Switzerland, world's largest wealth manager and United States have signed an agreement to share bank information with each other about the billions of dollars that US citizens have squirreled away in Switzerland.

The agreement is still required to be approved by the government in Bern.

According to the agreement, Swiss banks would be able to share client information (in cases where an explicit and justified request has been made).

Earlier, international pressure forced Switzerland to soften its bank-secrecy law. 

Organization for Economic Co-operation and Development also ordered Switzerland to soften its bank secrecy laws to avoid sanctions from G-20 members.

A lawsuit against Swiss bank UBS AG, by the U.S. govt. to get back names of American clients with funds in Swiss bank accounts also forced Swiss govt. to draft agreement. 

UBS compromised with the U.S. Department of Justice in February to avoid criminal charges by paying a fine of $780 million and supply a certain number of U.S. account holder names.

The U.S. is the 6th country with which Switzerland drafted an agreement through which U.S. will be able to combat tax evasion through offshore accounts.

Speaking on the development, Timothy Geithner, U.S. Treasury Secretary, said, "This treaty will increase our ability to enforce our tax laws and will help bring an end to an era of offshore accounts and investments being used for tax evasion."