Union’s major economies are hoping to enlist the support of all 27 EU member states as they gear up for a battle to crackdown on tax havens.

The move followed an agreement by the EU’s seven leading economies to launch action to clamp down on tax havens as part of a push to overhaul the global financial system in the wake of the world economic crisis. Hosted by German Chancellor Angela Merkel, the meeting was called to set out Europe’s position on financial market reform and tackling the recession ahead of the April summit in London of the Group of 20 (G20) major economic powers. The EU is considering plans to forge a so-called black list of tax havens as well as so-called uncooperative states before the G20 meeting in London.

The Swiss Federal Council rejected criticism directed at the Alpine nation over tax issues, saying that privacy in banking remained intact. In a statement, the council, the executive branch of government, said it would, however, work “to improve cooperation with other countries in the area of tax offences.” The Council added that “it is prepared to enter into dialogue with third countries on the taxation of savings income.” To do so, it set up a “group of experts,” which includes civil servants, bankers and academics, to advise the government.

UBS, the Swiss banking giant, has recently come under fire in a tax investigation in the United States. Under orders from the Swiss regulatory body, UBS handed over last month some data on clients who allegedly committed tax fraud to US authorities. It also paid a hefty fine of USD 780 million. The bank told a US Senate hearing that it would not hand over more data owing to Swiss banking secrecy laws. The US is demanding information on 52,000 clients, while the bank is reported to have transferred unspecified data on only a few hundred.

Switzerland is said to house about a third of the USD seven trillion held offshore globally. Swiss bankers, who profit from the system, say the collapse of banking secrecy could halve the financial sector, which currently makes up about 12 percent of GDP. “The need for appropriate protection of privacy of citizens from unwarranted state intervention is deeply rooted among the Swiss population,” the government said, but added that privacy would not provide cover for tax offenses. The Swiss law book makes a distinction between tax evasion and tax fraud. Currently, only the latter is a criminal offence, though it has been implied that this too would be up for negotiation.

After the scandal though, UBS replaced CEO Marcel Rohner with Oswald Grubel, while Chairman Peter Kurer said he would step down later this year, in what was seen as an ouster and repudation of his leadership after the bank’s stocks fell rapidly as depositors demanded an end to the bonus culture and were angered over the bank’s failures. Switzerland’s biggest bank, UBS lost billions in the financial crisis.

To show the importance of the banking industry and the US attempts to clamp down on tax evaders, US Secretary of State Hillary Clinton met with Swiss Foreign Minister Micheline Calmy-Rey in Geneva to discuss the UBS tax fraud investigation. Calmy-Rey told reporters after the meeting that she said to Clinton that the US should not put more pressure on Switzerland regarding UBS, but that the Swiss would work more closely with Washington to find avenues to share information.