The US Justice Department may drop a closely watched lawsuit aimed at forcing Swiss banking giant UBS to divulge the names of 52000 wealthy American clients suspected of offshore tax evasion.

Justice Minister Eveline Widmer-Schlumpf said it was "unacceptable" for the US to force the Swiss bank UBS for the release of confidential bank data related to 52,000 customers at the bank. He further said the United States should respect bilateral accords.

Confirmed sources said the complaint could be dropped before July 13, when Judge Alan Gold of the United States District Court in Miami, is expected to hold a short trial on the issue.

Speaking on the issue, an U.S. official said, "The Swiss do not want this to be litigated, and it is possible it will settle before then." 

Earlier in February, UBS agreed to pay a $780 million fine and reveal the identity of about 300 of its U.S. clients to avert criminal charges.

Then U.S. authorities filed a civil lawsuit against UBS seeking information on 52,000 undeclared accounts.