UBS will give U.S. authorities the names of about 5,000 wealthy Americans suspected of using the Swiss bank to evade taxes under a deal that will be formalized this week, a U.S. legal source said on Monday.

The source, who asked not to be identified because he was not authorized to discuss the agreement, said it was due to be announced jointly by the Swiss and U.S. governments on Wednesday.

Initialed last week, the deal ends a long-running legal dispute between Swiss and U.S. negotiators over access to the names of American clients of UBS suspected of using secret accounts at the bank to conceal assets and dodge U.S. taxes.

The case strained relations between the United States and Switzerland because of aggressive tactics used by U.S. investigators for more than a year to crack open one of the world's leading bastions of bank secrecy and confidentiality.

The source said the deal settling the dispute, which was finally hammered out in Washington last week, would involve the disclosure to U.S. authorities of roughly 4,500 to 5,000 names of American clients of UBS.

That is less than the 52,000 names the United States originally hoped it could force the bank to disclose through a lawsuit.

But U.S. government sources have said repeatedly that U.S. prosecutors could still claim a big win in the case, if they come away with names believed to hold the biggest offshore accounts, containing the bulk of the estimated $15 billion in assets linked to U.S.-based clients of UBS.

That, in turn, should resonate across the global offshore banking industry amid concerted efforts by the United States and other countries to fight money-laundering and tax cheats.

UBS became the target of U.S. probes in 2007 when a former executive at the bank, Bradley Birkenfeld, began cooperating with U.S. authorities and helped them start building criminal and civil complaints against the bank.

The whistle-blower, who once smuggled a client's diamonds into the United States in a toothpaste tube, is due to be sentenced in a Florida court on Friday after pleading guilty in June 2008 to helping a billionaire hide $200 million of assets from U.S. authorities.

(Editing by Pascal Fletcher and Steve Orlofsky)

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