Switzerland's UBS has warned parliamentarians failure to back a deal to end its bitter U.S. tax row with the bank could result in a damaging backlash for Swiss banks as well as the Alpine nation's economy.

The Swiss government wants parliament to overule a Swiss court decision that prevents it from honoring the agreement to hand over data on 4,450 clients of UBS suspected of hiding money from the U.S. taxman, by cementing the treaty in law.

The risks for the Swiss finance center and the economy in general are very considerable if Parliament refuses approval, UBS, Switzerland's largest bank by assets, said in a letter to politicians opposing the deal, seen by Reuters on Friday.

The (U.S.) Internal Revenue Service obtained information on around 20 banks from the voluntary disclosure program, UBS said in the letter. It is very possible that the IRS wants to obtain information about other clients of these banks.

Switzerland's right-wing SVP party said earlier this week it opposed retroactive parliamentary approval of the deal agreed between Berne and Washington in August.

Switzerland's biggest parliamentary party, does not hold enough seats to block approval in the lower house without the support of at least one other major party, but the government has no contingency plan should parliament not approve the deal.

The refusal of Switzerland to recognize its legal obligations could signal an escalation of these cases, UBS said.

Around 14,700 individuals came forward as part of a U.S. tax amnesty program last year. Many of these were UBS clients but thousands more had accounts at other non-U.S. banks.

U.S. tax prosecutors are examining more than 7,000 accounts from foreign banks beyond UBS, including other Swiss banks, a top Justice Department lawyer said at the end of February.

A UBS spokesman declined to comment on which politicians had received the letter.

Swiss bank secrecy laws prevent Berne from sharing tax information automatically with foreign authorities. Each request needs to follow an administrative process and clients of Swiss banks can appeal against a request for data transfer in court.

One such client of UBS won an appeal in January to prevent her account data being handed over to U.S. authorities, threatening the basis of the agreement to hand over names, as a Swiss court ruled her behavior did not constitute fraud.

UBS said it had kept its side of the deal, transferring over 4,000 dossiers containing almost 4 million pages to Swiss authorities for handing on to U.S. counterparts.

DBA DANGER

The SVP also said it opposed double taxation agreements (DBAs) Switzerland signed last year to bring it in line with international standards, and may want to put them up for referenda.

Those agreements, 12 of which were required to remove the Alpine state from an international list of tax havens, have to be ratified by parliament. The government has already said one tax agreement could be put to the popular vote.

The DBA with the United States would be in danger if the UBS tax deal fell, putting pressure on the export-reliant Swiss economy, UBS said.

This could mean that transactions not only for Swiss financial companies but Swiss companies in general could be made subject to a special withholding tax, UBS said, adding the United States could even decide to make its own blacklist of tax havens, including Switzerland.

(Reporting by Jason Rhodes; Editing by Mike Nesbit)